OP-ED: The issues facing property tax reform
For years, if not decades, people have urged the Pennsylvania General Assembly to come up with a viable solution for relief from school property taxes that are forcing senior citizens out of their homes. But their appeals appeared to fall on deaf ears. Believe me, I know the frustration, as I was one of those people asking my elected officials to fix this problem.
Since becoming a member of the House, my colleagues and I have worked to come up with a real solution that would appeal to the majority of representatives and senators to finally make progress on property tax reform. While I’ve advocated for plans that included complete property tax elimination, I remain open to property tax reform proposals that have the ability to garner 102 House votes, 26 votes in the Senate, the governor’s signature, and keeps Pennsylvanians in their homes. As you can imagine, this is no easy task.
The property tax situation in York and Cumberland counties is totally different from that in, for instance, Bedford County. In fact, just going from one school district to a neighboring district in York County results in varying tax rates, some more extreme than others.
Take Warrington and Washington townships for example. A home assessed at $150,000 in Warrington Township would receive a school tax bill of $2,620, while a home in Washington Township assessed at the same amount would receive a school tax bill of $3,396 due to differing millage rates between Northern and Dover Area school districts.
That’s just in the 92nd District, the extremes that exist throughout the commonwealth are staggering.
Property tax relief isn’t a partisan issue, it’s a geographical issue. There are many factors that play a role in the way property taxes are levied throughout Pennsylvania, including the volume and livelihood of local industry, equitable distribution of state and federal education dollars, archaic education funding laws, hold-harmless clauses, changing student populations, and much more.
A school district receiving 50% of its per-pupil costs from the state doesn’t require the taxpayers to subsidize its budget like a school district receiving less than 30% of its per pupil costs from the state. Some school districts are funded at such a high level by the state that property taxes aren’t an issue at all. Some school districts with a high density of businesses experience an average property tax bill of just $1,000. These funding disparities between school districts across the state make it challenging to gain the consensus needed for true property tax reform legislation.
I was encouraged by my recent appointment to a bipartisan, bicameral property tax work group, charged with the task of creating a property tax reform plan than can garner the votes required to get signed into law. That’s an important component — garnering the support of the majority. Past proposals have not been able to clear this hurdle.
This renewed effort for property tax reform, supported by leadership in both chambers and both parties, gives me hope that we can find middle ground and finally make some progress on property tax reform.
The proposals before the House this session range from freezing property tax rates for individuals over the age of 65, to school districts excluding up to 100% of a homestead or farmstead by instituting an additional state personal income tax (PIT) of 1.8%. Another plan proposes to realign taxes and provide all property owners with a flat rebate check.
Yet another plan includes a complete tax shift that eliminates school property taxes by increasing the PIT from 3.07% to 4.5%, increasing the sales and use tax (SUT) from 6% to 7% and expanding the list of taxable items to include food and clothing. And we’ve all been reading about an extensive property tax elimination proposal that includes a 1.85% PIT increase to 4.5% that’s levied on the untaxed portion of pensions and interest earnings, and an optional 2% local SUT.
It’s important to understand that any property tax reform plan will require a tax shift, as those education costs must still be covered. But the gains to be realized are possibly the elimination of the most regressive tax levied in Pennsylvania, a more equitable taxation system, predictability of taxes owed, and peace of mind from knowing government no longer has the ability to take your home.
As we continue to work toward a comprehensive solution, know that I remain open-minded and actively engaged to ensure property tax reform progress is made. Pennsylvanians simply can’t afford to wait another five or 10 years for relief because legislators insist on “all-or-nothing” action with property tax policy. At minimum, our seniors should never have to worry that they’ll lose their home because they can’t pay their property taxes.
That’s why I’m sponsoring legislation that removes the ability of government to confiscate the primary dwelling of our senior citizens for failure to pay property taxes. The taxing authority may place a lien on the property to be recovered upon the sale or transfer of the property.
I’m confident we can reform our property tax system. The reform may not be the magic bullet everyone is hoping for, and it may require a series of steps until significant reform is realized, but we all need to come to the table and be willing to make the necessary effort, and take the difficult steps, if we’re ever going to see any substantial property tax reform.
— Dawn Keefer is a Republican from Dillsburg representing the 92nd District in the Pennsylvania House of Representatives.