Posted: Thursday, October 3, 2013 5:00 am | Updated: 7:01 am, Thu Oct 3, 2013.
A plan supported by two Lower Bucks County Democrats to change the way schools are funded has been soundly defeated in the state House.State Reps. Tina Davis and John Galloway, who held forums in the summer on the merits of House Bill 76 — the Property Tax Independence Act — expressed disappointment with the outcome.
The proposal to replace $10.4 billion each year in school property taxes with higher income and sales taxes was defeated 138-59 Tuesday after about three hours of debate.
“I’m very disappointed,” said Davis, D-141, Bristol Township, who had 350 people show up for a forum on the issue in September. “This is important to my constituents and needed to be vetted.
“Eliminating property taxes is not for the weak of heart, and we will not back down from eliminating this archaic and unfair tax.”
Galloway, D-140, Falls, said the setback could be the end of substantial efforts at property tax reform.
“I don’t see this being brought up again for a very long time,” he said. “We need the best quality education for our kids, but we also have to start talking about how we’re going to pay for it.
“All that’s going on in Harrisburg today is work around the edges. There’s no real reform.”
The proposal, which had 91 co-sponsors, was in the form of an amendment to an underlying bill that would have allowed individual school districts to enact a proposed “elimination tax” to generate revenue in place of rising property taxes many lawmakers say are driving Pennsylvanians out of their homes.
While Davis and Galloway voted yes, local House members who voted no include Paul Clymer, R-145, West Rockhill; Madeleine Dean, D-153, Abington; Gene DiGirolamo, R-18, Bensalem; Frank Farry, R-142, Langhorne; Tom Murt, R-152, Upper Moreland; Bernie O’Neill, R-29, Warminster; Scott Petri, R-178, Upper Makefield; Marguerite Quinn, R-143, Doylestown; Steve Santarsiero, D-31, Lower Makefield; Todd Stephens, R-151, Horsham; and Kathy Watson, R-144, Warrington.
Opponents said the amendment was riddled with legal flaws and amounted to little more than “a concept.” They called the measure ill-conceived and warned that the resulting increases in statewide taxes would unfairly penalize working Pennsylvanians.
“The math doesn’t add up, that’s my biggest problem with it,” Farry said. “Our colleagues sold segments of the public on this and it doesn’t work. If there was a silver bullet to fix this, somebody would have fired it a long time ago.”
Petri said he believed the bill’s author, Berks County state Rep. Jim Cox, R-129, “oversold” the legislation.
“He acknowledged on the House floor that the bill doesn’t raise enough money but we should vote on it on policy,” Petri said. “That’s politically stupid on his part. It’s at least $1 billion short next year. Then what do we do?”
Petri said the bill also does not fully eliminate school property taxes. “If a school district has debt, you still had to pay that at the local level.”
In addition, he questioned the merits of sending all taxes to Harrisburg. “That doesn’t work out too well for us, here,” he said.
The commonwealth has been unsuccessfully waging the property tax debate for decades, with estimates of up to 10,000 people losing their homes in Pennsylvania each year because of property taxes.
Under HB 76, the sales tax would rise from 6 cents on a dollar to 7 cents. The personal income tax would go from 3.07 cents for every dollar earned to 4.34 cents.
The legislation would use existing gambling revenues to help replace the $10.4 billion that is generated by school property taxes. Additionally, things that aren’t now taxed — like candy and gum, newspapers, textbooks, personal care services, basic TV subscriptions and theater tickets — would be added to the sales tax levy.
“It’s a tax on everything you do,” Petri said. “You wake up in the morning and get your newspaper. That’s taxed. You make your coffee. That’s taxed. Have breakfast. Tax. Go to your dry cleaner. Tax. ... Everywhere you go there’s a tax in this bill.”
Proponents contend someone would have to spend $70,000 on the newly taxed items to equal the elimination of a $5,000 school property tax bill — and experience a tax increase.
Davis and Galloway said they were disappointed the bill was attached to another measure as an amendment as opposed to receiving consideration on its own merits. HB 76 had been tied up in the House Finance Committee.
“We need a true out and out debate to make this bill better,” Davis said. “Enough people across the state are interested in this and want relief. That’s a bill that should have been debated for day, not for an hour.”
