What It Will Take To Replace Property Taxes
5/10/2017
          
My March column on property tax references made during the House Appropriations Committee budget hearings drew a great deal of feedback. The responses were interesting and varied. This is a good time to explain the four-bill package I have introduced.

You’ve surely heard many times property taxes are not a statewide problem, which makes the issue difficult to resolve. For the majority of Pennsylvania, property taxes are not the primary issue they are in York County. Another reason is how far reaching the “tentacles” of this problem go, which is why one piece of legislation will not do the trick.

Before anything else, we must deal with the Pennsylvania Constitution, which requires both residential and commercial properties to be treated the same. I have introduced House Bill 1317, which would make the necessary constitutional change so the General Assembly can address residential school property taxes without impacting property taxes paid by commercial properties. This bill would have to pass in two consecutive sessions before being placed on the statewide ballot.

Two of the bills would address some of the unfortunate public education cost drivers that need to be reined in. One of them is the “hold harmless” clause, which prevents funding for individual school districts to fall below the level of funding they received in the prior fiscal year, even if their enrollment declined. Hold harmless asks funding sources (taxpayers) to come through when there are shortfalls. House Bill 1316 would specifically amend the state constitution to take into account actual student enrollment. This legislation has the same requirements for passage as House Bill 1317 because of the constitution being changed.

Another cost driver is the price tag associated with school construction. What if a school district had to follow a template when designing a new building instead of being able to include all the “bells and whistles” it desired? House Bill 1315 would divide Pennsylvania into six geographic regions. Specific school building designs would be created based on energy needs for heating and cooling, building size, average school district population in the region, layout of the building (one story versus multiple stories) and structural requirements due to climatic or geographic difficulties. Districts that fail to adhere to the suggested design would not receive state reimbursement for a school construction project as they currently do.

The final piece in the package involves the necessary funding source. We have researched this problem extensively with budget experts on the House Appropriations Committee and feel our figures present realistic funding requirements. I am proposing House Bill 1318, the Residential Property Tax Elimination Act, which would shift the majority of funds collected as property taxes to being collected as sales and income taxes.

My plan would raise the Personal Income Tax from 3.07 percent to 4.5 percent and increase the sales tax from 6 percent to 7 percent. It would also add sales tax to food - with the exception of items purchased from the WIC (Women, Infants and Children) list with food stamps - and clothing, meaning there is no new list of winners and losers. All revenue collected would go directly into the newly created Residential Property Tax Elimination Fund. Money in this restricted account could be used only for property tax relief, unlike the money from expanded gaming that was placed in the General Fund. Distribution would be made using the new Basic Education Funding Formula, which unlike its predecessor benefits growing school districts like those in York County. If school districts wish to take on additional debt through building or renovation projects, they would have the option of enacting a local income tax for purposes to be approved by voter referendum.

Will these bills make everyone happy? No, because there has never been a perfect bill passed in the General Assembly. These pieces of legislation explain where we need to go if a solution to school property taxes is to be sought. Residents of other states will tell you they don’t have this problem, but they are paying for public school education in some other manner of taxation. Property taxes are a key element of what we use, and these bills offer a viable alternative.

If we want to replace school property taxes, an adequate replacement funding source must be found and this package of legislation is what it will take. Should you have questions on any of these bills or wish to discuss them further, your feedback on this concept is welcomed. Please contact the district office at (717) 840-4711.

Representative Keith Gillespie
47th District
Pennsylvania House of Representatives

Media Contact: Scott Little
717.260.6137
slittle@pahousegop.com
RepGillespie.com


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