PA Budget Twist: Attack on School Property Tax

HB76_560

Reposted from Philly.com:

It might be a wake-up call to anyone expecting a smooth path to a final state budget.

Senate Republicans plan to vote next week on a proposal to eliminate property taxes as a source of school revenue and replace them with hikes in the sales and personal income taxes. And the bill’s key sponsor says he has support from both parties.

“You don’t reform property taxes,” Sen. David Argall (R., Berks) said Wednesday. “The only solution is to eliminate them.”

Even if his measure fails, its emergence could signal cracks in the tentative $30 billion budget deal Gov. Wolf and Republican legislative leaders touted last week. Neither side has offered details, but both said the plan they hope to finalize by early next month will include a 1.25 percent increase in the state sales tax, changes to the liquor and pension systems, and a reduction in property taxes.

But all that does nothing, Argall and others say, to stop school boards from raising taxes in future years.For him and his 21 cosponsors, including seven Democrats, the issue is not so much about passing a budget, but permanently changing how Pennsylvania funds its schools. They say the current system, based on sometimes outdated and illogical assessments, is a relic.

“It’s based on, how big is your house? When did you buy it? How big is your lot? Did you remember to paint your door last year? I mean, that’s crazy,” Argall said.

Wolf’s office declined to comment on the bill, saying only that it was not part of the framework agreed upon with Republican leaders.

Property taxes generate about $12 billion for public schools statewide each a year. The bill would generate the same funding, supporters say, by increasing the sales tax from 6 percent to 7 percent, expanding the number of taxable items, and hiking the income tax from 3.07 percent to 4.34 percent.

Underscoring the bipartisan nature of the bill is Sen. Lisa Boscola (D., Northampton), who believes the current dependence on property taxes places the school-funding burden on too few people.

“When you go to a sales tax [funding stream], you get more people paying into the system,” she said.

Senate Majority Leader Jake Corman (R., Centre) has not said how he may vote, in part because he doesn’t want to sway undecided legislators, spokeswoman Jennifer Kocher said.

She said a vote before Thanksgiving was expected, partly because GOP caucus members “have been asking for it for some time.” … Continue reading →


Tim’s Thoughts on SB 76

I have written about the Property Tax Independence Act many times over the years, but you may want to also read PA HB/SB 76: Octorara vs ‘Property Tax Independence Act’.

Why do I support SB 76?

  • School taxes will no longer be placed on the shoulders of the few.
  • The amount paid in school taxes will more reflect what a person can afford.
    • Those who earn more pay more.
    • Those who consume more will pay more.
  • School taxes will no longer force people from their homes..
  • The grandmother who purchased her home 40 years ago, and now is paying more in taxes than her whole original mortgage, no longer has to choose between paying taxes or buying food and medicine.
  • More young families will be able to afford buying their first home,School property taxes will no longer be a factor in calculating a monthly mortgage payment.
  • There will no longer be a tax shift from farmers to other property owners.
  • School boards will be forced to become more prudent with spending.

The Property Tax Independence Act is not a great solution, but it is the best solution that anyone has been able to come up with. The whole reason this is even being considered is because many school boards, across Pennsylvania, have been shown to be irresponsible with spending… and I think we can all cite examples of Octorara doing the same.

If this passes, we all need to send John McCartney, a former Octorara Area School Board Director, a note of appreciation. McCartney has worked for years with Chester Lancaster Anti-School Tax Assoc. (CLASTA) and Pennsylvania Coalition of Taxpayers Assoc. (PCTA).

5 thoughts on “PA Budget Twist: Attack on School Property Tax

  1. I totally support this Bill and have for some time. I find it interesting that Sen. Corman says he doesn’t want to sway the vote of others. He is the Senate Majority “Leader” for heaven sake. Isn’t a leader’s job to get the votes necessary to do what is right? This is a big part of our problem with governance in PA. We have a vacuum in leadership! I assume that since Governor Wolf is not in favor of this Bill he could veto it and then we are back to square one. I do not like a hybrid of continuing property tax and increasing sales tax. This should have been voted on months ago, just like the budget.

  2. I think this is a very bad idea. This will allow the state to control the funding for the schools. Its already bad that we have to wait for the state to tell us how much money they will give us . Meanwhile the school board needs to find ways to fund the school system while they wait.

    This past year Philadelphia had a funding problem and the state had to give them more money to help out. Whats going to happen when the state has control over all school funding ? are they going to pick the philly schools over our local schools? We need to keep the tax money out of the hands of the state and keep it in the hands of the local school . Better yet back in the hands of the tax payer. In our area we do have high taxes and we over spend. If and when we learn to control our spending we will have a chance to lower our taxes. If the state takes control we will no longer be able to choose a tax rate to match our spending. We will have to change our spending to the wishes of the state.

  3. This bill taxes everyone not just homeowners and business owners this is a grand slam if the bill passes .Personally it should have been put to a referendum vote.

