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Mar 20, 2020

Pa. Property Tax Reform: For Real This Time?

By Peter N. Calcara, vice president – government relations


The Pennsylvania General Assembly wants to address the longstanding issue of property tax reform. This is not a recording.

Most public policy issues get addressed in some form or fashion, while others never seem to get resolved. A few (very few) meander from legislative session to session, never successfully, or even inadequately, addressed. School district consolidation is one of these issues. How many times have you heard someone say we have too many school districts in Pennsylvania (500)? State oversight of hard alcohol is another. Changes have been made to the manner in which Pennsylvanians can purchase beer and wine, but the state still has a firm grip on liquor stores and the sales process through the Liquor Control Board. The granddaddy of them all, though, is school property tax reform.

Pennsylvania Capitol in Harrisburg The issue predates my time in Harrisburg. In fact, I was a Senate staffer when Gov. Bob Casey’s local tax reform plan was approved by the General Assembly just before the clock wound down on the 1988 session. Voters ultimately rejected the plan in 1989, and the issue has lived on in the ether of legislative issues ever since. It has swung from being a front-burner issue to one that is sporadically talked about by a handful of legislators and interest groups. It seems to rise to the top of the issues heap in election years as one that many legislators campaign on (but soon forget).

In January 2020, Sen. Joseph Scarnati (R-Jefferson), the highest-ranking member in the chamber, breathed new life into the issue of school property tax reform. In his acceptance comments as president pro tempore of the Senate, Scarnati told the chamber that he would like to see the Senate take up property tax reform. He did not endorse any one plan, but acknowledged that tackling the issue would not be easy and would require “tough votes” from lawmakers.

So, where are we now?

Legislators do have a good running start at, perhaps once and for all, addressing the issue. You may be surprised to learn that a bipartisan, bicameral workgroup of legislators has been meeting since last August to review the issue of school property taxes. The group’s goal is to seek a consensus that could garner the necessary 102 votes in the state House, 26 votes in the state Senate, and the signature of the governor. The workgroup came up with five plans (summarized below) to provide significant school district property tax relief. Note that the word used was “relief” and not “elimination.” Some lawmakers and a fringe group of outside stakeholders still dream of the total elimination of school property taxes (a $14 billion to $15 billion proposition), the votes for which simply are not there. The pie-in-sky notion that Pennsylvania can eliminate a major source of funding for public education and not have it impact other programs and services is misguided and fiscally dubious.

Here are thumbnail summaries of the five proposals advanced by the workgroup:

  1. Reduce school property taxes by $8.62 billion, increase the personal income tax from 3.07% to 4.07%, and raise the sales tax from 6% to 7% to provide money for homestead exclusions. School districts would have to levy a local earned income of at least 1%. The Property Tax and Rent Rebate Program would be expanded.
  2. Cut school property taxes by $6.44 billion through an increase in the personal income tax from 3.07% to 4.62%.
  3. Raise the personal income tax from 3.07% to 4.32% and cap the rebates for homestead properties at $2,340, effectively eliminating school property taxes for more than 2 million homeowners.
  4. Boost the personal income tax from 3.07% to 4.72% and cap the homestead rebate at $5,000, effectively eliminating school property taxes for more than 3.1 million homeowners.
  5. Effect an $8.5 billion elimination in homestead school property taxes by raising the personal income tax from 3.07% to 4.82% and the sales tax from 6% to 7%.

State budget hearings have concluded, and the General Assembly is supposed to be in session the next few weeks, but of course all that may change. With the coronavirus pandemic wreaking havoc on everything, it’s really anyone’s guess what happens with these proposals. However, once we return to normal, don’t be surprised to hear more talk coming out of Harrisburg about property tax reform.

The PICPA will have a major voice when the process begins to unfold. The local tax workgroup of our State Tax Committee will be fully engaged, offering different ideas, reviewing legislative language, and working with legislators.

Maybe, after nearly four decades of chasing the school property tax reform specter, it will finally materialize in Pennsylvania. After all, it is an election year.


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24 comments

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  • Nik | Aug 06, 2020

    Just some questions for thought...

