Property tax reform was the most prominent concern discussed when Pa. Sen. Judy Schwank (D-Berks) addressed the crowd of 50 lower Berks residents at a town hall style meeting at the Caernarvon Township building on Sept. 26.
In 1992, then-Berks County Rep. Sam Rohrer initiated the concept of finding some help from alternative sources of funding to eliminate the current assessment of value of real estate, with a combination of sales taxes and funds from other sources to finance the public school system.
There was then no real analysis of whether the funding would work. The Independent Fiscal Office in Harrisburg is currently determining if ample alternate funds are available to replace property tax in education funding.
Once the fiscal study comes back, it will provide more answers on property tax reform, said Schwank. Two more sponsors for the bill are needed in the state senate now that State Sen. Andy Dinniman has jumped aboard.
The Senate Finance Committee is holding a public hearing on Oct. 15 at 9:30 a.m. on the IFO’s analysis of the bill. A copy of the IFO report can be found at www.ifo.state.pa.us.
At the Sept. 26 meeting, local residents voiced their concerns with potential reform and education funding. One resident said senior citizens would be affected by an increase in sales tax. Another said it would be like “robbing Peter to pay Paul.”
“I hear you. I am on top of all this and want to be a part of it,” Schwank said. “Let’s see what happens.” She added that she’s never seen property tax reform legislation come this far before.
Since the meeting, an amendment to House Bill 76 was voted down by a large margin. In a recent phone interview, a spokesperson at State Rep. Gordon Denlinger’s office said that residents of many northern and western municipalities in the commonwealth like the tax system the way it is because they have low populations and much of their funds come from densely populated areas of Pennsylvania. Legislators in Philadelphia don’t want reforms because the wage tax would rise, he said.
The state also has a contract with the teachers that it can’t break, Schwank said at the meeting. New employees coming in have to pay for the pensions of those who are older. The legislature talked about pension reform but nothing was done. The costs of special education also add millions to the costs of education.
One resident said the cost of education was much lower when teachers were underpaid and the economy was better. Education costs began to rise as teacher salaries improved and the economy began to slump. Pensions are part of the problem but not all of it, he added.
Some residents said they believe alternative funding gained from a tax on shale gas could benefit a solution. However, Schwank said long-term benefits from a tax on shale gas are not reliable because of uncertainties in the quantity, location and availability of natural gas.
However, Schwank said residents should continue to talk to their representatives if they want a tax on shale operations to help finance education. Initiatives to get funds from the Marcellus Shale operations usually don’t even make it out of committee, she said.
A resident said in the development where he lives, houses are new and taxes are higher than in a nearby area where the residences were assessed 20 years ago. His property has been reassessed twice.
No blanket assessment of real estate has been done in Berks County since 1993, said Schwank. Reassessment would cost about $5 million. Residents who have an issue with their property assessment can call the assessors’ office. If they do not respond, residents can call the commissioners’ office.
Schwank said another problem with state taxes is that many businesses in Pennsylvania find a legal loophole by registering with a Delaware address so they do not have to pay taxes in Pennsylvania. It is much more favorable for a business to be incorporated in Delaware. There is a lobby of businesses to keep the status quo. This practice also hurts the amount of money the state has to use.
A teacher agreed the property tax is unfair and it has to go, saying that people are suffering. High property taxes are the first concern for his parents.
Another resident said the cost of state mandates is unbelievable and many of the demands from the state have nothing to do with education.
Many states have different systems Pennsylvania could use as a model. There is some legislation that would let school districts initiate their own taxing system, said Schwank.
“I am with you folks. Work with me. Let me know your concerns. We have to move forward to make this happen,” she said. The next step for Bill 76 is to get it out of the finance committee.
The 11th Senate District covers most of the area between Boyertown, Cumru Township, West Reading and Bernville. Schwank serves on the following committees: Aging & Youth, Agriculture & Rural Affairs, Appopriations, Public Health & Welfare and Veterans Affairs. Her office phone number is 610-929-2151. The number for her Harrisburg office is 717-787-8925. Her web site is www.senschwank.com.
The property tax independence act is supported by 76 members of the Pennsylvania Coalition of Taxpayers Association. If passed, it would increase the sales tax to 7 percent and 8 percent in Philadelphia and Pittsburgh. Personal income tax would be increased to 4 percent and funds would be assigned from slot machine receipts. Districts would be responsible for their own debt service.