Rendell favors forcing property tax relief
HARRISBURG – As Harrisburg gears up for the fall legislative session, Gov. Ed Rendell launched the opening salvo Monday by saying the state’s failed plan to provide school property tax relief is best remedied by mandating it across all school districts. A half dozen or so proposals to address property tax relief have been streaming in over the past four months after 80 percent of Pennsylvania school districts rejected Act 72 – the Homeowner Tax Relief Act – on the grounds that the funding move was too risky and diminished local control over education.
Among local schools, only Bethlehem-Center School District in Washington County and Connellsville Area and Albert Gallatin Area districts in Fayette County opted into Act 72 before the May 31 deadline.
Board members in the remaining local school districts – including all five in Greene County; Brownsville Area, Frazier, Laurel Highlands and Uniontown Area in Fayette County; California Area in Washington County; and Belle Vernon Area and Southmoreland in Westmoreland County – voted against their district’s participation in the Act or opted out by not taking action at all.
Several new proposals call for a complete elimination of school property taxes, to be replaced with an expanded sales or personal income tax. Another asks that Act 72 be put to a popular vote in school districts which rejected the plan.
But Rendell said a mandate that takes away school board choice on the matter would best ensure that all homeowners get their promised property tax relief that came with legalized gambling.
He said he’d like to see removed the requirement of a 1/10 of 1 percent earned income tax levied by participating school districts, a controversial element that stalled support in some districts (school districts could choose to keep the tax, however). And Rendell said he’d like for school districts to still get voter approval for any school budget that spends more than the rate of inflation.
“Pennsylvania is the only state in the union not to have some control, some limit, over a school board’s authority to raise property taxes,” he said. “This will give voters some control over the increase in property taxes and at the same time will give administrators the type of flexibility and control over their own spending. We must do this now.”
Rendell listed property tax reform in a lineup of five other items at the top of his fall agenda, including raising the minimum wage to $7.15 per hour, increasing mandatory minimum sentencing for sex offenders, and better benefits to the National Guard, among others.
But it’s revising the failed property tax reform that seems poised to trump the fall agenda at large. Republican legislative leadership seemed warm to the idea of most of Rendell’s plan, with the exception of the minimum wage hike.
“It’s the Republican playbook,” said Steve Miskin, spokesman for House Majority Leader Sam Smith, R-Jefferson.
Act 72, however, is bound to crack open a continued and larger debate about property tax reform, and Rendell and lawmakers seem focused on the fact that they have to get it right this time around with re-election bids looming next year. Rendell has said he’ll compel the Legislature to stay in session into the December holiday season if need be to settle the issue.
Because there’s so wide a cast of proposals, the property tax debate could prove a messy one. The Pennsylvania School Boards Association immediately objected to Rendell’s plan for a mandate, while saying a full debate on property tax reform is needed.
“[A mandate] doesn’t address the longer term issue of controlling costs of school districts, state and federal mandates, or creating a comprehensive public education funding system for Pennsylvania,” said association Spokesman Scott Shewell.
Lawmakers gave mixed reviews.
“It doesn’t make sense. You gave them a choice,” said Rep. Bernie O’Neill, R-Bucks, referring to school boards. “It’s like you’re taking your ball home and saying you can’t play with it anymore.”
“He includes mandates, and when you start making mandates on school districts you lose me,” said Rep. David Steil, R-Bucks. “They are a violation of the partnership we share with the school districts.”
Steil has introduced his own package of four bills that would eliminate property taxes by 50 percent, making up school revenue with a 1.5 percent increase in personal income taxes. The state would also pick up the tab for special education by using gambling revenue, removing one of the most costly items in school budgets, Steil said.
But House Minority Whip Mike Veon, D-Beaver, said the state already requires mandates of all sorts on school districts and the governor’s proposal is no different.
“Every aspect of school districts are determined ultimately by the Legislature. At times we give them broad discretion, and at times we give them a requirement,” he said.
Veon, who’s introduced legislation mandating Act 72 to all school districts, called the governor’s proposal better than his own because the earned income tax requirement has been removed.
“People were confused by [the EIT] and didn’t quite follow the math,” Veon said. “On balance it was controversial and confusing. I think this is cleaner, clearer, and easier to understand than before.”
Conservative lawmakers also see the renewed debate on Act 72 as a opening to push plans to replace property taxes with an expanded sales tax, or in one case a personal income tax.
Sen. Wayne Fontana, R- Allegheny, who is backing a Senate proposal, said the larger question over property taxes is over how far to go.
“Should we settle for just property tax relief, or should we go for the elimination? That’s the ultimate question,” Fontana said.
The most pressing decision of the moment will be whether to put Act 72 on the November ballot in those school districts that rejected the law, said Erik Arenson, spokesman for Sen. Majority Leader Chip Brightbill, R-Lebanon.
Such a course of action would have to be decided within two weeks after lawmakers return the third week of September, he said.
“We have to figure out the general approach,” he said. “Is it something for the people or Harrisburg to decide?”
Arneson said he thinks most Senate lawmakers want movement on property tax reform this fall.
Alison Hawkes can be reached at 717-705-6330 or ahawkes@calkins-media.com