    1) On what other item that you purchase, are you expected to pay taxes each and every year? 

    2) If business can conduct commerce on line, why do we need brick and mortar technology to educate our students?

    3) If you can get a college degree on line (in some cases a Master's) why do we have to transport students to buildings which are deteriorating to get a high school diploma?

    4) Why are these people who we elect-who are suppose to work FOR us, empowered to take away a home which we legally purchased?

    5) In any occupation, if we fail to perform to our employers expectations, we are dismissed....I suggest it is time to dismiss these people from office-who work for us-whom ignore the will of we the people.

    6) Besides being immoral, how is it not elder abuse to evict a senior whom cannot afford to pay taxes from his / her home?

    One cannot give away, what one does not have!

    Wake up people, you are losing more and more of your precious freedoms each day.

    I believe it was Edmund Burke who stated, All that is necessary for evil to exist, is for good men to do nothing.

    WAKE UP!

  • Tom A | Jul 20, 2020
    3 things... everyone who lives in pa should contribute to education funding not just home owners... totally wrong 2) school boards should never have financial authority... to decide to raise taxes on home owners... 3) all budget requests and expenditures must be audited and reviewed by a totally independent citizen sponsored group... sooooo much money is wasted and misspent... for many years i worked in the information technology department for an extremely large school district... you would never believe how much wasted money i witnessed being literally wasted... there is a tremendous amount of waste and the money needs to be managed correctly... very poor oversight... i guarantee EVERY school budget can be dramatically cut while our education quality would dramatically improve if things had proper oversight... the whole pa tax system and education system is a total disgrace... such a pity the people who are responsible for this pathetic and unfair environment... how do they sleep at night??? They have no conscience 
  • Hicks | Jul 12, 2020
    All goverment officials are voted to work for us citizens who pay your food and shelter! You are stealing our property and houses due to taxes! Its OUR house and are creating a crime called property theft! We demand school and property taxes off our homes and business NOW!! You have no right to rob or deny what we have been asking for years as well as inheritance tax!! I want mine back! I paid taxes on that money already !! Thefts in pa goverment and racketeering !!! We should be able to firer all of you who lied at the voting block! 
  • Joseph Schuler | Jul 12, 2020

      

    School Property Taxes - how in our form of Government do we allow the School board to dictate to the populace?

      It is said you can attend the meetings to voice your opinion and the end result is 'they say next' when you are done with no action on your voice - meaning IF the majority of citizens/voters say they oppose an policy it is ignored. And WE/you take it!

      Any and all needs for funds must be from an vote of the majority of the citizens.

     SB 76 seems to have disappeared. David Baldinger what happened to him? His 'partner' Rodkey [name correct?] is now with Sen. Frank Ryan whom is backing HB 13.

       Clearly - School funds need to be examined by an accountant to assure their is no misdeeds.

    School board individuals/supporters ... I can not help but feel IF you represent Education, Teachers, the Students, one would want to believe YOU are intelligent. Clearly with what is going on: Sub par students for decades; acting in self interest which appears to resemble an Dictatorship or Tyranny. How is it possible these people go through their lives not caring people are having their homes seized - because of them and   they   do not care.

      Should HB 13 get passed: You know what will happen.

    1 -  The School board will say - an Year has gone by and we have other needs - so the PIT will need to be raised and also the Sales Tax oh and since we are at it we still would like another Billion or two so since we already have raised the other taxes we need to re-establish an Property tax.

    2 - Here comes the Real Estate Property tax supervisors - and they will raise Property Taxes. After all you received tax relief now you can afford to give us our share since we have had many items grow on our wish list and it is time to make them happen. Many of our Political representatives are supposed to be like the proverbial Maytag man waiting for the phone to ring saying 'You are needed".  You are not supposed to be so pro active in our communities. All we want to hear from you is at the community or county fair. How did we let them believe WE ACTUALLY NEED THEM?!

      I, for one, have grown to abhor School officials with their self importance. 

    Wish everyone good luck.

