With the county's highest millage rate and the lowest average resident income, property tax reform could have lasting consequences for the poverty-plagued York City School District.
But with all that's at stake, city and school officials said a proposal to shift school funding from property taxes to an earned income tax isn't the answer.
Under an analysis completed by The York Dispatch, a York City couple with average income who live in a house assessed at the average value would lose more than $1,750 per year if just 30 percent of their property taxes were shifted to earned income tax.
Such shifts have been key components of several past and pending pieces of legislation, including a proposal by state Rep. Seth Grove, R-Dover Township.
Because his proposal includes relief to businesses that don't pay earned income tax, homeowners and renters who do pay the tax are left to fund the deficit created by the loss of revenue from businesses that would get the same tax break.
For that reason, Grove has said he plans to change the bill to remove relief for businesses and focus it on owner-occupied homes.
But under the current proposal, the home assessed at the district's average $50,268 would save $468.67 on property taxes, but the earned income tax would have to be increased by several times its current level to compensate. The average household of two wage earners earning a combined $45,063 per year would pay out an extra $2,223 in earned income tax, meaning they would have a net loss of $1,754 per year.
A single homeowner earning the average $22,531 per year would lose $643 annually. Average couples who rent would lose the full $2,223 per year because they have no property tax savings. A single renter would lose $1,020.
Commercial entities not paying earned income tax get to keep their entire property tax savings and don't have to contribute to the redistribution kitty.
If commercial properties are removed under the changes, which Grove said he'll make next year, the net loss for the average household of two wage earners would be reduced to $1,227. A single renter would pay about $320 more per year.
Net loss: While some of the deficit created by businesses could be filled through higher or expanded sales taxes, Mayor Kim Bracey said she doesn't consider the proposal a workable one as is.
Bracey said she and other concerned city officials met with Grove to air the legislation and its impact, before he said he intended to change it.
"We left on friendly terms of course, but we told him this is not relief to the City of York," she said. "We have thought for a long time that we need some type of reform, but this isn't it."
She said her favorite part of the proposal is the city's ability to opt out.
Kevin Schreiber, the city's director of community development, said the proposal could potentially work against his office's goal of increasing home ownership and residency because the average homeowner would pay more per year in taxes.
He said Grove's proposal is "a starting point," though, and commended him for continuing the property tax discussion.
"There's no panacea," he said. "But something has to be done to address the over-dependence on property taxes."
-- Reach Christina Kauffman at 505-5436, firstname.lastname@example.org, or follow her on Twitter at @YDYorkCounty.