State senators took up property tax reform last week, but a locally authored proposal that passed the House this month was absent from discussion while senators instead aired a plan that tanked in the House.
The Senate Committee on Finance discussed Senate Bill 76. The House version failed after being tagged onto state Rep. Seth Grove's Optional Property Tax Elimination Act, which did pass.
Members of the House rejected HB 76 by a margin of 138-59.
Because of the unsuccessful vote, HB 76 would have to change significantly before the House could vote on it again. It might have to change significantly regardless.
Members of the House said they were concerned about flaws in HB 76, as the Legislature's Independent Fiscal Office found a $2.6 billion hole in its funding plan, leaving school districts with less money under a proposed tax shift.
Would eliminate tax: HB and SB 76 would eliminate property taxes by increasing the personal income tax by 41 percent and raising the state sales tax to 7 percent, and eliminating many existing sales-tax exemptions.
The Senate version of the bill, introduced by Sen. David Argall, R-Schuylkill, is sitting in the Senate Finance Committee. Argall told the Associated Press he would like to see a speedy process in which amendments could be offered to correct any flaws in the bill.
Sens. Rob Teplitz, a Democrat, and Pat Vance, a Republican, represent portions of York County and sit on the committee.
Both said neither Argall's proposal nor Grove's, which is also sitting in the committee, would get their vote as is.
Vance said she was baffled by the committee taking up legislation that had already been strongly defeated in the House.
"I'm not quite sure I understand how we would pass it in the Senate and send
it back," she said. "I would like to see something that has a chance at passage ... and I can't imagine 76 would be considered viable at this point."
A nurse, Vance said she said she also doesn't support lifting some sales tax exemptions on skilled nursing facilities and homes for intellectually disabled people as called for in SB 76.
Grove's bill: Teplitz said there has been "no indication" that the finance committee is going to take up Grove's HB 1189, "at least not in the near future."
Under Grove's bill, any school district can implement an additional earned income tax, mercantile tax or business privilege tax to reduce the property tax rate by up to 100 percent.
The money raised by shifting taxes would be used on a dollar-for-dollar basis to reduce the school district millage rate.
All taxpayers, even renters, would notice an increase on their earned income taxes -- taxes paid on wages -- to compensate for the lower property taxes.
Businesses could be included, but they would have to pay an additional tax on their services or on their gross receipts of goods sold.
Vance said the "beauty of Grove's idea is also the problem."
"A school district could choose to do what they would with it, but it would be a problem for large businesses who had to cope with multiple school districts each choosing their own method of doing things," she said.
Targeted approach? Teplitz said a more targeted approach to property tax reform is needed.
For example, Senate Majority Leader Dominic Pileggi, R-Chester and Delaware counties, has introduced a bill to freeze property taxes for senior citizens.
"That's the kind of targeted tax relief I would support," Teplitz said. "I wouldn't be very excited about casting a vote for much higher income and sales taxes."
Teplitz also thinks Grove's bill could cause confusion, potentially creating more than 500 taxing systems, one for each of the state's 500 school districts.
Grove said Tuesday that his proposal can't be vetted by the Independent Fiscal Office because there are too many options school districts could choose.
Also, some of the taxes the office would be asked to analyze don't currently exist in some school districts. They would be created if a school district decided to reduce property taxes.
-- Reach Christina Kauffman at firstname.lastname@example.org.