The Challenges to Eliminating the Property Tax and Opportunities for Reform

Date Created: Jul 29th 2019 | Categories: Blog |

Throughout my time in elected office, I have heard from many constituents expressing deep concern about the rising cost of property taxes and the negative impact this form of taxation is having on them and their families. Many of our neighbors are rightly concerned about housing access and affordability.

Many young families dream of owning a home and are simply unable to afford a home when they factor in their annual property tax payments.

Far too many of our senior citizens, many of whom are on fixed incomes, increasingly feel the squeeze year after year as property taxes go up and fear they may lose their homes.

I have heard from more constituents expressing anger over out of control property tax increases and the need for reform than any other issue over my time serving in the PA House and Senate, by far.

Frustration is on the rise.

First, I think it may be helpful to share with you some of the challenges we face and the barriers to getting rid of this tax. In fact, I have voted numerous times to eliminate school property taxes, most recently in 2015. That most recent vote in the PA Senate was narrowly defeated 25 to 24.

Currently, for the average homeowner in the 36th Senatorial District, property taxes are broken down this way:

 

  • 79% – Schools
  • 14% – County
  • Municipalities – 7%

 

As you can see, schools are the biggest proportion of your overall property tax bill. But they are not the only government entity depending on it and you, the taxpayer, are not the only one hurt by it.

While property taxes have a big impact on homeowners, it also is having a detrimental impact on municipalities.

I want to share with you the challenges before us, some potential consequences if we can’t fix this problem, and what you can do to help and ultimately be a part of the solution.

 

What is the Problem for Homeowners?

It’s obvious, taxes are going up to the point that people cannot afford them.

While that’s clear, there is more to it than that. When someone has worked hard to pay a home off, they never truly own it. A government owns it. If you don’t pay your taxes, for any reason, you will lose your home or property.

It is a legitimate and serious question about property ownership and rights.

As noted above, the most significant portion of a homeowner’s property tax bill is school taxes.

Some estimates suggest that education alone will cost taxpayers $14.22 billion over the next two years.

According to the State Independent Fiscal Office, statewide 43.8 percent of all homestead property tax money is paid by those 60 or older. When you consider that Pennsylvania is one of the oldest states by age, and getting older, this number will only increase putting more pressure on seniors with fixed incomes to pay for education.

The Philadelphia Inquirer stated,

 

“The state’s senior population is growing at a rate 20 times faster than Pennsylvania’s overall population. By 2025, more than one in five Pennsylvania residents will be 65 or older.”

 

To cap it off, younger families are finding it harder to afford homes and when they have to pay $4,000 – $6,000 per year in taxes.

In a York Dispatch op-ed in June, Senator Folmer (R) said it well:

 

“It’s only a matter of time before the current system to fund education becomes unsustainable and completely overwhelms taxpayers. Every year, school property taxes rise by about $500 million. At the same time, the cry for total elimination of these levies also grows.”

 

Property Taxes and Impacts on Municipalities

But that’s not all of it…

A few weeks ago, I posted on Facebook that in addition to homeowners feeling the squeeze, so are municipalities.

By law, the Commonwealth dictates to municipalities how they can raise funds to meet their needs and obligations. That is largely through property taxes.

In a recent workshop I attended, Mayors and elected officials from cities across the Susquehanna valley shared how they are hampered by their dependence on property taxes.

Lancaster Mayor, Danene Sorace, shared that expenses are growing approximately 3% a year while the city’s revenue only grows approximately 1%.

Anyone can see that is unsustainable!

Mayor Sorace stated,

 

“To make up the difference, property taxes would have to rise 30% over the next five years. They have gone up eight times in the past 14 years. Increased taxes threaten to push out longtime residents, people who have contributed to Lancaster’s vitality. That’s not acceptable and I won’t stand for it.”

 

Across the state, our infrastructure is aging quickly and the money municipalities of all sizes need to meet their objectives cannot and should not be solely on the backs of property owners.

 

3 Reasons Why is it Hard to Eliminate the Property Tax?

There are many reasons it is hard to eliminate the property tax and the biggest one is honestly, political.

 

1. Some Areas of the State Don’t Rely as Heavily on Property Taxes to fund their Schools

Many school districts throughout Pennsylvania receive the majority of their income from the state.
As a result, their property taxes are comparatively low.

Therefore, legislators representing those areas of our Commonwealth have little reason to vote for what would amount to a significant tax increase on their constituents.

Property Tax Reform is simply not a major issue for them.

Despite recent efforts to make long-overdue changes, there still exists a significant lack of fairness and equity in our school funding formula. This inequity has led directly to the failure of both the House and Senate to pass legislation that would eliminate the property tax or make meaningful reductions for our residents.

 

2. Other Taxes Would Go Up

You can’t eliminate the property tax, and fund our schools, without a replacement.
So, what can you replace it with?

Many of the proposals to eliminate the property tax include raising the income and an expanded sales tax.
Under the bill I voted for in the Senate in 2015, the sales and use tax would have increased from 6% to 7% and new items currently not taxed would have been subject to the sales and use tax.

Additionally, the state’s personal income tax would have risen rise from 3.07% to 4.95%.

Again, to my previous point, this is a difficult vote for legislators in those districts that would see an overall tax increase, as compared to property tax reductions, on their constituents.

 

3. The Governor Opposes Eliminating the Property Tax

While Governor Wolf recognizes the problem, he is not for eliminating the property tax. He is for reducing it.
Since the beginning of his first term, the Governor has opposed the SB/HB 76 plans to fully eliminate school property taxes.

Without the Governor’s support, there is not enough support in the Senate to override a veto.

Finally, it is worth noting that unless government (at all levels) controls spending, property tax reform efforts will result in a rapidly increasing tax shift. In my view, in addition to property tax reform, we must take steps to control spending, provide school districts with mandate relief, and fix a flawed school funding formula.

 

How Can You Help?

As Senator Folmer said in his op-ed:

 

“The clock is ticking: Property taxes continue to rise and taxpayers continue to bear the burdens… no tax should have the power to leave you homeless.”

 

If we don’t get this done, and if property taxes keep escalating at such a rapid pace, we may have real economic consequences in the near future.

People can only afford so much. This current system of taxation is a major reason our citizens are leaving the state. I have heard from many of my constituents who cannot afford the tax and are at risk of losing their homes.

There are very real economic consequences for our Commonwealth, local governments, education system, and our citizens.

Currently, Pennsylvania is an abysmal 42nd in growth in the nation with a growth rate of just 0.24%.

We have an aging population and a working-age population on the decline.

I think we can do better.

In light of the challenges, how do we get this done?

Without your help, we cannot!

It comes down to a few things:

 

  1. ENGAGE – Share your experiences and views with your state Senator and Representative.
  2. VOTE – for people who understand the problem and encourage others to do the same.

 

This must become a grassroots issue statewide. It cannot be limited to just our corner of the state.

For us to get this done, Republicans in the Senate and House will need your help!

I will continue to fight for meaningful property tax relief.

I will work with my colleagues in the Senate and House to advance this issue.

I will not stop fighting for you!!!

We need your help to make your voice known across the state, not just right here at home.