Sponsored by Rep. Jim Cox, R-Berks County, co-sponsored by most of York County's Republican contingent and supported by state Rep. Eugene DePasquale, a Democrat who represents metro York, House Bill 1776, the Property Tax Independence Act, represents one of the fairest and most thoughtful, realistic and meaningful reforms to reduce property taxes in Pennsylvania.
The bill would eliminate or greatly reduce school property taxes paid by all property-owning residents, businesses and farmers throughout Pennsylvania. All property owners' sizable relief would be made up by broad-based increases in the personal income and sales and use taxes. The latter would include the purchases of goods and services by out-of-state tourists, business travelers and shoppers.
The act has been gaining bipartisan support. The majority of Democrats on the House Finance Committee -- six in all -- voted to bring the bill to the House for full consideration on June 11. Unfortunately, by a 13-11 vote, the committee voted to table it.
The bill would gain more support if its merits were fully explained to and shared with leaders, stakeholders and citizens in small cities and boroughs.
Our aging core communities need tax fairness and a fairer tax playing field to incent more long-term families and cohesion in our neighborhoods, as well as city-wide development, market-rate housing, job creation and historic preservation.
The act would have a huge, positive impact on all property owners throughout York County, but especially on York City property taxpayers -- homeowners, as well as commercial, industrial and retail property owners of all types and sizes.
Their total property tax burden would drop by about 58 percent.
Regressive, antiquated, unpredictable and onerous, school property taxes are the greatest inhibitor to economic and community development in York and many core communities.
Unchecked spikes in property taxes threaten our city's momentum and progress. Without dramatic lures, most rational, patient investors and would-be homeowners will pass on an environment of unwieldy and unpredictable property taxes.
Especially in our land-locked or nowhere-to-grow cores, they work against creating a healthy climate of reinvestment, construction, historic preservation and rising property values that lead to a robust tax base benefiting all three taxing entities.
The bill proposes that equitable revenue sources -- such as moderate increases in the personal income tax and sales and use tax -- pay for public education costs, which would be adjusted upward for inflation over time.
Property owners in core communities like York would benefit the most because they shoulder the highest school property millage rates. This is due to socio-economic, cultural and other challenges (e.g., 90 percent of York City children and youth have free or reduced lunch meals; 10 percent of York City students are functionally homeless; and the average city student moves four times per year).
A creeping challenge is a large concentration of tax-exempt properties, which accounts for 38 percent of the value of all properties in York.
Based on 2011-12 rates, the average school property tax rate in our county's townships is 19.08. The average total (i.e., school, municipal, and county property taxes) property tax rate in our townships is 24.34.
During that same span, the average school property tax rate in our county's boroughs is 19.08 mills. The average total property tax rate in our boroughs is 25.57 mills.
By contrast, the total millage rate for city property owners in 2011-12 is 55.60 -- more than twice the averages of either our townships or boroughs. For 2012-13, it is now 58.26. Without bold reform by the General Assembly, this discouraging disparity between cities' rates and other municipalities' rates will continue to grow. This is not just a York challenge; it is a Pennsylvania dilemma.
With the city school board's final decision to increase school taxes by 8.5 percent -- from 31.08 to 33.74 mills -- city school taxes account for 58 percent of a city property owner's annual property tax bill.
The 8.5 percent spike for 2012-13 is by far the largest of any district in the county, with the next largest being 4.6 percent.
With the possibility of additional hearings being held this summer, the Property Tax Independence Act is not dead, but it is on life support. Our current state Legislature's session ends in November. Stakeholders and citizens who want real tax fairness and relief should continue pressing for real property reform that would give a huge shot in the arm to the people of scores of cores who are burdened by unpredictable and historically high school tax rates.
Elected officials and concerned citizens have talked about property tax reform for at least a decade, but this act, with some thoughtful amendments (e.g., retaining the local earned income tax) would deliver the greatest, long-term tax relief to city homeowners without compromising long-term, local educational funding.
The household scenarios below are based on current millage rates as of July 3, including the final city school district rate of 33.74, and they account for House Bill 1776's increases in personal income tax and sales and use tax for each particular household.
If the bill were passed, an owner-occupied household of a house in York valued at $50,000 that makes $30,000 per year would see a $1,277 net decrease in the owner's current taxes. This would be a stunning 70 percent drop in that household's total school tax bill.
Dramatically lightening the tax load of city homeowners is the right and fair thing to do. It also is the smart thing to do to spur our economy, rebuild and preserve our historic cores, strengthen our sense of place and civic identities and stimulate a robust tax base.
-- Matthew Jackson is a public policy analyst and strategic planning and eco nomic and community devel opment consultant.