The final week of budget hearings conducted by the House Appropriations Committee begins Monday. My York County colleague, Majority Chairman Stan Saylor, has done a fine job keeping testifiers on topic and on time, just as he said he would. All the testimony is being streamed through my website, www.RepGillespie.com
On Tuesday, Feb. 21, representatives from the Independent Fiscal Office (IFO) stood for interrogation about the Economic and Revenue Update they submitted to the committee. I’m wondering how many people caught the interesting (and maybe disappointing) pieces of information that were released on that first day of hearings.
With regard to the state of Pennsylvania, the IFO’s outlook offered little good news. They do see our economy expanding in 2017, and that could cure a number of ills. What’s left is rather disappointing. Growth in our economy and employment picture is anticipated to be slower in comparison to our neighbors and the nation as a whole. The same can be said for our population growth. IN fact, they anticipate approximately 181,000 jobs being lost statewide between the years 2015 and 2025.
The IFO also gave a not-so-rosy forecast for Pennsylvania’s pension crisis, thus accentuating the need for reform. They expect the combined unfunded liability between the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS) to reach nearly $68 billion by the year 2020. While the property tax issue was not part of the IFO presentation, the mere mention of dreary pension numbers made one think of further increases to property owners’ bills.
That’s not to say no one brought up the subject of property taxes during the hearing. State Rep. Karen Boback, from northeastern Pennsylvania, inquired about the amount of money school property taxes have generated in Pennsylvania. IFO Deputy Director Mark Ryan explained that for fiscal year 2017-18, school property taxes, combined with delinquent taxes and the Act 1 allocation, amounted to $14.3 billion.
Boback then asked about replacing school property taxes as a source for education funding. Ryan testified the sales tax would have to be increased from 6 percent to 14 percent if it was used solely to eliminate property taxes. He estimates the Personal Income Tax (PIT) rate, as an independent source of funding, would have to be raised from 3.07 percent to 6.3 percent. If a combination of the two were to be used for property tax elimination, the sales tax rate would need to be 10 percent and PIT rate would need to be 4.7 percent.
A number of things come to mind after you let those numbers sink in. Would you be willing to make those sacrifices in order to do away with school property taxes? Are you willing to pay more than double the sales tax on your existing purchases so that costly bill goes away? Are you comfortable with trusting sales tax as a stable source of revenue to support our schools?
For the record, there is no current effort in the General Assembly to make those changes. The IFO’s statistics are mere opinions grounded in statistics that were offered before the committee. In fact, what legislation there is currently in place to bring about such a tax shift includes numbers far short of what the IFO says would be needed to do the job.
I’m presenting these numbers merely to advance the conversation. So many people want to do away with school property taxes but have no realistic answer as to how they then intend to fund public education. As a property owner, I don’t enjoy seeing that bill in my mailbox (and I’m sure you don’t either). But we as legislators constantly hear about the need to increase education funding, so where is the money going to come from and how much is enough?
School property taxes are a subject that will not go away. At the same time, we have a constitutional obligation to “provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth.” How we do that and from where the money comes is a debate made more interesting by the IFO’s testimony.
Representative Keith Gillespie
Pennsylvania House of Representatives
Media Contact: Scott Little