A state law that uses slot machine revenue to decrease local property taxes is sparking local debate about its effect on property owners and renters.

Under the Homeowner Tax Relief Act (Act 72), participating school districts would receive a portion of the gaming revenue and would be able to reduce property taxes.

The schools would need to raise the earned income tax by a minimum of 0.1 percent to get the property tax relief, said Scott Shewell, spokesman for the Pennsylvania School Boards Association.

He added that the property tax decrease would only apply to primary residence homeowners.

"[Renters] are the ones that benefit the least," Shewell said.

Bob Steinbach, a local homeowner from Boalsburg, said the act has potential to help some area residents, but it could hurt local renters.

"It would be positive for homeowners," he said.

Shewell said renters would not receive a property tax reduction, and there would also be an increase in the earned income tax for both renter and landlord.

Rep. Lynn Herman, R-State College, said he has received many requests from residents to have more time to examine the act.

"I would not object to any extension being provided," he said.

Shewell said the Pennsylvania school boards have until May 30 to decide whether they will participate in the property tax relief program offered by Act 72, but within the next 10 days they will be filing a lawsuit to extend this deadline.

"It's about seeking more time to make better decisions," he said.

But before any school receives state money from the slot machines, Nick Hays, spokesman for the Pennsylvania Gaming Control Board, said schools need to wait until the board issues gaming licenses, which is scheduled for December 2005.

Gaming revenue will be distributed once the revenues equal $900 million, with $400 million going to a reserve fund and $500 million being distributed, Shewell said.

The State College Area school board appointed a citizens' advisory committee to study the act.

"The recommendation of the citizens' advisory committee is that the board does not participate," said Patricia Best, State College Area School District superintendent.

Stephanie Weyant, spokeswoman for the Pennsylvania Department of Revenue, said the department estimated there would be $1 billion in property tax relief, with an average savings of $330 per household.

Herman said homeowners are in need of property tax relief.

"The greater issue is it's getting harder to own and maintain their homes as property taxes increase," he said.

Herman added that he opposed slot machines in Pennsylvania, but supports the use of the money from the slot machines.

"I thought an appropriate use of those dollars would be for property tax relief," he said.

Esli Feliz, a recent Penn State graduate, said the school board needs to look at the effect of the legislation on renters. "[Act 72] will affect one group more than another," she said.

Best said the advisory committee cited uncertainty in the budgeting process, financial planning problems, and the increase in the local income tax as potential disadvantages.