PA Issue Update: Property Taxes
By: Source: AARP.org Date Posted: 2007-12-14 16:13:26.759470-05:00
The question of how to reduce the property tax burden continues to be hotly debated in Pennsylvania as 2007 comes to an end. Former Speaker of the House Mathew Ryan probably has the most accurate quote of all time when referring to this debate - "If this was easy, we'd have done it by now." The following is an update on where the debate currently stands in Pennsylvania, a guess at what the outlook for the future might be, and a recap of what AARP is trying to do to lessen the burden of increasing property taxes on all Pennsylvanians.
The root cause of the property tax problem is that the costs of public education continue to increase. There have been attempts to control these costs. Pennsylvania law now sets caps on increases in local school district budgets. That cap varies by individual school districts, but is somewhere in the 3.5% to 4.8% range. The law establishing this cap was passed in 2006 and went into effect for the 2006 school budgets. School districts can apply to the Dept. of Education for an exemption to this cap for a couple specific items, including special education costs and employee health care costs.
On the other side of the coin, homeowners will soon see the first direct financial result of the legalization of slot machines in Pennsylvania. Revenue from the slots has just about reached the level necessary to begin property tax rebates to all homeowners. At some point in 2008 homeowners will receive a check somewhere in the $300 range. In addition, many older homeowners have taken advantage of the expansion of the senior property tax/rent rebate program, which now gives Pennsylvanians over the age of 65 with an income less than $35,000 (with only ½ of Social Security earnings counting toward that total) a rebate of between $250 and $650 a year.
Many homeowners have complained that these rebate programs do little to ease the burden of property tax bills that are in the $5,000-to-$6,000 range, however. Numerous legislative proposals have been made to produce a more dramatic reduction, or even elimination, of the property tax. But these proposals all involve a shift to other forms of taxation. Proposals to do this at the local level were offered to voters in the 2007 primary election. These proposals were rejected in all but a handful of school districts.
Perhaps the biggest problem with school costs and property taxes right now is that the level of state funding for schools in many areas has dropped dramatically. Some school districts in Pennsylvania are now getting less than 20% of their total funding from the state. That means, of course, they must raise over 80% of their costs at the local level, most often through property taxes. As the late Speaker Ryan noted, there isn't a simple answer to this situation - if the state spends more to fund schools, state taxes will go up. The reality is that in the quest to lower property taxes, there needs to be increases in other forms of taxes plus common sense spending reductions in schools. But getting to that point is going to anger different groups, and so far, the Pennsylvania General Assembly hasn't been willing or able to come to a consensus to take such a step.
From AARP's perspective, we think that the only way that changes are going to happen in our school funding system is at the state level. The caps on school spending increases are a start, but until the state develops a funding formula that is much fairer to schools across the state, there are going to be pockets of communities with very high property taxes. AARP has been talking to legislators and advocating for a fair property tax reduction bill that would combine a tax shift (from property taxes to non-food or clothing sales and personal income taxes) with common sense spending reductions (buying pools for school employee health insurance, consolidation of administrative services, etc).
There are no guarantees of any immediate success, but the issue does seems to be moving forward - a vote on a comprehensive property tax reduction plan has been scheduled in the House before the end of the year. Of course this timetable could slip and the Senate still has to consider such a plan, but the issue is still being discussed.
The debate on this issue is going to be difficult, because those that would be negatively impacted by any changes will make their voices heard loud and clear. But there is an awareness that the current property tax system is unfair to a large number of Pennsylvanians, however, and AARP will continue to remind our elected officials of this while we keep working to make the system more fair. Please keep talking to your local politicians and make your feelings known. There are elections coming up for the General Assembly next year and we'll be asking the candidates for their solutions to the property tax problem.
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