“I’m very disappointed,” said Davis, D-141, Bristol Township, who had 350 people show up for a forum on the issue in September. “This is important to my constituents and needed to be vetted.
“Eliminating property taxes is not for the weak of heart, and we will not back down from eliminating this archaic and unfair tax.”
Galloway, D-140, Falls, said the setback could be the end of substantial efforts at property tax reform.
“I don’t see this being brought up again for a very long time,” he said. “We need the best quality education for our kids, but we also have to start talking about how we’re going to pay for it.
“All that’s going on in Harrisburg today is work around the edges. There’s no real reform.”
The proposal, which had 91 co-sponsors, was in the form of an amendment to an underlying bill that would have allowed individual school districts to enact a proposed “elimination tax” to generate revenue in place of rising property taxes many lawmakers say are driving Pennsylvanians out of their homes.
While Davis and Galloway voted yes, local House members who voted no include Paul Clymer, R-145, West Rockhill; Madeleine Dean, D-153, Abington; Gene DiGirolamo, R-18, Bensalem; Frank Farry, R-142, Langhorne; Tom Murt, R-152, Upper Moreland; Bernie O’Neill, R-29, Warminster; Scott Petri, R-178, Upper Makefield; Marguerite Quinn, R-143, Doylestown; Steve Santarsiero, D-31, Lower Makefield; Todd Stephens, R-151, Horsham; and Kathy Watson, R-144, Warrington.
Opponents said the amendment was riddled with legal flaws and amounted to little more than “a concept.” They called the measure ill-conceived and warned that the resulting increases in statewide taxes would unfairly penalize working Pennsylvanians.
“The math doesn’t add up, that’s my biggest problem with it,” Farry said. “Our colleagues sold segments of the public on this and it doesn’t work. If there was a silver bullet to fix this, somebody would have fired it a long time ago.”
Petri said he believed the bill’s author, Berks County state Rep. Jim Cox, R-129, “oversold” the legislation.
“He acknowledged on the House floor that the bill doesn’t raise enough money but we should vote on it on policy,” Petri said. “That’s politically stupid on his part. It’s at least $1 billion short next year. Then what do we do?”
Petri said the bill also does not fully eliminate school property taxes. “If a school district has debt, you still had to pay that at the local level.”
In addition, he questioned the merits of sending all taxes to Harrisburg. “That doesn’t work out too well for us, here,” he said.
The commonwealth has been unsuccessfully waging the property tax debate for decades, with estimates of up to 10,000 people losing their homes in Pennsylvania each year because of property taxes.
Under HB 76, the sales tax would rise from 6 cents on a dollar to 7 cents. The personal income tax would go from 3.07 cents for every dollar earned to 4.34 cents.
The legislation would use existing gambling revenues to help replace the $10.4 billion that is generated by school property taxes. Additionally, things that aren’t now taxed — like candy and gum, newspapers, textbooks, personal care services, basic TV subscriptions and theater tickets — would be added to the sales tax levy.
“It’s a tax on everything you do,” Petri said. “You wake up in the morning and get your newspaper. That’s taxed. You make your coffee. That’s taxed. Have breakfast. Tax. Go to your dry cleaner. Tax. ... Everywhere you go there’s a tax in this bill.”
Proponents contend someone would have to spend $70,000 on the newly taxed items to equal the elimination of a $5,000 school property tax bill — and experience a tax increase.
Davis and Galloway said they were disappointed the bill was attached to another measure as an amendment as opposed to receiving consideration on its own merits. HB 76 had been tied up in the House Finance Committee.
“We need a true out and out debate to make this bill better,” Davis said. “Enough people across the state are interested in this and want relief. That’s a bill that should have been debated for day, not for an hour.”
12 comments:
Perhaps with more discussion, agreements to the concepts & wording can be negotiated between those in favor and those apposed to this.
Band together and shut down the PA govt because you didn't get your way? Portray it as a crusade for fairness and freedom.
This can't possibly work. It doesn't raise enough revenue, period. Do some math instead of feelgood nonsense.
Eff math. And science. You probably have the nerve to think man has something to do with climate change too. Just make my taxes go down.
