Property Tax Post: Tax Relief or Adequate School Funding? One Group Says ‘Yes’ to Both


Property tax reform in Pennsylvania should be narrowly tailored to provide relief to specific high tax districts instead of focusing on broader approaches such as eliminating the tax entirely, the Pennsylvania Budget and Policy Center (PBPC) concluded in a report titled “Reform Not Repeal: Pennsylvania Can Provide Property Tax Relief and Protect Public Schools.” The report was issued in response to the Pennsylvania Legislature’s bipartisan, but stalled plan to reform property taxes Property taxes have been one of the most prominent public policy issues in the state, and in this year’s race for Governor.

Among other proposals that envision extensive revision to the property tax system, Senate Bill 76 has emerged as one of the most likely reform bills, and would eliminate property taxes completely. As of now, it appears that no property tax reform will pass before the end of the legislative session, and PBPC’s report suggests that would be a good thing.

The report’s primary message is that property taxes in Pennsylvania are not as high, compared to other states, as reform proponents have claimed. Pennsylvania’s property taxes are low in many counties and school districts, but there are certain school districts where they are high and certain groups of people such as senior citizens and adults with disabilities, for whom they are high. It is these narrow, targeted groups of high tax districts and demographic groups that should be the focus of property tax reform, according to PBPC, not the “meat cleaver” approach favored by the Legislature.

As the report points out, the Pennsylvania Independent Fiscal Office has found that S.B. 76 would take $2.6 billion out of public schools over a five-year period. While property taxes in Pennsylvania are lower than property taxes across the country as measured by share of personal income—3.08 percent of personal income compared to 3.31 percent nationally—Pennsylvania has increased its reliance on property taxes to fund school to a larger extent than most other states, according to the report.

This study favors keeping the property tax in place, but tailoring solutions that target tax relief to disproportionately high tax areas and residents that are least able to afford to pay them. Some of the solutions proposed include:

  • Increasing the amount of the state’s property tax and rent rebate program and indexing it to inflation
  • Increasing state funding for schools to ease the funding burden on local revenue
  • Redirecting additional state education funding to high property tax districts
  • Creating a property tax circuit breaker program for working families who pay a high share of their income in property taxes
  • Modernizing and regularize reassessments of property

 

Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: Is it possible to do away with the property tax and protect public funding for schools?

By: George Lynch

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