Is real property tax reform a possibility in Pennsylvania?
— Is real property tax reform a possibility in Pennsylvania?
That was a central question being asked last Saturday morning during a meeting of a group of area citizens who are concerned about the rising cost of taxes related to school funding.
Sen. Lisa Baker attended the meeting organized by Wayne County Property Tax Payers and held at Joey C's restaurant and banquet hall in Honesdale.
Baker began the meeting by outlining what she called "key issues" which will be dealt with by the state legislature. She also stressed that no action will be taken following the November general election until new members are seated in January.
She said those key issues are pension reform and obligations as well as transportation and infrastructure funding.
"Our property tax system is increasingly problematic for all of us," said Baker.
She pointed to her own experience, saying her mother-in-law, who is 96, had her taxes triple.
Baker said two bills are being worked on by lawmakers, House Bill 1776 and a companion measure, Senate Bill 1400. Both target reforming education funding and elimination of property taxes.
Baker called it a "real opportunity to reform the system."
However, she also said analysis of the bills shows shortfalls and lawmakers are striving for "dollar for dollar match-ups."
As it stands, the bill would pay out $10.7 billion to school districts, however, at that rate, she said there is a $1.7 billion deficit. She said lawmakers are trying to rework that to "see if we can close the gap."
But implementation of the bill would also mean big changes for residents of Pennsylvania.
One major change would be that school districts would no longer have the ability to implement a property tax.
However, to offset that, there would be wholesale changes in the tax codes.
One of the biggest changes would be raising the sales tax rate from 6 percent to 7 percent.
There would also be new sales taxes implemented on a wide variety of goods and services.
That includes newspapers, magazines, non-prescription drugs, personal hygiene products, dry cleaning, tickets to sporting events and concerts as well as clothing which costs more than $50.
It would also give districts the ability to implement personal income taxes or earned income taxes. Those would have to be approved by a vote of the people.
Baker called the proposal the first one that "really comes close" in budgeting.
Baker told the audience that currently, state law has a "hold harmless" clause for school district. Part of that formula allows districts to raise property taxes annually up to 3 percent without a vote of the people.
When asked if lawmakers might consider changing that to requiring a vote of the people, her response was she "doesn't know."
The senator also pointed to a "major cost driver" for schools as special education.
She said in 1991, the state "turned back" special education funding to the local districts but supplemented them with a state stipend.
She said there is now a "greater number of kids in special education" and that is putting a strain on local budgets.
One of the biggest cost factors for districts is the pension obligation for retired teachers.
"In my judgment, the state has not gone far enough," said Baker about this issues, one she called a "significant challenge."
Baker said on this issue, everyone needs to have an open mind.
"We all need to be open about making changes, everything has to be on the table," said Baker.
She also said there are no "easy fixes" when it comes to the pension system.
Local resident Carol Santos said she believes state officials need to "look at mandates" which are handed down to local government entities.
She said "common sense and the word no have to be part of the conversation."
"It's a very valid point," said Baker.
Joe Davis, Sr., told Baker said property taxes continue to rise every year.
"I don't hear anything about cutting," he said.
He also pointed to the fact students in this area, and in the country in general, are falling behind the rest of the world in education.
"If money was the answer, we'd have the best education in the world," said Davis. "Money is not the answer. People are hurting. Enough is enough. It's time the people had control."
Baker said one of the funding problems is the fact the "state did not put enough money" into the pension system and now it is a major obligation for local districts.
She also admitted that state lawmakers have a good pension plan.
"I can't dispute the pension system we have is a generous one," said Baker.
Another local resident commented about the health care plans given to educators, saying they are "ridiculous."
In Wayne Highlands, the current contract provides full family health care coverage, including dental and vision, paid for by the taxpayers for all district employees.
That, said Travis Samson, a local resident who has been attending all board meetings and questioning spending, is the heart of the matter.
"It has to be really taken care of on the local level," said Samson.
Samson also questioned the proposed legislation in which more tax money would be collected, given to the state which would then dole it out to school districts.
"I think the state already has too much control," said Samson.
Baker was also questioned about whether lawmakers would have the will to reform the school pension system when they have a lucrative pension themselves.
Though she didn't directly answer the question about whether they would have the willpower, she did say any reforms would "have to be overall."
She also said lawmakers have to look at the "legal ramifications" when it comes to changing the system for "the new folks."
At the end of the meeting, Baker told the audience that "this won't be the last time you see me."
Anyone who would like to view the proposed bills can visit ifo.state.pa.us and click on the links "HB1776" and "SB1400."