Pennsylvania Senate eyes bill to kill school property tax
HARRISBURG — The Pennsylvania Senate’s majority leader said Tuesday that he is planning a vote early next week on legislation to end the collection of school property taxes and replace it with billions of dollars in higher state taxes on income and sales, including repealing of a wide range of exemptions on transactions.
A planned vote Tuesday was postponed to address various issues, including ensuring that the bill would raise enough money to adequately replace eliminating the property tax, Majority Leader Jake Corman said.
The state’s Independent Fiscal Office projects almost $14 billion in school property tax collections this year.
Passage of the bill could threaten the fragile structure of a sprawling deal to end a 5-month-old budget stalemate. Under that deal, House and Senate Republican leaders and Gov. Tom Wolf agreed to pursue legislation to increase school property tax rebates by $1.4 billion by raising the sales tax rate from 6 percent to 7.25 percent.
Many details of the agreement are still being worked out. Meanwhile, officials from school districts and social services providers that are suffering through the stalemate are pressing the Republican-controlled Legislature to approve a boost in aid first proposed in March by Wolf, a Democrat.
Corman said he has told Wolf and other negotiating partners that any school property tax debate in the Senate would have to include a vote on legislation to eliminate the tax. A strong contingent of senators support the move and it is close to having enough support to pass, Corman said.
“I told that to everybody, so they’re all very aware that we’re going to go through this process,” Corman said. “If it passes, then we have to sit down and discuss what we want to do.”
Legislation to eliminate school property taxes has not received a committee vote this session. Instead, the Senate would bypass that step for a floor vote to amend the legislation to an unrelated bill.
Under the bill introduced by Sen. David Argall, R-Schuylkill, the personal income tax rate would rise from 3.07 percent to 4.34 percent while more types of food, clothing and shoes would be exposed to a new, higher tax on sales — 7 percent, up from 6 percent.
The sales tax also would be applied to a wider range of services that are currently exempt. Those include basic TV service, tickets to recreational, cultural and sporting events, and some work performed by lawyers, accountants, architects, financial institutions, funeral parlors and salons.
The bill would mandate that school districts get a regular inflationary increase from the state. Districts wanting to spend above that allotment would have to win voter approval to increase local income taxes.
A similar bill failed in the House two years ago, 138 to 59.
In May, the House narrowly passed a bill that would raise about $4.2 billion for property tax rebates by increasing the sales tax rate to 7 percent and the personal income tax rate to 3.7 percent. Some opponents of that approach warn that short-term savings to property taxpayers will eventually be lost when schools return property taxes to current levels, leaving a permanent tax increase on sales and income intact.
Wolf and Republicans also disagree over how to distribute new money for property tax rebates.