Property tax elimination bill is back in business in PA

By Timothy Reilly, for the Times

Is the property tax a relic of the past or a necessary tool to secure the financial future of the school system? A budget battle is brewing again in Harrisburg to address this fundamental question.

For state Sen. David Argall (R-Schuylkill/Berks), the answer is simple.

“Based on the overwhelming majority of my constituents, there is no issue more important than ridding taxpayers of this 1830s method of taxation,” he said in an email correspondence.

Argall plans to introduce legislation in the Senate to eliminate the property tax. The bill, christened SB 76 in the upper chamber, will replace the revenue collected from local property assessments with increases to the state income tax and sales tax.

The list of items eligible for the sales tax will also expand. The bill has drawn bipartisan support, garnering sponsors from both sides of the aisle.

This is not the first time SB 76 and its companion in the House of Representatives, HB 76, also known as the Property Tax Independence Act, have been considered by the state legislature.

Argall noted he’s introduced the bill multiple times. Most recently, the bill was narrowly defeated in the Senate in 2015. Lt. Gov. Mike Stack cast the deciding vote that doomed the legislation.

In 2013, an amendment to the Optional Property Tax Act, or OPTEA, was proposed. The amendment also called for the elimination of property taxes. The vote came on the heels of a report from the nonpartisan Pennsylvania Independent Fiscal Office projecting a $1 billion shortfall within four years if HB 76 passed.

OPTEA, which passed the state House of Representatives, was later defeated in the Senate.

This time, however, Argall believes that the new composition of the Senate, which includes two freshmen who campaigned on the issue, will give him the votes he needs for passage.

The bill was authored in collaboration with a citizens group known as the Pennsylvania Coalition of Taxpayer Associations.

David Baldinger, one of the citizen advocates supporting the reform, manages the Pennsylvania Taxpayers Cyber Coalition website.

“The enactment of 76 is going to change the entire paradigm,” Baldinger asserted, calling the legislation “a catalyst for change.”

The burden of addressing the underfunded pension system, for instance, will shift from local school boards to Harrisburg.

The proposal has drawn its share of critics, including the Pennsylvania School Boards Association.

In its view, “school districts will be forced into a system that lacks financial equity and predictability, and robs them of local control.”

Not so, says Baldinger.

“The only local control lost is the ability of school board members to raise taxes at will,” he said.

Baldinger cited another report from the Pennsylvania Independent Fiscal Office that revealed school property taxes have increased at a rate of 146 percent since 1993-94, far outpacing inflation.

The reform measure purports to fund each school district at its current level, replacing dollar-for-dollar the revenue that was collected through property assessments. Future increases in funding will be tied to consumer economic activity.

Local school boards would retain the ability to impose income tax increases for projects such as school construction. They will need to disclose the details of the proposal and secure the approval of voters in a ballot referendum.

Moreover, most school districts will need to continue assessing some level of school property tax for years to come in order to service outstanding debt. Nevertheless, Baldinger reports on his website that the average statewide reduction in property tax will register at 90 percent.

“It’s killing the housing market in Pennsylvania,” he observed of school property taxes.

Baldinger forecasts a housing boom if the legislation is passed.

The property tax debate has also been hashed out in Lower Bucks County. Sam Lee, currently the Bensalem School District superintendent, also addressed the Property Tax Independence Act during his years as superintendent for nearby Bristol Township.

“As a homeowner and community member, it sounds appealing, but with all legislation the devil’s in the details,” he said in a phone interview last week.

Back in 2013, the issue was a hot one in Bristol Township when HB 76 and the OPTEA amendment were in play.

According to Lee, many residents in Bristol felt the sting of property tax increases perhaps more acutely than homeowners in more affluent districts like Council Rock or Central Bucks.

That wasn’t necessarily because the taxes were much higher, he stressed. In fact, those other districts relied much more on local funding than townships like Bristol.

However, in Bristol, the tax obligation-to-income ratio was higher, meaning a smaller tax burden takes up more of the average person’s paycheck.

Meanwhile, a township like Bensalem derives a significant amount of revenue from commercial properties. If the state were to switch to a sales and income tax model, that burden would likely shift to consumers and homeowners.

“The problems are real, and that’s awful,” said Lee of the hardships property tax increases can bring to homeowners. “We understand and are sensitive to the burden, and are grateful for the community’s support of our children.”

