School property taxes

In a classic Star Trek episode Mr. Spock says to another Vulcan “It is not logical, but it is often true.” The situation with our Pennsylvania school tax is quite similar. Logically it is outdated and unfair and injurious to some tax payers. Truthfully, no one has come up with a solution which our legislature has been able to accept.

Currently under consideration are two quite different bills: SB and HB 76, and HB 1200.

The title of Senate and House Bill 76 is 114 words. The bills itself is 160 pages. From that anyone can see what we are up against. The current bill is a response to objections to the original bill, proposed several years ago. What it does not say is that the factory on the edge of a town that had been paying $20,000 in property tax will shift the tax to its employees. A worker earning half the Pennsylvania median income of $59,000 would pay about $540 in additional income tax. In total the bill provides approximately three billion dollars in tax saving for tax payers of commercial properties.

Senator Blake of the Lackawanna area says “The fact is, under SB76, lower income people in Pennsylvania will be paying much higher taxes to provide tax relief to more affluent property owners” (www.senatorblake.com).

To offset the loss of all school tax property revenue, the bill proposes an increase in the personal income tax to 4.95%, and an increase in sales tax from 6% to 7%. One important improvement in the current bill is that these new funds would be paid into an education fund. In the original bill the funds were placed in the general fund and doled out to the school districts by a formula chosen by the legislature.

If enacted, Senate and House Bill 76 would not really go into effect for several years. Almost all PA school districts have some debt from loans used for capital improvements. These loans must be paid back with property tax income, because the property tax was the surety pledge to the lenders for the loans. This means that property taxes will continue to be collected until the loans are paid off.

Pennsylvania House Bill 1200 takes a quite different approach to the school tax problem. The bill is only seven pages and the title is 89 words.

This bill would limit tax reform to homesteaders and farm homesteaders. Commercial properties would still be paying school taxes. “Homesteaders” is legal old-speak for owner occupied houses and farms. Each school district would add up the total tax appraised value of all such properties and multiply that sum by their currently established millage rate. Funds from an increase of 1.8% in personal income taxes would equal their former property tax income. This process has been enabled by the voters of PA who chose to amend their constitution to allow 100% homestead property tax exclusion.

However, as required by that process each school district would have to choose to buy in to the new program. It also means that each homesteader would have to apply in writing to have their property tax eliminated. Additionally, the way each district sets its millage rate would significantly affect its funding. There could develop an odd patchwork of tax relief and tax payers across the state.

It seems that HB 1200 in its clarity and simplicity might be intended as a platform for other members of the legislature to iron out the kinks and add language and provisions acceptable to all.

Last March, Ed Mahan, writing for the WHYY TV channel webpage wrote a well-researched article entitled “5 Reasons Why PA’s School Property Taxes are so Hard to Kill.” Here is my restatement of his ideas:

First, the increase in individual taxes is naturally unpopular. It is logical to spread tax burdens over large groups, unless you are one of the ‘new’ tax payers who did not think they were paying school tax before.

Second, the simple matter of changing peoples’ habits. Historically change is slow in Pennsylvania. Anybody who has paid attention to changing the liquor control laws might agree with that.

Third, all the bills (and there seem to be at least six others) are objected to by individual legislators or very influential groups.

Fourth, Governor Wolf favors some kind of school property tax relief, but he would not support any of the bills proposed so far.

Fifth, there is always the “will this cause me to be voted out of office?” consideration by all legislators. The necessary imposition of broad based tax increases might just move voters to reject the members who voted for the taxes.

Source: https://whyy.org/articles/five-reasons-pa-s-school-property-taxes-are-so-hard-to-kill/.

It seems that all of us should continue to ‘save up’ toward that day in August or September when we send in our annual school property tax checks.

R. B. Lasco is a retired school media specialist. He is a member of the Gettysburg Area Democracy for America Education Taskforce.