Bridging the school funding gap
House bill would pay for tax loss from Pottstown Hospital sale
POTTSTOWN » In addition to co-sponsoring a bill that would speed up the implementation of the fair funding formula and generate more state aid for Pottstown schools, state Rep. Tim Hennessey, R-26th Dist., has proposed another bill aimed at filling school district budget gaps.
His bill specifically addresses the tax revenue losses experienced “when a for-profit hospital sells its institution to a nonprofit.”
Locally, six Community Health Systems hospitals were sold to Tower Health last year and one of them was Pottstown Hospital and another was Phoenixville Hospital.
Phoenixville is fighting Tower’s tax-free status in court and so has yet to realize any tax loss. But the assessment board in Montgomery County granted Tower tax-free status in Pottstown.
That resulted in an annual property tax loss of $970,000 for Pottstown School District.
That’s more than half the $2.4 million budget gap now facing the school board as it considers a $63 million budget that could raise taxes by as much as 3.5 percent to fill the gap — the first tax hike in four years.
“The Pottstown School District is already hugely disadvantaged by the delay in fully implementing the Fair Funding Formula, to the tune of $13 million
each year. The additional loss of nearly $1 million is crippling,” Hennessey said.
To cover the loss sustained each year by these school districts, the bill would create a standalone account within the General Fund, according to a release issued by Hennessey’s office.
Money for the account would come from the current tax revenues, which would be transferred to the account and would be in addition to the new money distributed by the fair funding formula. A school district would no longer receive the ongoing subsidy if and when the building is returned to a
“The single greatest factor in this year’s school district budget is the sudden and perpetual loss of tax revenue from Pottstown Hospital.” Stephen Rodriguez, Pottstown Schools Superintendent
tax-paying status.
“The single greatest factor in this year’s school district budget is the sudden and perpetual loss of tax revenue from Pottstown Hospital, which is just under $1 million,” according to Pottstown Superintendent Stephen Rodriguez. “Students and staff will be negatively affected, and so will taxpayers who have to try and make up the difference.
“While our school districts do not have a say in the property transfers and
significant loss of tax revenue, we can help protect them from the adverse consequences,” said state Rep. Tom Quigley, R-146th Dist., who co-sponsored the bill and also represents Pottstown in Harrisburg.
“It is great to see our legislative representatives facing this problem with us and coming up with a solution that helps students and taxpayers alike,” said Rodriguez. “If this becomes law, it will surely have an impact on all of Pottstown for years to come.”
It’s chances of becoming law are less clear, given that unlike the fair funding legislation Hennessey and Quigley co-sponsored, this bill does not yet have a twin in the state Senate.
Marc Stier, executive director of the Pennsylvania
Budget and Policy Center, who spoke at a fair education funding rally at Pottstown High School Thursday, indicated the need for this bill illustrates the broader problems with how dependent Pennsylvania public schools are on local real estate taxes.
“Your school budget should not change overnight just because your hospital was purchased by a non-profit,” he said.
Of course, the sale of the hospital to Tower Health also meant a tax loss to the borough — a $235,000 revenue loss that was part of the reason for borough council’s unpopular vote to raise taxes by 12 percent.
However, Hennessey’s announcement makes no mention of plugging the borough’s loss.