There’s also the possibility that the state, which already faces budget problems, couldn’t match current revenue, especially if there’s a downturn in the economy or if schools are faced with new mandates or other expenses, noted Lee.

Elsewhere, state Rep. Perry Warren, who serves the 31st District in Lower Bucks County, remains uncommitted with respect to the proposal. In an emailed statement, he supported the concept of reducing the “sometimes disproportionate burden of property taxes.”

However, in considering reform measures, Warren stated that “we need to do it in a way that won’t hurt working, middle-class families. We also need to do it in a way that doesn’t hurt the children in our public schools, and we need to ensure that corporations are paying their fair share.”

Warren’s comments hint at a potential stumbling block for proponents of school property tax elimination. The state Constitution prevents lawmakers from eliminating property taxes on homes while retaining them for businesses. If the tax is to be erased, it must disappear entirely.

Baldinger had a different view of the issue.

“Businesses don’t pay taxes. People pay taxes,” he observed, noting that property taxes are expenses that companies pass on to the consumer.

Furthermore, Baldinger believes that the elimination of property taxes will end the cycle of lawmakers supplying tax abatements to entice businesses to set up their operations in the state.

Gov. Tom Wolf will deliver his budget proposal in February. Sen. Argall will likely introduce SB 76 during the ensuing budget negotiations.

20 thoughts on “Property tax elimination bill is back in business in PA

  1. Property tax elimination is a pipe dream. Every state that has tried this strategy has drastically damaged their school systems. PA is antiquated as a state overall, not just on property taxes. These same people (seniors) yelling about not being able to afford to pay property taxes likely have used the public school system to their benefit and now want to stick the bill to the rest of us working citizens with young children. It’s not our fault that huge numbers of seniors in this state failed to properly financially plan for retirement. They’ll all be gone in 10-15 years and the working class AND OUR CHILDREN will be stuck with THEIR bill. Major. Fail.

    • I have paid significant property taxes all my life. I had one child. There are many children who’s parents or guardian didn’t pay a dime in property taxes they got the same education my child received. Property taxes should be illegal, if someone can’t pay their property taxes, the state will take their property and sell it for the unpaid taxes, I know because I have bought tax leans. After two years you can take that property legally. Did Schumer cry for Colleen Hufford’s family, you know cause a Muslim chopped her head off at work in Oklahoma?
      Did he cry for the 4 Americans left to die in Benghazi?
      Did he cry for the 50+ executed in Orlando?
      Did he cry for the murdered soldiers at Ft. Hood?
      Did he cry for those who were killed and maimed at the Boston Marathon?
      Did he cry for those killed in San Bernadino?
      His pandering pales to Hillary Clinton, what a worthless POS!! system. Schools should be funded by every citizen of the state. Last thing, I never chose to foreclose any of those tax line property’s.

    • SB76 is by far the best solution to the heinous SD property tax that is rising annually much faster than inflation or average weekly wage gains. It is slowly bankrupting the taxpayer and the entire state. Like PTCC on FB to join the more than 11,000 folks supporting this bill and spreading the word.

  2. While the idea of eliminating business and personal property income taxes sounds appealing, one must realize that taking away one tax will only raise other taxes. This is evident in this situation because our sales taxes WILL go up. Believe me, our taxes will be paid one way or another. I doubt any of us will pay a dime less overall under this proposed legislation. Additionally, does it not scare the supporters of SB76 that, by eliminating property taxes, power that is supposed to be LOCAL is now shifted to Harrisburg? School board members are ELECTED officials and they are beholden to their constituents who live in their district. What power will our local school boards hold if Harrisburg holds the purse strings? Is this not a prime example of taxation without representation at the local level? I challenge anyone who thinks it is difficult to make a local impact with their school board to try to make an impact with the politicians in Harrisburg. You have a much better chance of having your voice heard locally than with the spineless politicians (Republican and Democrat) in our capitol.

    • 1) Under 76, consumers would pay one additional cent for every dollar spent on taxable items and income would be reduced less than two cents for every dollar earned. 2) 76 would enable true transparency of school district budgets. In fact, local taxpayers will gain far more control within their school districts via a no-exception ballot referendum. Requests for additional revenue from school districts (via a local EIT or PIT only) must be approved by taxpayers. The only thing eliminated is the ability of school boards to just ignore taxpayers. Plainly spoken, if your school district wants a college like sports complex they will have to fully explain their needs to you, the taxpayer. Finally, taxpayers would have the final say in funding said college like sports complex. 3) Under 76, all revenue collected goes into an account totally separate from the General Fund called the Education Stabilization Fund. For example, a budget stalemate will have absolutely zero affect on this revenue and is free from the bonds of political gamesmanship. The Education Stabilization Fund does exactly what the name implies – it enables school districts to budget more precisely based on a constant and stable flow of quarterly payments from a funding source unencumbered by the politics of Harrisburg.