    As long as there are people whom believe they have such power to affect our lives so badly, coldly we will lose this great Country of ours. Just recently America was able to view in living color how 'well' our educated Young people feel about our Country, your rights, your right to have an nice home, how they despise you for having more than them disregarding your years of commitment to the workplace - real indicators our School system is an absolute failure.

       Those few people were very successful in intimidating our Officials. Made decent hard working citizens feel like fools for believing you have to work for what you want - mocking the American dream. Had we lost WWII - how many types of people would have been exterminated ? And now our children have no respect for the freedom others gave their lives for  to allow them to express themselves - though in an most objectionable and primitive manner.

      IF THEY were rioting against unfair taxation I would have joined them.     

       

     

     

  • Lisa P. Rouse | Jul 08, 2020
    ARE WE FACING A DISASTER??? *UNFORTUNATELY, THE PANDEMIC (COVID-19) IS NOT GOING AWAY ANYTIME SOON, AND I'M NOT SO SURE IF PENNSYLVANIA (SCHOOL) PROPERTY TAXES ARE EITHER! WE'RE LIVING IN HORRIFIC TIMES, AND IT VERY HEARTBREAKING THAT SENIORS / HOMEOWNERS (WHO HAVE WORKED MOST OF THEIR LIVES) ARE NOT ABLE TO ENJOY THEIR GOLDEN YEARS, OR ANY YEARS FOR THAT MATTER!!! ESPECIALLY NOW! LET'S BE HONEST, HOW CAN THEY? (THEY'RE NOT ABLE TO AFFORD TO LIVE IN THEIR HOMES, DUE TO THE VERY EXPENSIVE PENNSYLVANIA SCHOOL TAXES!) BUT EVEN BEFORE THE PANDEMIC, TALK (FOR OVER A DECADE) ABOUT "DOING AWAY WITH SCHOOL PROPERTY TAXES" SEEMED TO GIVE HOPE TO MANY. BUT LOOK WHERE WE ARE TODAY! AS GENERATIONS ARE PASSING AWAY (ESPECIALLY NOW... EVEN SOONER THAN ANYONE EVER EXPECTED). LET'S BE HONEST, WHAT ARE THE POLITICAL REPRESENTATIVES OF PENNSYLVANIA GOING TO DO? SURELY, THIS IS A TIME WHEN THE TRUTH WILL COME OUT, BECAUSE IT DOESN'T TAKE A ROCKET SCIENTIST TO FIGURE OUT WHAT'S GOING TO HAPPEN TO THE VERY (WEARY) SENIORS, AS WELL AS HOMEOWNERS; IF NOTHING IS DONE, SOON!!! AND I MEAN SOON!!! WHO CAN WAIT ANOTHER YEAR? NOBODY!!! IF MAJOR RETAILERS ARE GOING OUT OF BUSINESS (DUE TO THE PANDEMIC), WHERE DOES THAT PUT HOMEOWNERS??? PERHAPS, BEING HOMELESS ISN'T A BIG ENOUGH ISSUE TO MAKE A CHANGE. BUT IT OUGHT TO BE!!! AND WHAT ABOUT THE CHILDREN, WHO KNOW NOTHING OUR LEGISLATOR... MAKING PROPER DECISIONS THAT ARE GOING TO HELP THEIR PARENTS, GRANDPARENTS, AS WELL AS THEIR FUTURE!!! 
  • Nadine Hensley | Jul 08, 2020

    Going to an income tax type of funding would be the fairest system.  Sales tax are less progressive, I am not for increasing it.  That we have children in the schools or not, we all benefit from a quality education for the children who will be one day supporting us and bringing value to the overall economy.  

    Teachers are so valuable, they do a terrific job.  When you consider the extra work they do behind the scene and beyond the in-school instructions, I wish that the public in general would recognize it. 

    I would like to be more involved on this issue, any suggestions?

