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WILKES-BARRE — The discussion over school property taxes will be front and center in 2017 and local legislators feel the time has come for the passage of Senate Bill 76, which would eliminate school property taxes entirely and replace them with other revenue streams.
“Momentum to eliminate school property taxes is reaching a critical mass in Harrisburg as the number of legislators and taxpayer advocacy groups pushing for the passage of Senate Bill 76 grow in numbers,” said Sen. John Yudichak, D-Plymouth Township. “We need to rid Pennsylvania of a school property tax system that punishes taxpayers who can least avoid it and shortchanges our children by not fairly and adequately funding education.”
Across the aisle, Sen. Lisa Baker agrees that it seems likely there are now sufficient votes in the Senate to ensure passage of the bill.
“This will be a crucial step forward for reform hopes,” Baker, R-Lehman Township, said. “The troubling inequities and the incurable imperfections in the property tax system warrant another vote on eliminating property taxes as the primary means of funding education.”
Baker said the “unrelenting advocacy” of so many taxpayer advocates in the Luzerne County area for more than a decade must be credited for raising this issue from improbable to high priority.
“The legislation has undergone constant refinement each legislative session and has become, in the judgment of many, much more viable and workable as a result,” Baker said.
Should property taxes be eliminated, it would mean shifting about $14 billion in taxes from property owners and businesses to Pennsylvania consumers and workers through sales and personal income taxes.
An Associated Press analysis of state data found that more than 70 percent of school property taxes were collected by the wealthiest half of school districts in 2014-15.
Sen. David Argall, R-Schuylkill, said he will introduce the proposal, which would increase the income tax rate by 60 percent and hike the state sales tax rate by 17 percent, while applying it to a wider range of goods and services, such as groceries, clothing, basic TV, and funeral services.
According to an Associated Press story, Argall said he will reintroduce the bill in the two-year session that began Tuesday. It would allow the collection of school property taxes only to retire current debt, would give districts an inflationary aid increase annually and would require voter approval for school boards seeking a local income tax increase.
Argall said he has discussed eliminating school property taxes with Democratic Gov. Tom Wolf’s administration.
Wolf campaigned in 2014 as a proponent of reducing property taxes, in part to narrow the wide disparity between wealthy and poor school districts. To date, Wolf hasn’t endorsed a plan to eliminate property taxes.
If Argall’s legislation makes it through the Senate, it is unclear whether it will pass the House. A Republican plan the House approved in 2015 was designed to reduce property taxes by about $4 billion, but Democrats said the bill would have helped wealthier, not poorer, districts, and it died in the Senate.
State Rep. Mike Carroll, D-Avoca, said he would welcome the upcoming policy discussion on property tax relief for homeowners. Like many other state policies, Carroll said a re-examination of how public schools are funded is long overdue.
“I have always supported an increase in income and sales taxes for reductions in property taxes on a family’s primary residence,” Carroll said. “Because I have serious concerns related to increased income and sales taxes for a reduction of property taxes on commercial, vacation and rental properties, I believe we should focus our attention on a significant tax reduction for the primary residence of Pennsylvanians.”
Republican Rep. Aaron Kaufer of Kingston said now more than ever, leadership is needed from Wolf to push the issue and to stand with the taxpayers of Pennsylvania.
“Members of the House of Representatives, especially Democrat members, need to know that this is not a symbolic vote, but rather a major policy overhaul that will become law if we get the votes together in the House,” Kaufer said. “I am not sure whether the House of Representatives has the votes to pass such a bill or not, but with leadership from the governor, we would be more likely to get something done.”
Rep. Karen Boback, R-Harveys Lake, said she has been a strong proponent of school property tax elimination for more than a decade.
“Slowly but surely, more members have begun supporting this cause, and I am looking forward to voting for House Bill/Senate Bill 76 this session,” Boback said.
Boback said in order to become law, it is important to note that a majority of House and Senate members to support the legislation is needed, as well as the signature of the governor.
“The majority of constituents I’ve spoken with are supportive of the bill’s tenets which include sales tax expansion and a nominal increase in the personal income tax in order to completely eliminate school property taxes for once and for all,” Boback said.
The AP story notes that school property tax collections this fiscal year likely will amount to $13 billion to $14 billion.
Argall’s legislation would:
• Increase the state’s income tax rate to 4.95 percent, from 3.07 percent, providing an estimated $5 billion.
• Someone earning $50,000 a year in taxable income would see their state income taxes go from $1,535 to $2,475.
• The remainder of the difference would come from increasing the state sales tax rate to 7 percent from 6 percent and eliminating exemptions on many transactions, including groceries, clothing and shoes; legal, accounting and financial services; dry cleaning; funeral services; salon services; basic television services; trash pickup; liquor and beer by the drink; non-prescription drugs; and tickets to sporting events, concerts and other events.
