HARRISBURG — While House Bill 76 sits in committee in the state legislature, its near identical version — Senate Bill 76 — may soon come to a vote as 24 senators have come out to support the bill that would eliminate school property taxes and increase the earned income and sales taxes.
State Rep. Phyllis Mundy, D-Kingston, is on record stating she sees flaws in the proposed legislation, but if it comes to the House floor for a vote, she will vote in favor of it.
“If the House Republican Majority brings it up for a vote, I will vote in favor of the bill because we must move this discussion forward, especially given the escalating property tax hikes caused by the $1 billion in education funding cuts made by Governor Corbett and the Republican-controlled House and Senate over the last three years,” Mundy said.
The veteran legislator said HB 76 is not a new approach; that similar bills have been introduced over the years and even have been voted on but never approved. Mundy says the approach taken in HB 76 can work, but she questions, given the diversity of Pennsylvania’s school districts, if it can muster 102 votes in the House, 26 in the Senate, and the governor’s signature?
To replace the lost revenue, Mundy said HB 76:
• Replaces it with existing gaming revenues.
• Increases the state Personal Income Tax by 1.27 percentage points (3.07 percent to 4.34 percent), which is a 41 percent increase.
• Increases the state Sales and Use Tax by 1 percentage point to 7 percent in some places, higher in others such as Philadelphia and Pittsburgh; and expands items and services that are taxed.
• Allows a local Personal or Earned (Wage) Tax, which is required to go through referendum and can be used for projects such as school construction.
Mundy said HB 76 has opposition from many areas, including business groups such as the American Institute of Architects, Insurance Federation of PA, National Federation of Independent Business, the Bar Association, the PA Chamber of Business and Industry, the Convenience Store Council, the Food Merchants Association, the Newspaper Association, the Restaurant Association, the Retailers Association and the Tavern Association, among others.
“Their goods or services would be subject to the sales and use tax for the first time,” Mundy said.
She also said that many legislators, even some of the bill’s co-sponsors, have concerns about eliminating property taxes on commercial and industrial property because it would shift and greatly increase the tax burden to individual taxpayers. Others, she said, have a long standing opposition to taxing food and clothing.
At a press conference in Butler Township last Tuesday, Gov. Tom Corbett said he has problems with how the bill’s estimated income for the state does not match the current property tax revenue.
“Any bill like that that comes through has to be at least revenue neutral,” Corbett said. “And my understanding of reviews of that bill so far is that it doesn’t bring you the sufficient revenue that we presently have in the system.”
Legislators offer input
• State Rep. Mike Carroll, D-Avoca: “I believe our state’s policy related to funding of our public schools can be dramatically improved with a reduced reliance on property taxes imposed on homesteads, which are replaced with income or sales tax increases.”
• State Sen. John Yudichak, D-Plymouth Township: “The Property Tax Independence Act recognizes the central role the Commonwealth plays in funding public education and develops a system that is both fair to taxpayers and sensible in its approach to funding our schools so no child is denied a quality education in Pennsylvania.”
• State Rep. Karen Boback, R-Harveys Lake: “I ask, what is the alternative? With people losing their homes across the state, now is the time to act on real reform.”
• State Sen. Lisa Baker, R-Lehman Township: “In addition to the elimination bills, there are proposals to freeze property taxes for senior citizens, so it is possible we will see action on that front as well.”
• State Rep. Eddie Day Pashinski, D-Wilkes-Barre: “Multibillion-dollar companies have the responsibility and the resources to pay their fair share. HB 76 would give Wal-Mart, Home Depot and huge companies like these a complete pass on property taxes which would then pass the burden of higher costs back on the very people we are trying to help.”
• State Rep. Tarah Toohil, R-Butler Township: “There is money out there and it needs to go toward relieving the property tax situation that is burdening our homeowners.”
• State Sen. John Blake, D-Archbald: “We need to be sure that we can raise sufficient revenue from sales or income tax to meet the cost of providing a quality public education for our children. And we need to be sure that the new income and sales taxes do not unduly punish working class families or undermine the economic competitiveness of the Commonwealth.
• State Rep. Gerald Mullery, D-Newport Township: “House Bill 76 and Senate Bill 76 are viable alternatives to the archaic system that currently funds public education.”