Bill seeking to eliminate property tax
Proposed property tax elimination legislation is brewing in the Pennsylvania Senate.
The proposal means districts would stop collecting property taxes on June 30, 2017, states a January Senate co-sponsorship memo of the Property Tax Independence Act.
The legislation would eliminate school property taxes and shift to an increased personal income tax and an increased and expanded sales and use tax.
However, the memo reads: “A portion of the school property tax would remain only to pay off debt service that is on the
books as of December 31, 2016.”
The percentage of property tax that could remain for two decades or more to pay off district’s debt for expense including capital projects is no small amount, according to a recently issued report to districts by Pennsylvania Association of School Business Officials.
Williamsburg Community School District would retain 40 percent of its real estate tax levy to pay off its debt, while taxpayers are also hit with increases in personal income and sales and use taxes, the report states.
Tyrone Area School District, which has no debt, would completely eliminate property taxes — but the district’s taxpayers would still lose, Superintendent Cathy Harlow said.
“Based on the recently issued PASBO report, our taxpayers will pay more in personal income tax and sales tax than they currently pay in local property tax with no additional dollars flowing to Tyrone Area School District,” she said. “Tyrone has historically been a low-spending, low-taxing school district, ranking 488 out of 500 school districts in spending. Other districts that spend and tax considerably more will inherently receive more state dollars through property tax elimination. This will exacerbate the funding equity issue that presently exits in Pennsylvania.”
The massive shift of more than $12 billion statewide to an increased personal income tax and an increased and expanded sales and use tax especially concerns districts most reliant on local real estate taxes.
Roughly 55 percent, or more than $25 million, of Hollidaysburg Area School District’s revenue is generated locally, and almost all of that local revenue is through real estate tax.
Currently, the state determines a district’s level of state funding based on the overall wealth of its residents.
For Blair County, Hollidaysburg is considered a more affluent area, so the state provides 43 percent of its revenue, whereas it provides Williamsburg Community School District with 69 percent of its funding.
“The elimination of property tax equates to a loss of local control,” Gildea said. “Harrisburg will have complete control of budget decisions, leaving a district’s only remedy for unexpected expenses to cut programs or go to referendum (to raise taxes).
Senators, including the bill’s primary sponsor, Sen. David G. Argall, R-Chester, believes it is time the state get rid of property taxes first enacted in the 1830s and find a fairer way to fund public schools.
“From town hall meetings to the ballot box, the school property tax is the most hated and egregious tax,” states the Senate cosponsorship memo for the Property Tax Independence Act.
The senators are planning to reintroduce the bipartisan Property Tax Independence Act, though it currently hasn’t been introduced to a Senate committee.
School district administrators are staying alert on the proposal’s movement.
“We will be completely relying on the state in order to pay our bills,” Gildea said. “That is worrisome at best.”
Mirror Staff Writer Russ O’Reilly is at 946-7435.
A closer look
Percentage of real estate taxes remaining to cover existing debt.
Altoona — 27 percent
Hollidaysburg — 23 percent
Spring Cove — 21 percent
Tyrone Area — 0 percent
Williamsburg Community — 40 percent
Claysburg Kimmel — 37 percent
Bellwood-Antis — 24 percent
Source: Pennsylvania Association of School Business Officials