A bipartisan panel of lawmakers, school officials, real estate professionals and tax reform advocates gathered at Lehighton Borough hall Thursday to debate how to balance property tax relief with the financial needs of school districts.
One thing they agreed on was that something needs to be done, and the consensus seemed to be that House Bill/Senate Bill 76, which would eliminate property taxes and replace them, dollar-for-dollar, with higher sales and income levies, is the best method. Doing that would draw taxes from a much larger pool of people than only property owners, panelists said.
"We need to have this legislation enacted now, if we are to save Pennsylvania's homeowners and its economy," said David Baldinger, spokesman for the PA Coalition of Taxpayer Associations.
State sen. David G. Argall, R-29, who introduced the bill, said the Commonwealth "has never been this close" to property tax relief. But he cautioned the panel against complacency, saying there is still a lot of work to be done.
Argall needs only 26 more votes to move the proposal out of the Senate and on to the House for its vote. He has until the end of 2014, the current legislative session, to get the bill to Gov. Tom Corbett for signing. Argall said Corbett has said he would sign the bill if it gets to his desk.
However, Weatherly Area School District school director and Pennsylvania School Board Association liaison Gerard Grega, and Jim Thorpe Area School District Superintendent Barbara Conway pointed out that schools need to keep spending on a tight leash, and that funding has to be changed to accommodate factors that are outside local control, such as Special Education costs, and employee health care and pensions. The costs of those programs and benefits is high, and rising.
No political lines
The panel was unique in that it was composed of officials of both parties.
"In Washington, we've seen the inability of Republicans and Democrats to do anything together. I think here today we saw Republicans and Democrats working together. That's a good thing," Argall said.
The roundtable was called by the Senate Democratic Party committee at the request of state Sen. Lisa Boscola, D-18, and Sen. John Yudichak, D-14.
The panel included school superintendent Jonathan Cleaver of the Lehighton Area School District; Jim Thorpe school director Clement McGinley; county Controller Robert Crampsie; Lehighton school board president Rocky Ahner; Jim Zurn, president, Carbon County Association of Realtors; Kimberly Skumanick, president-elect, Pennsylvania Association of Realtors; Robert Kistler, also of the PA Coalition of Taxpayer Associations; state Sen. John Blake, D-22, Conway, Grega and Baldinger.
Senate Bill 76, sponsored by in the state Senate by Argall, who was also on the panel, and co-sponsored by Boscola and Yudichak, is now in the Senate Finance Committee.
The identical HB 76, is sponsored by state Rep. Jim Cox, R-129, and co-sponsored by 88 representatives, including Rosemary Brown, R-129; Mike Tobash, R-125; Neal Goodman, D-123; Jerry Knowles, R-124; Doyle Heffley, R-122, and Mario Scavello, R-176. The bill is currently in the House Finance Committee.
Out with system
The panelists agreed that the school property tax system has to go.
"Heavy reliance on school property taxes to fund education is antiquated, dysfunctional, and it's not working for our students or our taxpayers. Senate Bill and House Bill 76 totally eliminate school property taxes to go more toward an income and sales based tax, which is a broader base of people paying into the system. It's more fair, more equitable. It's the right way to go," Boscola said.
"Senate Bill 76, eliminating property taxes for homeowners across Pennsylvania, is good for education and it's good for the economy. It's the best way to tackle the two pressing issues that we have in Northeastern Pennsylvania: High unemployment and high property taxes," he said.
The push for property tax relief is growing fast as more Pennsylvanians reach retirement age and downsize their incomes. The state Independent Fiscal Office projects school property taxes to increase by 16 percent, or more than $2 billion to a total of $15.8 billion, within five years.
Delinquency on rise
Given a wobbly economy, a high unemployment rate, and record numbers of people reaching retirement age, many are struggling to pay their school tax.
Many, apparently, have lost the fight: State Rep. Cox has said that about 10,000 properties were seized last year alone for nonpayment of taxes.
Locally, delinquency rates are rising. For example, the Panther Valley School District has about $1.7 million in delinquent tax payments. Tamaqua Area School District has $1.5 million.
On Thursday, the panel discussed three current property tax relief proposals now working their way through the state legislature: HB/SB 76, which would replace property tax revenue, dollar-for-dollar, with revenue from increased sales and use taxes and a higher personal income tax rate; HB 1189, also known as the Optional Property Tax Elimination Act, sponsored by state Rep. Seth Grove, R-196, which would allow each school district to decide whether and how to replace its property tax, dollar-for-dollar, with increased earned income and other taxes.
Senate Bill 484, also known as the Senior Citizens' Property Tax Freeze Act, sponsored by Boscola, would keep real estate tax levy at current rates for those who are at least 65 years old, have lived in their own homes for at least five years, and have annual incomes below $65,000.
The state's 2006 plan to use gaming revenue to help offset school taxes, known as the Taxpayer Relief Act, also surfaced at the roundtable. The plan had been expected to raise some $1 billion for property tax relief. In the last fiscal year, the state reaped about $1.41 billion in gaming revenue taxes. of that about $611.5 million will be distributed to school districts to help offset tax bills.
But some people believe lawmakers are siphoning off slices of the gaming pie for things other than what the Taxpayer Relief Act was meant for: school property tax relief.
"What happened to the gaming revenue?" Crampsie said.
He said Pennsylvanians agreed to casinos in the state in the hope that revenues would help offset property taxes.
"I looked at my school property tax, and got a 15 percent homestead exemption. I know a lot of people are not happy with that percent. I know I'm not happy with that percent," he said.