  • chris | Jul 07, 2020
    how did property /school taxes go up when kids were home since march, that means all those resources that weren't used so how did they go up? where in the world do you pay for an item, like a soda or a car, then pay more money at the end of the years for them???? property taxes are the biggest scam known to man to screw over the working class
  • Vince | Jul 04, 2020
    The Current real estate tax system is INSANE!  People, especially the seniors, are losing their bought and paid for homes to the tax man each and every day and not only is there no end in sight to this madness and theft by our own government it is actually getting worse.  My taxes have gone up each and every year I have owned my home.  Teachers get pay raises and benfits increases every year when the entire rest of the economy has been flat for many years and they work 9 months of the year at that.  What, however, is the worst aspect of our current system is all of these individual school district kingdoms where the perpetual goal is to be able to say ours is better than theirs!!?  What?  Each and every child should receive the exact same quality and quantity of education and extra services as every other child in PA.  In Radnor they famously spend more than $24K on each student per year while in Chester they spend around half that per student.  Ninety per cent at least of the students in Radnor are white while the opposite is true in Chester where the overwhelming majority of its students are minorities so if you really want to reap  the so called benefits of the notion that public education for everyone generally better our society as a whole ( a notion with which I agree) why don't you at least acknowledge the blatant racism that exists in our current system and seek to address that.  There should be one school district and that should be the state district.  Every local district should be closed, teahhcers hsould be rotated from location to  location so no one location has the "better" teachers and if the teachhers don't like it tell them to quit.  I guarantee that there will be a hundred applicants lined up to replace them.  I have worked every day since I was 16 years old and with a recent reassessment and these illegal, unconstitutional, criminal property taxes I am never going to be able to remain in the house which I built and which I intended to leave to my son.  Any increase in either sales or income taxes is better than blindly taxing a peice of property which is, by definition, a cost not an income producer.  Where was it decided that it was fair to tax more based on the property's value?  Just because a property is high in value that says nothing about the homeowner's ability to pay these outrageous taxes.  At least if I decide to buy a new TV or a case of beer I have intentionally made the informed decision that I have the money to afford that purchase.  I don't want to hear this nonsense that increasing sales or income taxes is "regressive".  What's regressive is me having to live in a tent somewhere because I have lost my home to these out of control taxes!  Oh, never mind, I won't be living in a tent because I won't be able to afford the taxes on the vacant lot. 
  • Wallace | Jul 01, 2020

    I understand why we all have to pay taxes: we all reap the benefit of an educated workforce. 

    What no one seems to have suggested is to change the PA Constitution, so that a graduated income tax can be implemented.  A family needs a certain amount to live on, for food, clothing, shelter... but also for transportation, insurances, even internet access (especially important if you're stuck at home and education is being provided online).  People who make barely enough to pay for the necessities will find an increase to the income tax especially difficult, and PA is already considered to be a regressive tax state, because the tax structure falls especially heavily on lower income families.  None of the recommendations improves this situation, in fact, they may make it worse.

    As for "doing what other states do"... as far as I can tell, the only state with no school property tax is West Virginia - not exactly the education system to emulate.  The other "district" to have no school property tax is Washington DC... again, not a example for long-term success of the citizens.

    You get what you pay for.  Our elected officials need to stop thinking there's an easy fix for this and do some hard work for a change. 

    And while they're at it, they should pass legislation that disallows legislators from leaving office and immediately going to work as highly paid lobbyists.  (Maybe it's time to call them what they are - business whores!)

     

  • Dave | Jun 29, 2020
    PEOPLE PEOPLE PEOPLE NOW IS THE TIME WE NEED THIS PROPERTY TAX REFORM, WITH ALL THE PEOPLE OUT OF WORK DUE TO THE EPIDEMIC. SOMETHING HAS TO BEEN DONE, RETIRED PEOPLE THAT HAVE PAID TAXES ALL THERE LIVES HAVE TO EITHER DOWN SIZE OR SELL THERE HOMES, ITS JUST NOT FAIR!!!!!
  • Mary | Jun 25, 2020

    PA citizens demand elimination ONLY. We do NOT support just a reduction. We should not have to pay perpetual rent (property taxes) for property we buy. We already taxes when property is transferred.

    Education would be more egalitarian if school districts received proportional funding instead of creating segregated districts based on property values.

