Eight state senators are sponsoring the Property Tax Independence Act, a bill to end all property taxes for schools in Pennsylvania. If passed, the bill as drafted would end all chances for equitable funding in Pennsylvania and would be the single most unfair and destructive piece of school legislation in the 130 years since schools became mandatory.
There are much fairer alternatives to fixing property tax inequity, including proposals that would virtually end residential property taxes.
What is wrong with eliminating property taxes for schools? Start with the fact that it will end not only residential property taxes but also property taxes on commercial, industrial and oil and gas properties. The state will need to raise $12 billion from new income taxes and sales taxes paid primarily by individuals. Shifting the burden of commercial and industrial property taxes to individual taxpayers is unnecessary to fix the problem of residential taxpayers.
Secondly, the new state funding will go to replace on a dollar-for-dollar basis all current local property taxes. This will shift the cost from taxpayers in wealthy districts to taxpayers in poorer districts – the exact opposite of what our school children need and the opposite of tax fairness. This is because the local tax base varies so greatly that Lower Merion can raise $23,000 per student locally with a tax rate less than two-thirds that of Pottstown, which raises only $8,500 per student. Under the proposed bill, Pottstown taxpayers’ income and sales taxes will help repay all of the Lower Merion $23,000. Lower Merion will continue to have great excessively-funded schools, Pottstown will continue to have underfunded schools, but now Pottstown taxpayers will also be paying the bill for Lower Merion’s schools. This is reform?
This is going from one extreme to another. Today state appropriations shamefully provide only 37 percent of total school funding, fourth lowest support in the country. Shifting $12 billion from local to state will move state support to above 80 percent, the third highest in the country. A more balanced approach would aim to be modestly above the national average of 47 percent.
Gov. Wolf two years ago made a proposal that made much more sense, reducing residential property taxes by $3.8 billion, targeting the highest reductions for the neediest taxpayers and neediest schools, greatly reducing the unfairness in the system. Furthermore, his proposal was combined with substantial amounts of new funding so that underfunded schools like Pottstown, or Octorara and Avon Grove in Chester County, could begin to be able to catch up to well-funded districts. Quality of schooling should not depend on what zip code you live in. Eliminating all property taxes will consume all revenue available just to replace current local funding, ending any substantial new state assistance to underfunded districts.
These problems were all pointed out last year when a similar bill almost passed, defeated only by the tie-breaking vote of the lieutenant governor. Instead of coming up with a new measure which would fix the problem of an unfair burden on some residential homeowners and help our underfunded schools, the sponsors chose to come back with the same destructive bill which will consign students all over the state to schools which cannot afford the books, science labs, tutors, counselors and teachers they need. And the worst spending disparities in the country according to the U.S. Census Bureau will be locked in for another generation. Our senators need to hear that this unbalanced property tax elimination bill is not a substitute for a fair reduction of residential property taxes.