Where should I direct my manufactured outrrage?
The stupid idiots that ran Morrisville way back when doomed the town to failure when they refused to be a part of the Pennsbury School District. While P3ennsbury's tax rate is at 150 mils, ours in Morrisville boro school district are over 180 mils.
That 30 mil difference along with the lack of AP courses and other electives makes Morrisville boro schools a laughing stock. Thank god my house is for sale.
BCCT editorial...
Still waiting for Independence Day
Posted: Sunday, October 6, 2013 6:00 am
“All that’s going on in Harrisburg today is work around the edges. There’s no real reform.”
— Rep. John Galloway, D-140
Pick an issue, any issue, and the disappointing comments above from Falls Township’s Galloway could easily apply — liquor reform, ethics reform, state government reform.... You get the picture; not much going on there. In this case, Galloway’s observation is directed at property tax reform.
A promising proposal that had gathered much bipartisan support early on crashed and burned last week when dozens of lawmakers who had signed on as co-sponsors turned their backs on the measure and voted against it. House Bill 76, the Property Tax Independence Act, would have provided the opportunity for school districts to eliminate property taxes almost entirely.
As onerous as property taxes have become and as unfair as they always have been, reform is both welcome and overdue. Of course, any tax reform that seeks to lower or eliminate a tax necessarily must replace the lost revenue with other sources. The goal is to create or expand replacement taxe that are or would be more fair than the tax eliminated or reduced.
The strategy advanced by HB 76 was based on ability to pay. It would have increased the state sales tax from 6 percent to 7 percent and expanded the list of goods subject to the tax. It also would have raised the state income tax from 3.07 cents on every dollar earned to 4.34 cents.
The thinking — and it’s the right thinking — is that folks who earn more and spend more are in a position to pay more tax. This is an equitable and fair approach unlike property taxes, which are rigged to ever-escalating property values — regardless of a property owner’s income. It’s why seniors on fixed incomes are so up in arms over rising property taxes. Other wage earners have gotten a taste of that medicine as the stagnant economy has forced employers to freeze or cut wages or furlough workers, whose income then is profoundly impacted.
The one flaw in the reform measure is that in a down economy people earn less and spend less, thus producing less tax revenue. Along that line, critics said the measure would fall about a billion dollars short of school districts’ financial needs.
In our view, that’s not a fatal flaw. Our large Legislature — second largest in the country — with its many smart lawyers could have come up with a solution. But not in 60 minutes, which was the amount of time Rep. Tina Davis, D-141, said was devoted to debating the issue in the state House.
Said the Bristol Township lawmaker: “We needed a true debate ... Enough people across the state are interested in this and want relief. It’s a bill that should have been debated for a day, not an hour.”
"The one flaw in the reform measure is that in a down economy people earn less and spend less, thus producing less tax revenue. Along that line, critics said the measure would fall about a billion dollars short of school districts’ financial needs."
I got news for bcct: there was more than one flaw.
Were Tina Davis and John Galloway sober long enough to read the bill? I know when I attended both of their "property tax seminars" they never got into details or would let honest questions from people.
Also, do they drink with Kim Scarpiello in Harrisburg every week?
Pa. plan to eliminate property tax comes up short
The IFO says HB 76 would cause an estimated $1 billion gap in education funding for school districts by 2018-19.
Eric Boehm , PA INDEPENDENT
October 11, 2013
HARRISBURG — An analysis from the state’s Independent Fiscal Office seems to throw more cold water on a plan to eliminate property taxes in Pennsylvania.
But proponents of the plan say the analysis just gives their arguments more weight.
The proposal, contained in HB 76, would prevent school districts from levying property taxes after 2013, unless the tax is necessary to pay for ongoing debt service already on the books. The lost property tax revenue would be made up through a combination of a higher state personal income tax and a higher state sales tax, which would apply to many items now exempted from sales taxes.
There’s one problem: The math doesn’t add up, according to the IFO.
Though districts would break even in the 2014 calendar year, the IFO study projects a widening gap between expected future property tax collections and expected revenues through the new taxes proposed in HB 76.
“It is true that under the proposal they will not receive as much as they would have under current system,” said Matthew Knittel, executive director of the IFO.