    • Everybody buys stuff, everybody pays. I know a few people with children in the school system that don’t pay a dime of property tax. Yet, I have no children and I pay a fortune. I have no kids to take care of me in my old age, that money I’m paying for your children’s future needs to go into mine. Unless of coourse, those kids who’s education I funded are going to come and take care of me. I doubt that, they can’t even push a snow shovel.

  3. I have never heard such nonsense in my entire life. If taxing ones property is the only way to fund our school districts, why not eliminate all other taxes and let home owners pay for all taxes. After all that would give local government a way to fund what their residents want without any State Government involvement. Sounds silly doesn’t it and that is because it is. There is no fairness when one funds any services needed for local school districts by taxing one group of citizens.

    • Nicely stated Douglas. If it were my decision, school tax would be a Per Capita tax. The more kids you have the more you pay. Can’t afford that? We’ll, I’d like to own a Giraffe, but I can’t afford one, so guess what? I don’t have a giraffe. I also don’t have kids. Those using the school system should be grateful I’m paying any tax at all. Thanks to me you pay less and my neighbor’s kid can drive a BMW to high school..

  4. Pingback: Bucks school officials talk property tax elimination bill, state budget concerns | The Midweek Wire

  5. This doesn’t sound like a solid solution to me. I am a new homeowner and I’d MUCH rather pay my property taxes than more income tax and sales tax on food! What happened to the oil companies paying for PA schools??? See, I did research before I bought my house and I was aware of property taxes. Seems you folks don’t want to pay your fair share. Education not that important, eh? Isn’t that line of thinking how 25% of the country elected the current president?

    HB 76 will help corporations and gee, they really don’t need any MORE help. And you seniors, most of my paycheck goes to Medicare and SS that I may never see. So if you want to cut property taxes an destroy public schools, let me stop paying for your pills and enemas. Quit whining, you should have prepared for your retirements. And don’t you have the lotto also? Whiners. Your generation did nothing to help America. You destroyed the environment and leave a mess for everyone after you.

    Now, you don’t want to pay for kids to be educated? I guess you’d rather pay for them to be in jail or unemployed later in life (but I guess you won’t be alive so who cares, right?) Guess what? I bet that many childless people probably paid for your public education so why shouldn’t you pay too?

    Unbelievable! Sounds like most of you probably voted for Trump too and believe his “promises.” Wake up folks – this bill will hurt PA families. Aren’t you the family values crowd? Or is that just for show when it means keeping whites separate from “others?”

    • Depends on how much you pay for property tax. Did you actually do the math? Maybe your property tax is affordable now, But mine has increased from $2,500 a year to almost $7,000 a year since 1995. I will still be paying $2,500 a year in school tax with the new system. Since I never had any children, I think $2,500 is fair.

      So far I have paid well over $100,000 into the public school system. Remember, no kids. That money sure would have been nice to save for my retirement. Instead some kid I don’t know made it to the 5th grade, because that’s how far the money goes. $17,000 per year per kid in my school district.

      Do you realize 98% of the businesses in Pennsylvania are small business? There really isn’t many mega conglomerations here any more. The tax break will help, I know, I ran a small business for 20 years. The money wouldn’t have gone into my pocket, it would have gone towards improving the business or my employee benefits.

      • I can’t understand how this thing ever got approved in the 1st place. This School Property Tax needs to be set on fire ASAP. It’s obviously unfair and the way they keep jacking up these taxes every year is crazy unbelievable. What a bunch of greedy insensitive pigs they are. It’s disgusting. Everyone should be paying which will lower the average amount per person.

    • You are just an uninformed person …76 is the only way to go!!! Education is important but public education has become salaries and retirement in this state, which burdens us home owners. Their relentless thirst on tax payer monies.

  6. Pingback: Pennsylvania: No School Property Tax for the Rich, Poor Still Pay | gadflyonthewallblog

  7. I never could have children but I have paid taxes for ever , ! Why, I don’t get it ,why should I have to pay these taxes when I have no children in school?

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