Legislators try to find property tax relief measure
HARRISBURG – Crafting a plan to relieve property taxes is like “playing tennis with a tomato,” said Senate Minority Leader Robert Mellow on Wednesday. “No matter how hard you swing, or where you mean to hit it, taxpayers who are watching get splattered,” Mellow said.
It was this Scranton senator’s word of caution Wednesday as his chamber took up the 30-year thorny debate on how to achieve property tax relief, once again.
Mellow was concerned that opening the debate in order to fix the failed Homeowner Tax Relief Act – called Act 72 – could bring out more complicated and potentially regressive tax proposals that would help some Pennsylvanians and harm others.
It’s an issue that both the Senate and House will face this fall as they vet a dozen or more proposals in a special session on property tax relief. Should the tax code be restructured so that residents pay more in sales or income taxes? And is the average $330 per household that state officials predict will be achieved with gambling revenues enough, or should the state go further in property tax relief?
“Freezing this and cutting that is immensely popular, but finding alternatives and making the numbers work is rugged business,” warned Senate Pro Tempore Robert Jubelirer, who has presented his own plan.
“Nevertheless, we must emerge with a solution that has some staying power, one that puts taxpayers in a better situation than they are today.”
The first three proposals considered Wednesday in a Senate legislative committee all represent a more conservative tacking to the original Act 72 plan, with some revisions.
Included was Gov. Ed Rendell’s plan to mandate Act 72 across all school districts, but give districts an option to bow out of imposing a 1/10 of 1 percent earned income tax, with the result being less in property tax relief.
Mellow’s bill would mandate Act 72 but then give local voters the final say on whether a school district participates and if wage taxes are implemented. He pitched it as a “compromise plan” that blends various proposals and gives plenty of local control.
And Jubelirer proposed giving voters in all school districts that opted out of Act 72 the final say, most likely in a special election early next year.
Under his plan, any district opting out, or its voters, would get a chance to opt in and receive gambling revenues once the money starts rolling in by 2007.
In both Mellow and Jubelirer’s plans, voters would decide whether they want school spending controls in an effort to give public say in places that want greater spending on education.
A number of senators said they were largely optimistic by the presentation of these first three proposals, saying never before have they seen such agreement on basic issues, such as local control and the necessity for spending controls on school districts. Leaders of the three proposals all said they were willing to compromise further.
“Everybody’s admitted that,” spending controls are needed, said Bucks County Republican, Sen. Robert Tomlinson, a committee member. “That’s big movement for a lot of people … particularly concerning the Democratic side. The [Pennsylvania School Board Association] and the teachers unions are very much opposed to that and they’re their traditional allies.”
Tomlinson has co-sponsored Jubelirer’s plan and is backing another proposed by a group of Southeastern suburban senators which would allow voters to decide whether to raise income or sales taxes in exchange for property tax reductions.
The meeting also brought out old concerns about ways to allow local communities, which object to the marrying of gambling dollars with education, to reject Act 72 proposals. And Sen. Mary Jo White, R-Butler County, wondered how spending controls would be achieved when school districts could raise taxes each year by the permitted inflation rate in anticipation of future budget needs.
Jubelirer said: “I hope those board members would be held accountable [by voters] and lose their positions.”
Despite some hopes that tweaking Act 72 would make it more palatable to school districts, Pennsylvania School Board Association spokesman Tim Allwein said none of those proposals answers the basic questions about why property taxes are so high.
“Spending is not the problem, the cost is the problem,” he said. “If it didn’t cost so much, school boards wouldn’t spend so much.”
Allwein said his association is interested in proposals that relieve costs for items like special education, and uses state money to pay for educational mandates.
Sen. Gerald LaValle, D-Beaver County, said he feared the Legislature would get bogged down in complicated tax plans, but saw one sign of hope. That was Jubelirer’s reference to a compromise in 35 days.
“That may be the most encouraging thing,” LaValle said. “That we’re being serious about getting things done and not dragging this on until the end of session.”
That could be December 2006.
Alison Hawkes can be reached at 717-705-6330 or ahawkes@calkins-media.com.