Week of April 10, 2017
Column: Local Tax Reform Myths
Opponents say SB 76 eliminates local control. I agree, we need to address cost drivers plaguing education: pensions, health care, collective bargaining, Prevailing Wage, and other state and federal requirements. While some of these costs are determined locally (i.e., contracts), we can’t continue to ignore these issues. However, SB 76 is just one piece of the puzzle.
Many of us have fought to repeal mandates only to feel we’re standing alone. The zeal of opponents against SB 76 is nowhere near the same as their support for lifting mandates. If they brought the same passion to lifting mandates as they’ve shown in opposing SB 76, many mandates would have been gone years ago.
SB 76 gives schools two options to raise revenues locally: Personal Income or Earned Income Taxes – after voter approval, like other states. Voter referenda are not unique: seven states require referenda to approve school budgets, 34 require them to approve property tax increases, and 19 require a referendum to approve increases over a certain limit.
When I first joined the Senate, I was told the Constitution required the Commonwealth to pay 50% of education costs. I carry a copy of the Constitution and know there’s no such requirement. Nonetheless, Pennsylvania taxpayers have been generous in their support of education, spending nearly $28,000,000,000 a year – $875 a second – in federal, state, and local taxes.
Another SB 76 myth is the uncertainty of the Sales Tax. Enacted in 1953 as a “temporary” 1% levy, the Sales Tax evolved into support for public education: revenues roughly equal state appropriations for basic education. Last year, sales taxes raised nearly $9.8 Billion and the state appropriated over $10.7 Billion for basic education.
Sales and Personal Income Taxes account for 77% of the Commonwealth’s budget and nearly 37% of the budget supports education. Even in lean years with a weak economy when sales and personal income lagged, the state share for education increased or stayed the same. If the Commonwealth can support education with these taxes, why can’t we do the same as proposed by SB 76?
Opponents of SB 76 say advocates mislead with the claim it will completely eliminate school property taxes. They say it doesn’t because “43% of school districts will maintain a property tax of at least 20% of their current rate.”
As an accommodation to opponents, SB 76 excludes existing debt service from the dollar-for-dollar property tax reductions until schools liquidate that debt. Once repaid, all school property taxes would be eliminated.
Is the glass half full or half empty? I believe it’s 80% full as SB 76 would result in immediate reductions in school property taxes statewide: the average would be nearly 80% and only 23 districts would have reductions under 50%.
I understand the concerns with SB 76. However, no one has offered an alternative to eliminate school property taxes. This is why emotions of supporters run high: we want total elimination – not partial elimination, no tax credits, and no state programs that benefit some but not all.
In the interim, I’ll stand with taxpayers in supporting Senate Bill 76 because I believe no tax should have the power to leave you homeless.
You can also listen to my remarks on the Senator Floor from March 28th regarding this same issue here: http://av.pasenategop.com/folmer/2017/0317/taxreform.mp3.
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