Proposed bills call for taxper votes on all school increases
The state Senate is reportedly poised to vote on a bill that would replace property taxes with increased sales and income taxes.
Senate Bill 76 is expected to come before the senate for a vote next week. A similar bill was voted down by the state house two years ago.
The current resurrection of the bill is tied to the state budget negotiations. School districts would need a referendum vote by the public to impose the new earned income and sales taxes in place of property taxes.
Sen. Majority Leader Jake Corman said he has told Gov. Tom Wolf and other negotiating partners that any school property tax debate in the Senate would have to include a vote on legislation to eliminate the tax. A strong contingent of senators support the move and it is close to having enough support to pass, Corman said.
“I told that to everybody, so they’re all very aware that we’re going to go through this process,” Corman said. “If it passes, then we have to sit down and discuss what we want to do.”
Legislation to eliminate school property taxes has not received a committee vote this session. Instead, the Senate would bypass that step for a floor vote to amend the legislation to an unrelated bill.
Under the bill introduced by Sen. David Argall, R-Schuylkill, more types of food, clothing and shoes would be exposed to a new, higher tax on sales — 7 percent, up from 6 percent.
The sales tax also would be applied to a wider range of services that are currently exempt. Those include basic TV service, tickets to recreational, cultural and sporting events, and some work performed by lawyers, accountants, architects, financial institutions, funeral parlors and salons.
The personal income tax rate would rise from 3.07 percent to 4.34 percent.
The bill would mandate that school districts get a regular inflationary increase from the state. Districts wanting to spend above that allotment would have to win voter approval to increase local income taxes.
In May, the House narrowly passed a bill that would raise about $4.2 billion for property tax rebates by increasing the sales tax rate to 7 percent and the personal income tax rate to 3.7 percent. Some opponents of that approach warn that short-term savings to property taxpayers will eventually be lost when schools return property taxes to current levels, leaving a permanent tax increase on sales and income intact.
Meanwhile, legislation has been proposed in the state senate that would eliminate the Act 1 exceptions for school districts, meaning all tax increases would require approval from the public.
Since 2006, when the Taxpayer Relief Act, also known as Act 1, was adopted, school districts have been required to keep their budgets within an inflation index. If the budget exceeds the inflation amount, the district has to seek an exception from the Department of Education or referendum approval from the public. Department exceptions are also available for direct increases in special education costs, meeting pension obligations and paying for construction projects, with those increases only requiring state approval.
Proposed Senate Bill 909 would get rid of those exceptions and require all increases, including those to meet an increase in the cost of living, to go before the public for approval through a referendum. Freshmen senators Camera Bartolotta, R-Monongahela and Pat Stefano, R-Bullskin, are among the cosponsors of the proposed legislation.
“The people have really been rallying against property tax for a long time. I would love to see a total elimination of property tax,” Bartolotta said. “S.B. 909 puts the power back in the voters’ hands.”
Larry Blosser, the director of the Fayette County Election Bureau, said he was unfamiliar with the proposed legislation, but certain rules apply to all referendum questions.
“If a referendum is put on during a primary, it’s opened up to all voters. If an individual is neither a Democrat nor a Republican, the only thing on their ballot would be the referendum. They would have a separate ballot just for that,” Blosser said.
Blosser said who covers the expense of adding a referendum question to a ballot or preparing special ballots depends on how legislation is worded.’Bartolotta said the proposed bill takes a long-term view of the property tax issue.
“It really is an attempt to protect people in a school district from skyrocketing property taxes and losing their homes,” Bartolotta said. “In the case that we don’t completely eliminate property tax, this would be a way to keep our property taxes from skyrocketing again.”
“The rising cost of school taxes is one of my main interests. The costs just keep going up and up,” said Stefano. “I like the transparency of the bill. I’m not certain about the fine points.”
Stefano said it is very early in the bill process, with S.B. 909 not expected to come up for a vote until next spring, if at all.
“There will be hearings and debates and discussions, and once more people are on board, it will come up for a vote. These are beginning steps. The goal is to eliminate property tax. It’s at the concept stage for me,” Stefano said.
The Associated Press contributed to this story.