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Pension, property tax hurting us

Published August 29. 2014 04:00PM

Pennsylvania lawmakers are no strangers to pension and property tax reform.

The two issues dominated discussion again Wednesday night during a Pennsylvania School Boards Association legislative meeting in Lehighton.

The 90-minute session drew around 45 board members, superintendents and business managers from school districts in Carbon County.

Attendees on the legislative side included state Rep. Doyle Heffley, R-122; Bill Richards, legislative aide for state Sen. John Yudichak, D-14; William Hanley, staff member for U.S. Rep. Matthew Cartwright, D-17; and Vincent Kunderik, staff member of U.S. Rep. Lou Barletta, R-11.

"I have to commend all the personnel in the five Carbon County school districts on educating our legislators on the problems we face and thank the legislators for listening," said Rocky Ahner, Lehighton Area School District board member. "It's damaging to our districts when we lose or receive a portion of money allocated due to stipulations and unfunded mandates."

Unfunded liability for the state and school employees' retirement systems has eclipsed $50 million. Moody's recently downgraded the state's general obligation with the pension crisis stated as a key catalyst for the decision.

Gov. Tom Corbett has historically backed a proposal by state Rep. Michael Tobash, R-125, that would create a mandatory savings plan, similar to a 401(k) fund, for new public employees.

"We support a hybrid plan where new employees would see maybe their first $50,000 go to a defined benefit package and then a 401k savings plan for anything above that," Heffley said. "It's a good plan that would save between $11 and $16 billion over 20 or 25 years, but it won't get us where we need to be long-term. Something needs to be done."

Under the current system, according to Heffley, per pupil spending would need to increase by $2,000 across the state just to fund pensions. If nothing is done in 30 years, Richards added, every household in Pennsylvania would need to pay around $1,500 to fund the system.

Other proposals have suggested floating a bond and putting that money into the pension fund.

"That is a very risky proposition," Heffley said. "Right now, the estimate at $50 billion is on a 7.5 percent rate of return. If you have even a half a percentage point reduction in that rate of return, you're looking at billions of dollars additional. I think it's risky to take that bond."

Irene Genther, a Panther Valley School Board member, called the comparison of home sales in Carbon and Schuylkill counties an "inequitable situation," and pointed to property taxes as the driving force behind it.

"We have a school district that straddles both counties and I can tell you that people are not buying homes in Carbon because of the high property taxes," she said.

Richards said property taxes are "one of the biggest problems we face in the state right now."

"We're all for property tax reform, but the problem is that isn't the consensus across the state," he said. "The lawmakers in Philadelphia could care less that people in Carbon can't pay their taxes. In Potter County, people are paying $600 to $700 in property taxes. They don't want to see reform like we do."

Similar to the pension crisis, numerous property tax reform bills are locked up in Harrisburg. Stuck at the committee level is Senate Bill 76, which would eliminate property taxes and raise the sales and personal income tax.

"It has to be a dollar-for-dollar tax shift if we're going to do any type of plan," Heffley said. "Again, we support it because property taxes are crippling our region. People are moving out and areas are becoming blighted because of it. But the last time we voted on this, we didn't get a single vote out of Philadelphia."

Richards said the vote for reform is getting closer in the Senate.

"We went from a 12- or 14-vote disparity to only a 3 or 4-vote difference," he said. "We're getting there, but we need the House to come through as well."

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