Meadville Tribune

Opinion

May 4, 2014

Middle class families losing out in proposed tax change

While the Pennsylvania House punted on statewide property tax reform, the state Senate may be ready to take a shot at a plan to rid the commonwealth of this most-loathed of levies.

The Senate finance committee this week held a hearing on a 23-page amendment to the 137-page bill that would replace the state’s school property tax with an increase in sales tax.

The authors of the legislation, Sen. Mike Folmer, R-Lebanon County, and Sen. David Argall, R-Schuylkill County, made the strongest case by focusing on the popularity of eliminating school property taxes. The issue has been kept alive by a coalition of dozens of citizens groups across the commonwealth, Folmer said.

Pennsylvania has no direct means of voter-generated ballot referendum. The ongoing advocacy for those groups has been “the closest thing” to a referendum, Folmer said.

Argall observed that poll after poll has shown widespread support for eliminating the property tax. A statewide poll commissioned by the Pennsylvania Association of Realtors found that 52 percent support this concept with only 36 percent opposed.

“In this business, a 16-point lead is a landslide,” Argall said. But he noted that other regional polls have shown more lopsided support.

They may have a tougher row to hoe when they argue that the shift to sales tax would not create problems.

Folmer argued that without property tax, homeowners would be getting taxed only when they made purchases — generating revenue for the state while encouraging economic activity.

The charm for government with property tax is that it’s stable. Sales tax depends on how much people spend. Critics of the plan say switching to sales tax will short-change schools. Supporters say that would only be true if schools continue to increase their spending at the rate they have been.

“(Sales tax) is good enough for us” in state government, Argall said.

It seemed like a tough week for that argument. Lawmakers found out this week that April state tax revenues were $328 million below estimate.

But lost in all that bad news was this: While other tax streams disappointed, sales tax revenue actually exceeded expectations for April by $4.2 million, according to the Department of Revenue. Proponents of eliminating the property tax can make this point too: The state will close that budget gap one way or another. The underlying struggle in the push to get off property tax is to get schools to control spending without expecting taxpayers to shoulder a greater burden every year. That’s why the effort is so popular with the public but unpopular with the people who run the schools and work in them. Both the Pennsylvania School Board Association and the teachers’ union oppose the plan.

There are other objections that will nettle.

One: If all school tax dollars go to Harrisburg to be divided between 500 school districts, then there will be real pressure to make sure that money is being divided fairly. That’s something about which a lot of people in rural Pennsylvania are certainly going to be skeptical.

Two: Folmer repeatedly observed in the Senate committee hearing that the legislation would undoubtedly have “winners and losers.”

Winners would include seniors who own their own homes. Winners would also include companies that own large tracts of extremely valuable land, noted state Sen. John Wozniak, D-Cambria County. The losers could be working and middle class families left to pick up the tab. That’s a problem that’s going to trouble a good number of lawmakers when it comes time to settle the matter.

John Finnerty reports from the CNHI Harrisburg Bureau for The Meadville Tribune and other Pennsylvania newspapers owned by Community Newspaper Holdings Inc. Email him at jfinnerty@cnhi.com and follow him on Twitter @cnhipa.

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