The state House of Representatives on Wednesday approved a property tax reform proposal that allows each school district to move at its own pace to replace property tax levies, dollar-for-dollar, with income and other taxes.
House members voted 149 to 46 to pass the proposal, HB 1189.
On Tuesday, the House rejected an amended version of the bill, proposed by Rep. Jim Cox, R-Berks. That amendment would have replaced school property taxes by phasing in increases in personal income and state sales taxes.
Locally, representatives Doyle Heffley, R-Carbon; Rosemary Brown, R-Monroe/Pike; and Julie Harhart, R-Lehigh/Northampton, voted in favor of HB 1189.
Representatives Jerry Knowles, R-Schuylkill; Mike Tobash, R-Schuylkill/Berks; Mario Scavello, R-Monroe; and Neal Goodman, D-Schuylkill, voted against the bill.
The bill now moves to the Senate for its consideration.
HB 1189, proposed by state Rep. Seth Grove, R-Dover, is also known as the Optional Property Tax Elimination Act.
"House Bill 1189 provides a multitude of options for school districts to deal with their property taxes," Grove said in a prepared statement late Wednesday. "In areas where the local populace is demanding elimination it eliminates. In areas where the local populous wants reductions it reduces. In areas that want to be left alone it allows them to keep the status quo. This flexibility is why House Bill 1189 will be successful. It does not mandate a one-size-fits-all fix. It allows local communities to choose their tax base.
"The legislation puts the power in the hands of individual school districts by using an elimination tax. It would consist of an Earned Income Tax, Business Privilege Tax, and Mercantile Tax, or any combination of those to eliminate or reduce property tax. This allows local districts to find the tax package that best fits the needs of their residents and schools," Grove said. He said that HB1189 is the "first part of a four-bill package to allow for the elimination of property taxes. The remaining three bills are expected to face third and final consideration when the House resumes session on Oct. 15."
School property taxes currently raise about $13 billion in revenue to fund basic education. The amendment sponsored by Cox would have phased out the property tax levy, replacing it by increasing the personal income tax by about 41 percent, from the current 3.07 percent to 4.34 percent. It would also increase the state sales tax from 6 cents per dollar to 7 cents per dollar, and extended the levy to include some currently exempt items.
On Tuesday, the House rejected the amendment by a 138-59 vote. Heffley, Brown, Harhart, Knowles, Scavello, Tobash and Goodman all voted in favor of the amendment.