Senate Bill 76 – The School Property Tax Elimination Bill, may be introduced as soon as this week. State Senator David Argall, the sponsor of the legislation, has stated that his goal is to have the law passed and implemented as early as July 1.
SB-76, if passed, will increase the state’s income tax rate from 3.07 percent to 4.95 percent and increase the state sales tax from 6 percent to 7 percent. In addition, the state sales tax will be applied to items now exempted: such as groceries, clothing, financial services, funeral services, and non-prescription drugs. A portion of the school property tax will remain to pay off debt service. After that, 100 percent of a school district’s funding will come from the state in the form of quarterly payments plus a cost-of-living adjustment.
It’s worth pointing out that property taxes will not be totally eliminated; this legislation only applies to school property taxes. County and municipal property taxes are not addressed with this legislation and will remain.
While in principle, eliminating all property taxes is something I support, concerns about this bill, in its present form, concern me:
• While revenue to the schools will be capped at cost-of-living, how will schools be able to adjust for the still rapidly-rising cost of special education, collective-bargaining contracts that out pace cost-of-living, the rising costs of healthcare, and rising charter school tuition payments, and the crushing costs of PSERS payments, short of eliminating many of the educational programs they offer?
A NOTE ON PSERS: The school districts’ PSERS contribution rates have risen, in only 10 years, from 7.13 percent for the ’07-’08 school year to an estimated 32.57 percent for ’17-’18. If the state takes over school funding altogether, why not then just take over PSERS altogether? It doesn’t make sense to provide funding to the school districts, only to then take back a large part of that funding to cover PSERS contributions.
• Will the schools continue to be funded during budget stalemates, or will schools be forced to close along with other state agencies when the state budget cannot be finalized? PA’s recent budget fiasco comes to mind. Current state law requires 180 days of education with the end of the school year be no later than June 30. What happens if a state budget crisis makes meeting the June 30 deadline impossible? Will the schools be penalized? What about the seniors not meeting graduation requirements?
• With the elimination of school property tax only, will municipalities and counties be enticed to raise their tax rates even higher, or spur county-wide reassessments, in order to increase their revenue to even greater heights before property owners get used to the smaller payments? How can taxpayers be safeguarded against this temptation?
• Also, over the long term, there is concern in the pattern of the government to shift tax revenue from one source to another, only to increase the first source later. Michigan taxpayers, for example, experienced this when under Republican Governor Spencer Abraham. Their state eliminated property taxes, increasing the state sales tax to compensate, only to reintroduce property taxes under Democratic Governor Clair McCaskill, leaving the higher sales tax intact. What safeguards are in place to prevent this from happening? It may even take an amendment to the Pennsylvania Constitution to implement a suitable safeguard.
All too often, our government has enacted legislation with well-meaning intent, only to open a great can of worms and create bigger messes upon implementation. I am afraid this will be the case with SB-76 if these issues continue to be overlooked. So, while property tax elimination is a desirable outcome, governmental centralization has rarely proven to be beneficial, and these issues should be addressed and resolved to protect the schools, parents, students, and taxpayers of this commonwealth.