  4. I know you say that the local schools will have to change spending to adjust to the amount the state gives us, but this is exactly how we all do it. We get a pay check and we adjust our spending to how much we make. The local property tax allows schools to say we don’t make enough, so we’ll raise the taxes. The other BIG issue for us is the farm subsidy that the property owners have to pay for in Octorara. This makes our local taxes much higher than other districts without so much farm land. Then, down the road, the farmer sells her land for development (like Urban Outfitters in Gap), the developer gets a 10 year pass on taxes and the property owners loss on both accounts. Let’s keep in mind that the Governor’s plan is to raise sales tax AND keep the property tax and then force a voter referendum to allow schools to raise property taxes going forward. Right now, these are the two choices.

  5. Ten Reasons to Eliminate the School Property Tax

    A printer-friendly version of this entire page in Adobe Acrobat (PDF) format is available here. To ensure proper printing, please use Acrobat’s print icon instead of your browser’s “Print” command.

    WHY ELIMINATION INSTEAD OF RELIEF?

    Eliminating the oppressive school property tax has a result that almost everyone recognizes: To finally allow true homeownership for Pennsylvanians. But there are actually many more benefits to eliminating this onerous, antiquated tax.

    Those certain Harrisburg lawmakers who continue to tout ineffective, valueless property tax “relief” schemes like local tax shifts and small partial reductions to solve the problem are woefully oblivious to the damage property taxes are doing to Pennsylvania and the greater good that can come from total elimination. They need to remove their blinders and educate themselves about the real issues when considering how to deal with the property tax problem – it’s not just about property tax relief.

    Consider this:

    – More than ten thousand Pennsylvanians lose their homes to sheriff’s sales each year and many more are forced to sell to avoid having their home seized for non-payment of property taxes.

    – In many areas of the state, homes at the median sale price of $200,000 have property tax burdens of $10,000 or more annually. This makes these homes almost impossible to sell and is destroying the real estate market in these areas.

    – The American Legislative Exchange Council (ALEC) annually releases their “Rich States, Poor States” report that ranks states based on 15 factors of economic competitiveness. In the June, 2011 report Pennsylvania was ranked:

    • 41st in outmigration
    • 43rd in economic competitiveness
    • 46th in economic performance

    Antony Davies, professor of economics at Duquesne University, described these rankings as a symptom of increasing property taxes, which, along with increased income taxes, affects where young college graduates chose to move and live. Davies said, “They can go anywhere they want, so of course the states that are going to attract them on average are states with lower property taxes.” (PA Independent, June 21, 2011)

    Runaway property taxes are destroying Pennsylvania’s economy, driving away its residents, and are discouraging entrepreneurs from starting new businesses that would create jobs for Pennsylvanians.

    Here are ten well-considered reasons to eliminate the property tax that will benefit the lives of all Pennsylvanians and will help to make our Commonwealth an economic powerhouse and a great place to live, work, and raise a family.

    1. Achieve True Home Ownership
    You never really own your home as long as it can be taken from you for not paying your property taxes. You’re simply paying rent to the government under threat of eviction.

    2. Stabilize School Funding
    Many school districts are struggling with steep declines in property tax revenues as a result of assessment appeals by home and business owners. HB 76 and SB 76, The Property Tax Independence Act, creates a stable, predictable, equitable stream of revenue for K-12 education.

    3. Help Prevent Foreclosures
    Many homes that are in danger of being foreclosed could be saved with the elimination of the monthly property tax escrow that can amount to as much as 40% of a mortgage payment.

    4. Restore Plummeting Real Estate Values
    Because of excessively high property taxes, homes in some areas of Pennsylvania have sharply declined in value and have become almost impossible to sell. Eliminating the property tax will restore value and make these homes more attractive to buyers.

    5. Boost the Sagging Housing Market
    Elimination of the monthly property tax escrow payment will make homeownership more affordable, increasing both new and existing home sales.

    6. Attract Business to Pennsylvania
    Businesses are eager to establish a presence in states where the tax burden is low. Attracting business to Pennsylvania by eliminating the property tax can be a huge stimulus for the state’s economy.

    7. Generate Jobs for Pennsylvanians
    The second largest fixed cost for Pennsylvania business owners is the property tax. Many business owners have stated that the savings gained by the elimination of the property tax would enable them to hire more employees.

    8. Create a Massive Stimulus for Pennsylvania
    Homeowners pay about $10 billion annually in school property taxes. Returning that money to homeowners to spend as they please would create an organic, massive stimulus for Pennsylvania’s economy – one that would not subject the commonwealth to the borrowing and debt associated with typical government stimulus initiatives.

    9. Increase Personal Wealth
    A home purchase is a family’s largest investment. With increased home values and no property tax escrow to pay, homeowners will enjoy a significant boost in personal wealth and a much greater ability to invest in a brighter, more secure future for their families.

    10. Stop Costly Reassessments
    Abolishing the school property tax is the first step toward total property tax elimination. With no property tax, property assessments become a thing of the past. The average $10 million per county reassessment cost is eliminated and government spending – and the taxes needed to support it – is reduced.

    The standalone “Ten Reasons” list for distribution is available as a printer-friendly PDF document here.

    No Tax Should Have the Power to Leave You Homeless.
    Ptcc.us;Pennsylvania taxpayers cyber coalition

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