OUR OPINION: Bye-Bye Property Tax? A New Way To Fund Education

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catoon-708A pair of bills now making the rounds of the General Assembly may revolutionize Pennsylvania’s schools and Pennsylvania’s taxes. They would bag the historic tradition of funding education with a mix of local property taxes and largesse from the Commonwealth’s General Fund. In their place, school districts would draw from dedicated income and sales taxes – some at a statewide level, others voted in locally.

In one stroke, the most-contentious issue dominating politics and policies across the state would be transformed, with new winners – and new losers. Would this change be for the better?

SB 76 is authored by the chairmen of the Urban Affairs & Housing Committee, David Argall (R-Schuylkill) and Jim Brewster (D-Allegheny). These leaders claim 22 cosponsors in the 50-member Senate – 12 Republicans and 10 Democrats. A companion bill, HB 76, has been introduced by State Rep. Jim Cox (R-Berks).

Touted as the “Property Tax Independence Act”, this bold measure would do two things, each of which is remarkable by itself. First, it would provide a way for municipalities to cease taxing property entirely. If they willed it, they would be empowered to raise revenue entirely by voting for local income and sales taxes to fund schools – or any other local-government purpose. The burden of taxation would shift from owners and dwellers, to earners and consumers.

At the state level, new income and sales taxes would also be imposed which would be dedicated solely to fund k-12 education. The new income tax (1.27%) and sales tax (1%) would be placed in a new Education Stability Fund. This ESF is designed to take the place of the present Basic Education Fund, which delivers the core of the state component of school spending. But the BEF has no guaranteed income of its own. Each fiscal year it must do battle with a hundred other hungry mouths clamoring for a piece of the budget. In recent years it has often come up sucking the short straw.

So SB 76 might just as well be called the “School Funding Independence Act”. Under its provisions, all school districts could engage in stable long-term planning around their state funding base, free from political vagaries in Harrisburg.

How money is collected matters. But how much is collected matters more. An initial check of SB 76’s language suggests that had it been in effect in the last fiscal year, it would have boosted basic education spending from $5.5 billion to $6.7 billion. That extra $1.2 billion would fill a lot of holes in many school budgets – not the least of them Philadelphia’s.

Among other things, SB 76 would change the entire dynamic of the brutally contentious AVI debate in Philadelphia. Of your property tax, 55% goes to support the School District. If that money were to come through other channels, then the widespread increases in many homeowners’ taxes (sometimes doubling) which are scheduled to bite in next year – would go away!

None of which means this radical reform is a good thing. The devil lies in the details of this 137-page piece of legislation. The BEF does not account for all state education spending today. If the ESF is used to replace useful supplementary funding programs, schools will not see net gains.

And shifting the pain of taxation does not eliminate it. Voters will be asked to choose whether they’d rather see their home, or their paycheck and their checkout-counter receipt, taxed.

In addition, vastly expanding taxation options at the school-district level would pose “taxing” new demands on local tax-collection agencies (not to mention citizens’ tax-preparers). If nothing else, property-tax management is fairly stable, low-cost, public and easily tracked (except in Philadelphia, it appears … but that’s another story.)

But our traditional way of paying for education isn’t working well – especially for Philadelphia, whose property-tax base is in no shape to deal with the extra costs of educating children most of whom live in poverty. You can’t squeeze blood from a stone.

In the long run, the main burden of funding public education should be shifted to the State. Local-government levies can fund extra amenities for local schools if their citizens wish, but all core educational needs should properly be paid for out of the broadest-possible tax base. When a poor child needs a physician, we do not fund this chiefly out of a poor community’s pocket. Why do otherwise when a poor child needs a teacher?

Our General Assembly delegation must take a close look at the Argall-Brewster legislation to see if it offers an escape hatch from some of our School District’s woes.

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2 Responses to OUR OPINION: Bye-Bye Property Tax? A New Way To Fund Education

  1. The question about school funding in Pa should be framed as follows: Who should be responsible for funding our schools, the homeowners or the State?

    The answer should be a resounding “State.” Because when the State funds the schools, then everyone has skin in the game, not just the homeowners. When everyone pays, then how the money is spent, and on what, becomes the focal issue – not the unions, the local school boards, and the property-assessment commissions, With their myopic, self-serving demands.

    There is absolutely nothing fair about the current funding method. People who live in apartments and send their children to local schools pay no school tax. School districts build schools that look like palaces, to the detriment of the elderly and of people who have no children in school.

    People 65 and older should be exempt from paying school taxes – period. How many of our elderly in this state have lost their homes to sheriff sales for back taxes? It is about time for Pennsylvania schools to be funded with wage- and sales-tax increases.

    When I went to school in Philadelphia, we had 40, 50, even 60 people in a classroom. The teachers’ association wants 15–20 children in a class. This requires more teachers, more money to be set aside for health and retirement benefits; and the homeowners – most of whom do not have children in school – pick up the tab.

    If the union does not like the new funding source, then let its members find a job in the private Sector, where they will become familiar with another phrase: 401K.

    As for the teachers’ unions, local school boards and especially the local assessment commissions, they should be dissolved. There is not a more-treacherous group of entities in this state, and that includes our elected representatives in Harrisburg who seemingly are dragging their feet on moving HB76 and SB76 to the floor.

    The homeowners of this state should unite. No matter what your political affiliation, tell your representative if he/she does not vote yes, then their time in office is very limited. All political organizations should get behind the people who vote yes on this issue because this is the most important issue currently facing the voters of Pennsylvania. Do homeowners actually own their homes, or does the teachers’ union, local school officials and the county assessment commissions own your home by virtue of the obscene school taxes that we homeowners must pay?



    Arthur T. Hunter
    September 25, 2013 at 7:42 am

  2. You make some very good points; the best being the issue with the teachers’ union.

    As a teacher myself, their policies have been awful for education and I refuse to ever join. It is also wrong for homeowners to be the ones to fund public schools in Pennsylvania. Something needs to be done.

    Your claim that renters do not pay property tax is incorrect though. Their names might not be on the checks cashed by our public schools, but do you think for a minute that landlords do not factor in property taxes for renters? Renters do pay property tax but it is indirectly paid. It passes through the hands of their landlords first.

    November 15, 2013 at 11:43 am

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