Pols, advocates debate property tax relief efforts

UPPER DARBY » In a state where about two-thirds of public school budgets are funded by local taxpayers, homeowners in Delaware County have long griped that they pay too much in taxes to educate the children that reside in their districts.

Some see a solution in Senate Bill 76, which would eliminate property taxes but increase other state taxes to fully fund all public schools.

The bill’s sponsor, Sen. David Argall, R-29 of Schuylkill County, had a bipartisan roundtable discussion with over a dozen other lawmakers, agency leaders and community advocates in Upper Darby on Tuesday night to delve deeper into the 155-page bill, also known as the Property Tax Independence Act. The attendees brought praise, questions and concerns on the bill to each other and the public to develop a “solution to terribly unfair school property taxes” in the state.

“We may disagree on how we achieve on the ultimate goal of fixing our school property tax problem,” said Argall at the roundtable opening. “Tonight, we’re here to learn about solutions. Don’t just tell us what’s wrong with the plan, give us some alternative solutions.”

The revenue neutral bill will gut property taxes for homeowners to fund operational budgets for schools, which could find savings in the county anywhere from $1,800 (in Marple Newtown) to $4,500 (in William Penn) per $100,000 of the assessed value of a property. To make up for it, sales tax would increase 7 percent and the personal income tax would increase to 4.95 percent, rates that currently sit at 6 and 3.07, respectively. Expanding what goods and services would then be subject to the sales tax would also be included. Funds collected through the raised taxes would go directly into a education stabilization fund.

Boltz noted that a sales tax was created in 1954 by the state as a revenue source to fund public education, initially levied at 1 percent and expanding to its current rate of 6 percent in the late 1960s.

However, a property tax will remain for districts that have any outstanding debts incurred before the bill becomes law. But homeowners would see an average 82 percent decrease in their tax bill until the debts are eliminated. No new debts could be incurred until old debts are paid off. School boards would also be allowed to raise the local personal/earned income tax through voter referendum only to fund specific projects or programs. That levy would be voted on every four years.

The state’s basic education subsidy would remain intact.

The state will hold the purse strings that would forward fund dollar-for-dollar to a district what they would receive from current property taxes with annual increases based on the lesser of the average weekly wage growth or inflationary indexes.

Panelist Ron Boltz of the PA Coalition of Taxpayer Associations said the current system is antiquated since the rate of property taxes outpaces the average weekly wage growth and consumer price index and that property taxes is an unstable money stream.

“We have to fund public education. It is a constitutionally mandated obligation that we have as citizens,” he said. “It’s also a moral obligation; we have to do it … There is no other tax that we have like the property tax. What else do we have that taxes the exact same thing year after year; a tax that relentlessly rises at a much faster rate than our incomes and inflation?

“Show me another tax that will leave you homeless. There isn’t one, and continuing this injustice is absolutely unacceptable.”

Boltz noted that there were 10,000 sheriff sales in the commonwealth in one year due to failure to pay taxes.

He furthered asserted that replacing the system was a strong economic driver for the state which has been ranking near the bottom in the nation for bringing in new business firms and watching them mature. Boltz asserted that eliminating the school real estate tax would make the state more attractive to businesses to call their home and provide a more attractive housing stock with the potential for an increase in market value.

With the potential thousands of dollars homeowners would save on their tax bills, money would go back into the economy through disposable income.

The state Independent Fiscal Office gave its analysis on such a plan and had said that the sales and personal income tax increases would “more than off-set a reduction in property taxes.”

In a room filled with a lot of their constituents who are in favor of SB 76, state Sens. Tom Killion, R-9 of Middletown, and Tom McGarrigle, R-26 of Springfield, declared they were not in favor of the bill in its current iteration.

“I think increasing sales taxes … the people in my district would be paying more taxes, it’s a tax shift,” McGarrigle said. “We need to make it fair, and if we get a fair share then we would have real property tax relief in the county.”

McGarrigle would further proclaim that 40 percent of the state’s collected taxes come from five counties, Delco included.

“We’re already paying a majority of the bills and for us to send more money to Harrisburg and hope we get our fair share. I just don’t see it happening,” he added.

Resident Joanne Yurchak was opposed to the bill, calling the Harrisburg bureaucracy as the sole arbiter for the collection and distribution of education fund to school districts as “sheer lunacy.”

“School board members, locally elected by their communities to make the important decisions about how to run, operate and fund their district schools, will be rendered useless,” said Yurchak. “Under property tax elimination, Harrisburg becomes the de facto school board for 500 school districts.”

Boltz said school districts will still be in control because it doesn’t restrict districts with how they spend the money, and only eliminates a simple majority of the board to raise taxes. State control of the funds would prevent any potential for a district to overspend, according to Boltz.

From a school board perspective, Haverford School Director Larry Feinberg called property taxes odious and said that education funding is a complex issue throughout the nation. Feinberg made his own selfassessed “unpopular” suggestion on how to solve the education funding problem.

“Two years ago the Legislature did a fantastic job in coming up with a basic education funding formula: Fund the formula. Raise the money, make tough decisions,” said Feinberg. “If the state funded education at the level that it’s supposed to, we wouldn’t be killing our local property taxpayers.