  • Carol | Jun 25, 2020
    I am a senior, age 65, no dependent children, and renting in Bethlehem Township. Bethlehem Area School District sent me a 2019 school tax bill. I questioned this as I am receiving social security and a federal pension which PA exempts from taxes. The woman I spoke with in 2019 said the homeowners complained that renters don't pay a school tax and it wasn't fair so the school board started taxing renters. She suggested I attend board meetings to complain. I paid the 2019 bill. Two days ago, I received a delinquent bill for 2018 for which I was never billed and I am awaiting an answer regarding the 2018 tax.  What is the legality of all of this?  Does anyone know.  I have contacted Gov Wolf's office twice last year and they still have not contacted me.  
  • Chris | Jun 24, 2020
    I don't have kids, never used the schools, why do I have to pay for people who choose to have kid after kid, you know what make them pay more per kid like a percentage per kid increase and let childless couples pay a flat fee of 1,000 that never goes up or down just stays fixed. having kids is a choice and you choose to have 2,3,4,5 kids you should be paying for them not everyone else
  • Patti | Jun 13, 2020
    DEFUND the failed Coatesville Area School.  Those who stole from the school district (so many times)can pay my taxes this year. Lets all become Amish and not pay taxes.
  • Tracey | Jun 10, 2020

    School tax is extremely high. I dont even have kids and to top it off school was cut short by 1/2 due to oandemic, where is my redund. My property taxes (school) part are ridiculous.thieves that is what dallastown district is they are thieves 

     

     


  • Lota Golding | Jun 08, 2020

    i dont know why residents who dont have children in school are paying for school taxes. There are many retirees forced to move out of state due to the outrageous school taxes when there is absolutely no benefit for them once their children are grown and are no longer going to school. People with no school age kids should not pay any school tax. I am all for increasing sales tax or payroll tax which is fair across the noard.

  • Gerald Levanowitz | Jun 08, 2020

    Monroe county recently finished a "reassessment". Senator Scavello held a telephone town hall last fall and stated unequivocally that "the reassessment was not designed to increase revenue. Some taxes would go up slightly and some would go down slightly". I am a 77 year old retired person and my property tax increased by nearly 50%. I appealed my assessment and missed the appeal hearing because I was in the hospital with heart issues. The Monroe County assessors Office told me "too bad" when I asked for a new hearing date. My new assessment contained several obvious mistakes, one of which was that it had a building on a lot that is empty and not buildable. Senator Scavello was either asleep when the reassessment was completed, the county officials lied to him, or he lied to me maybe all 3...take your pick.

    I have been retired for 16 years now and I consider it a BANNER YEAR if i get a 1 1/2 % increase in retirement income. My youngest daughter graduated 32 years ago. SO WHAT AM I PAYING FOR??? The members of the school board tell the same lies every election year and continue to curry favor with the teachers and their union.

  • KG | May 28, 2020

    Personally i woold be willing to increase the sales tax to 8% if that meant eliminating school tax

  • Peter Calcara | May 20, 2020
    Denise, in response to your question, each of the legislative proposals have their own mechanisms to eliminate or reduce property taxes. Some are quite complicated and occur over a period of time.
  • Denise Spellman | May 18, 2020
    I see no details in any of the proposals on how the property taxes will be reduced.  I just see details on how other taxes will be raised.  How is one supposed  to know which if any of these proposals are worthy of support?
  • Brad | May 09, 2020
    There needs to a total elimination of property taxes not a reduction. When did spending money in the economy to make your property worth more be penalized by raising your taxes. Doesnt add up. Too many people do not get adequate raises in their salaries or retirement to keep up with school districts overspending. 
  • Chas | May 03, 2020

    I remember when the State first passed the local income tax for School Districts. We were told that the Schools needed to have any tax increase on real estate,, approved by a referendum. Allegedly there were going to be 4 exemptions. As time went by, we were told there were 70 ways to increase real estate taxes without a referendum, and now there are over 400. Regardless if all of these exemptions were in the original law, or if they were added later, they still lied to us. Every time a new way to raise taxes was added, it should have needed a referendum.