According to the IFO projections, the gap would be a mere $3 million in the first year, but it would grow to as much as $1 billion by 2018-19.
But rather than short-changing schools, some advocates of the property tax elimination plan see it as a way to control the spiraling cost of education, which has climbed faster than inflation over the past two decades.
Because sales and property taxes and linked to economic production, they rise and fall in line with taxpayers’ ability to pay. Property taxes are increased by a rate set by a school district, meaning they can increase – and have increased – during economic booms and downturns.
“That’s why property taxes are such a burden to the taxpayers,” said David Baldinger, spokesman for the Pennsylvania Taxpayers Cyber Coalition, one of the groups calling for the passage of HB 76.
Baldinger said the gap in future revenue is a result of education costs increasing faster than taxpayers can afford.
It may not matter much after supporters of HB 76 failed to win a key vote in the state House last week, but the IFO report gives an indication of how difficult solving the property tax riddle could be. Though few Pennsylvanians are a fan of the arcane tax system used to fund public schools, every attempt to find a different funding stream has failed.
The HB 76 plan would increase the state sales tax from 6 percent to 7 percent and would eliminate most of the exemptions in the sales tax code – things such as candy, gum, newspapers, dry cleaning and tickets to sporting events would now be subject to sales tax, though food and essential clothing would remain exempt.
It would increase the state income tax from 3.07 percent to 4.34 percent.
The sales tax changes would generate an additional $5.5 billion for schools, while the sales tax changes would generate an estimated $4.5 billion in additional money, according to advocates for the measure.
Other, smaller, changes in state policy — such as redirecting some taxes paid by casinos — would make up about $500 million or so, they claim.
But that comes up short of the annual $12.7 billion in property taxes collected by the state’s 500 school districts.
“You look at the numbers in the report, and you’re going to have to raise a lot of money in other places,” said state Rep. Kerry Benninghoff, R-Centre, chairman of the House Finance Committee, which handles tax issues.
Benninghoff agrees philosophically with connecting education spending to consumer-based taxes like those on sales and income. But there has never been a proposal — in more than 10 years of trying — that made the numbers work.
“This is really a local, parochial issue,” he said. “And it seems like a statewide solution is just too convoluted and always topples under its own weight.”
Some opponents of the property tax elimination plan point to the volatility of sales and income taxes. While property taxes may be more onerous, they are more stable.
“Income and sales tax revenue can drop significantly during a bad economy, meaning immediate cuts to schools,” concluded the Pennsylvania Budget and Policy Center in its own analysis of HB 76.
The liberal-leaning Harrisburg think tank said revenue from sales and income taxes have dipped seven times over the past 23 years, while property tax collections have only fallen once.
But proponents of reform, like Baldinger, see that as something of a positive because it would force districts to keep spending under control. Rather than short-changing education, Baldinger sees property tax elimination plan as a way to better align education spending with taxpayers’ ability to pay.
“The bills were designed to slow the growth of education funding,” he said. “Those numbers (from the IFO) are telling us exactly what we want to know — that, yes, we are succeeding in slowing down the growth of education funding.”
A competing proposal to overhaul school district property taxes passed the state House last week and awaits Senate action. That bill, HB 1189, would give each individual district the option to replace their property taxes with a mix of income and local sales tax, but it would not shut the door on all property taxes statewide.
Meanwhile, HB 76 continues to wait for its day in the sun.
Boehm is a reporter for PA Independent and can be reached at Eric@PAIndependent.com. Follow @PAIndependent on Twitter for more.
The Pennsylvania Independent is a public interest journalism project dedicated to promoting open, transparent, and accountable state government by reporting on the activities of agencies, bureaucracies, and politicians in the Commonwealth of Pennsylvania. It is funded by the Franklin Center for Government and Public Integrity, a libertarian nonprofit organization.
Read more at http://www.philly.com/philly/news/politics/Pa_plan_to_eliminate_property_tax_comes_up_short.html#ZPjE7lqrj46MGO5W.99
Anyone who supported HB 76 doesn't know how to add and subtract. Thank God Steve Santarsero is my new state representative and I know longer have to be worried about what Galloway tries to do.
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