Seth Grove
Seth Grove

After decades of asking for it, Yorkers got a chance at their first piece of property tax reform Wednesday with the passage of a bill from Rep. Seth Grove, R-Dover Township.

The House voted 149-46 to pass the Optional Property Tax Elimination Act.

If the bill passes the Senate and is signed by the governor, every school district in Pennsylvania could choose whether to eliminate property taxes and replace them with earned income and other taxes.

Property taxes have long been bemoaned in growing counties, such as York, because increasing school enrollment pushed taxes higher and higher.

That hasn't been a problem in parts of the state where population has decreased or remained steady, so Grove has said he set out to write legislation that would allow each district to make the decision that's best for that district.

"It's a beautiful day in Pennsylvania," Grove said after the vote on Wednesday. "The largest property tax bill that we have seen under the House and the only one (to pass) for elimination."

Flexibility: Grove said House Bill 1189 provides numerous options for school districts, allowing them to eliminate, reduce, or leave taxes alone.

"It does not mandate a one-size-fits-all fix," he said. "It allows local communities to choose their tax base."

Grove said he's "an eternal optimist," but he didn't expect the bill to pass so soon and so quickly.

"It shows the want of the House to tackle the issue," he said. "We've been screaming about it for a long time ... and there was huge bipartisan support to finally move this forward."

Grove's bill now moves to the Senate for approval.

"I don't think anyone (in the Senate) was expecting the magnitude of the bill we sent over to them, but there is an appetite for reform in the Senate," he said.

The tools: Under the 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.

Personal income taxes, which include money earned on investments, could be added if school districts wanted to take the issue to voter referendum.

The money raised by shifting taxes would be used on a dollar-for-dollar basis to reduce the school district millage rate.

The state now caps how much districts can raise taxes. The districts that eliminate property taxes would not be able to raise the other taxes any more than would be allowed under the system that currently governs property tax increases.

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.

Debates: On Tuesday, the state House's second consideration of the bill took a messy turn when another representative tried to sell his bill inside Grove's.

Rep. Jim Cox, R-Berks County, added an amendment attaching the provisions of his legislation - House Bill 76, the Property Tax Independence Act - to Grove's.

While HB76 has been a perennial favorite of some taxpayer groups and legislators, the bill remains tabled in the House Finance Committee.

So on Tuesday, Cox said he decided to tag HB76 onto Grove's bill because of the "legislative logjam."

But after about three hours of debate on the House floor, Cox's amendment still proved unpopular, with representatives voting it down 138-59.

HB 76 would completely replace school district property taxes through the use of statewide funding sources, raising the state sales tax from 6 cents to 7 cents, expanding the sales tax by closing loopholes, and increasing the state personal income tax.

- Reach Christina Kauffman at ckauffman@yorkdispatch.com.