    Do not listen and certainly do not believe anyone claiming to be wanted to cut the real estate tax burden for people. When you add up real estate rebates and real estate tax increases approved later on, there is no savings. 

    The School Districts should be reduced in size, and students should be allowed to transfer to a nearby district, in order to keep school from over spending, and in order to keep them motivated to have caring teachers.

    CD School District has been giving out  tax incentives for strip mall development. In this era, when a new mall is built, other malls suffer shuttered stores. if a developer wants to make a mall, they should use their money, and not taxpayers. Giving new stores a tax break gives them an unfair advantage over existing stores. Isn't it law that all businesses must be taxed fairly and equally ? Its a scam. 

    Also, CD had built a road, and intersection and made traffic improvements for a strip mall. Again, the land is an asset. Any taxing authority should not be handing out perks to attract business, unless they are in a low employment area. 

    We have never seen a referendum in CD schools for a tax increase. When I left the district, the real estate tax on properties had risen to near where they were before the 2% earned income tax was added. If CD had been limited in raising real estate taxes, they would not now need to find a way to alleviate AGAIN.

    I would like to see the State raise the earned income threshold for paying the LST raised from 12,000 to 15,000.

    15,000 is what someone making 7.25 an hour makes in year. You pay 52 if you make below minimum wage. Penna allows local government who make less than minimum wage to have to pay the LST tax. Totally unfair. If you want to start being fair to the poor, no government should be allowed to tax a penny of anyones earned income under 15,000 a year. That should be a federal law. Only allow taxation on income above 15,000 a year.

  • AH | May 01, 2020

    Agreed above!!!

    Simply investigate how other states accomplish this and duplicate it!

  • Gary | Apr 26, 2020
    I do agree that there has to be something to be done with the school systems. I believe that the schools should live in a budget, as it stands right now the schools have an idea and the first thing that is said that the taxes must be raised for their plans and regardless of what is said at the board meeting the board members say, this is what we want to do and this is what the taxes will be increased to do it. I also feel that it is wrong to have to pay for the schools as long as you own property. It is like you are being punished for wanting to own something while there are many people that have children going to school and are getting a free ride, These are the people that hate to hear anyone complain about the school taxes because they might have to pay their share if it changes. I do agree with a one percent increase in sales tax to pay for the schools but a total elimination of the totally wrong school tax and if the school needs more money they should get it from the people that have children going to school. I don't agree with paying off the schools debts. the school administration should have to take wage and benefit cuts until their debts are paid. No one pays my mortgage for me and there has been too much wreck less spending going on for far too long,It is to the point where the tax payers are fed up and the people that don't want to see this are the people that are not paying anything or next to nothing. The cost of education should go where it belongs, I had nothing to do with making these children I should not be forced to continue to work and pay and work and pay to support these bums. I should be able to retire but the major reason that I cannot is because of the school taxes.The school taxes are the highest taxes there are but every year they need more and more, Here we have an organization that would teach to days children economics but they can never figure out a budget for themselves. There is no wonder why there is so many children that when they get out of school they are in debt before they know what day it is they are being taught by the same organization that has proven itself to be a failure.There are people that ask me, Don't you care about the poor than I ask do the poor care if I can retire or not and I get no answer that is because no is the answer. There are poor that have more than what I have. They are playing the system and there are the poor that are too lazy to work, They can afford beer and tobacco and sometimes drugs but they cant afford to pay for their responsibilities and there are your working class poor that want you to know that they cant figure how to get their bills paid but what they don't want you to know is how they enjoy their annual trip to disney world. One percent increase in sales tax but total elimination of property tax and put the rest on the parents that have children going to school.But the schools are lazy. They want to be able to keep the people that have something to loose if you cant pay these taxes. pennsylvania is it the commonwealth state or has it become the common welfare state, I'm sure that this is not what william penn had in mind. I will soon be seventy two and the major reason that I cannot retire is because of the school taxes, a friend of mine is eighty four and still paying school taxes while there are so many people that have children going to school that are paying nothing and you can believe me when I say that I have more than paid my dues.

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