Over the past few months, there have been several news stories and letters to the editor regarding the issue of school property taxes. Along with this, I continue to hear from constituents with questions and ideas on this important issue. Because of this, I thought now would be an opportune time to provide an update of legislative activities surrounding school property taxes.
As many of you know House Bill 1776, the Property Tax Independence Act, was introduced this past April. I signed on to this bill as a co-sponsor and attended the rally in the Capitol to promote its passage. This bill would eliminate school property taxes and replace that funding with an increase in sales tax and personal income tax throughout the Commonwealth. The bill was referred to the House Finance Committee, which then held a series of public hearings. Numerous people testified at these hearings to discuss the pros and cons of this plan.
One of the most disconcerting points in the testimony came when the Department of Revenue projected that collections coming from a combination of increased sales revenue, increased personal income tax and expanding sales tax on a goods and services that are not subject to taxation would raise only $9.1 billion for the bill’s first year of operation. This figure fell far short of the approximately $12.5 billion currently generated annually from the state’s more than 500 school districts.
After these hearings, the House Finance Committee convened on June 11 to consider House Bill 1776. The projections from the Department of Revenue raised concerns from a number of the committee members and a motion was made to “table” the bill which passed. This action was widely reported in the news as having “killed” or “scuttled” the bill and from a procedural standpoint (as is sometimes what a tabling motion is designed to do.) After the Committee’s action, there was a strong public outcry and my office — along with many of my colleagues – received calls and e-mails expressing deep disappointment with this turn of events. I was also disappointed and concerned with the future of this plan.
The next sequence of events concerning House Bill 1776 appears to have been lost in the shuffle during the passage of the state budget and was not widely reported in the news media.
On June 27, the House Finance Committee held a meeting and voted to re-refer House Bill 1776 to the House Appropriations Committee for the purpose of reviewing the revenue estimates of the plan. Additionally the Chairman of the House Finance Committee requested that the Independent Fiscal Office review the bill’s projected revenue estimates, economic impact and impact on school districts.
The Independent Fiscal Office was created in 2010 to provide an additional review of the revenue projections used in the state budget process, along with impartial and timely analysis of fiscal, economic and budgetary issues.
Additionally the Senate Finance Committee recently held a hearing on Senate Bill 1400, the companion bill to House Bill 1776, and the Independent Fiscal Office will also be reviewing their legislation.
I know a number of people in Pennsylvania are disappointed and frustrated with the lack of progress on the school property tax issue. It is my hope that this analysis from the House Appropriations Committee and the Independent Fiscal Office will provide details on the funding and suggestions on how to make House Bill 1776/Senate Bill 1400 work to eliminate the school property tax.
House Resolution 774
Shortly after House Bill 1776 was tabled in the House Finance Committee, I introduced House Resolution 774 which calls for the formation of a House Select Committee to review, investigate and make recommendations on sources of school district and local government tax revenue, with a focus on property taxes.
I introduced this resolution to continue the push for a solution to the property tax issue. The Select Committee will be comprised of members of the following House Committees: Finance, Education, Transportation, Local Government, Environmental Resources and Energy, and Urban Affairs.
In addition to the school property tax, which remains the most pressing issue, the committee will also review municipal and county property taxes. More and more we are seeing cities, boroughs, townships and counties increasing their respective property taxes to fund operations and services.
The Select Committee has been appointed by the House Majority and Minority Leader and will be begin hearings in late August. I will be serving on this committee and I believe it will be a good compliment to the aforementioned steps being taken by the House Appropriations Committee and the Independent Fiscal Office.
House Bill 2552
Finally, I wanted to clarify some misconceptions regarding a recently introduced bill that would redirect gaming proceeds from the Valley Forge Casino to Montgomery County.
There were some who were under the misunderstanding that House Bill 2552 was redirecting money from the property tax relief fund to the county. That is not the case. Under the law, the host county and the host municipality were always due a percentage of the revenue generated by the casino.
As reported in a recent Mercury editorial, all House Bill 2552 would do is change the state Gaming Act to ensure that the Montgomery County’s local share assessment for slots and table games would be specifically deposited into dedicated accounts for the purpose of supporting the maintenance and refurbishment of the parks and heritage sites throughout the county, as well as Mission Kids and Laurel House. Mission Kids and Laurel House are both county-funded services which assist local families in need.
I know that the premise for the state authorizing casino gambling was to provide property tax relief and, unfortunately, the meager amount passed on to the homeowner does not help people in this area. I was not in the Legislature when the original gaming bill passed in 2004 and I voted against the bill to authorize table games because I realized that even if the gaming revenue exceeded the $1 billion projection it would not put an appreciable dent in a $12.5 billion school property tax total. The real answer to the school property tax issue lies with changing the current system of funding.
I hope this column has shed some light and provided clarification on the recent developments concerning this important issue.
Rep. Tom Quigley is a Republican who represents the 146th House District in the Pennsylvania Legislature.