Each year prior to June 30 school districts across Pennsylvania are required to pass a budget for the upcoming fiscal year. We as directors do our best to support the educational needs of the students while trying to be fiscally responsible to the taxpayers of our respective districts.
We hear from all aspects of the community. Some say spend more to provide the absolute best education for our students. Others feel over-taxed and plead for relief from their property taxes. It is not an easy decision, and ultimately will leave a portion of the community unhappy.
This could all change if some proposed legislation is enacted this year. House Bill 1776, called the “Property Tax Independence Act" is currently in the House Finance Committee and would eliminate property taxes as a source for public education funding in Pennsylvania.
The bill, sponsored by Rep. Jim Cox (R-Berks), calls for increases in income taxes and sales taxes as alternative means of revenue. The income tax rate, currently 3.07 percent, would increase to 4 percent, while sales taxes would jump 1 point from 6 to 7 percent.
In addition, a sales tax exemption on many goods and services would be eliminated; such as on dry cleaning, funeral expenses, amusement parks, gum and candy, flags, magazines and newspapers. Those are the basics. Eliminate school property tax and replace with sales tax and higher income taxes.
On the surface this seems like a win-win for all parties. School districts will be funded by the State and we will all pay gradually and not in one lump sum. It will spread the burden to renters, students, and anyone who buys goods or services, not just property owners.
Digging deeper into this bill, a 176 page monster to read, I am left with some concerns. I want to share some of those and encourage everyone to research this bill, no matter which side of the debate you fall under.
First, HB 1776 eliminates all local funding control for school districts while creating bigger government in Harrisburg. School board members in Pennsylvania are elected officials. Members are elected for a four-year term, with the election process calling for five members being eligible for re-election during one election cycle and four being eligible in the next cycle.
In my opinion there is no more “local” government than school directors. The average person can have their voice heard by the board on any given Monday evening in Bethlehem. If the voters are unhappy they can vote out the members and change the dynamic of the board.
Local grassroots campaigns are how most directors, myself included, win seats on the board. Your local State Representative can represent your views perfectly, but if they are in the minority in Harrisburg their vote will fall silent.
If you value your local school district and its local control, this bill could be a problem. What happens if Harrisburg decides it needs to borrow from the “school fund?” Where will the money then come from? Will boards be forced to cut basic programs if Harrisburg can’t deliver promised monies?
Second, HB 1776 eliminates property taxes from all properties. This includes commercial and industrial properties. The big box stores that currently share in the funding of the local schools will now go tax free. Think of all the warehouses, office parks, malls, grocery stores, entertainment venues, and more that will have their taxes eliminated. Should they not contribute to the local school districts?
The argument is that eliminating property tax will allow folks to spend more in these stores thus generating more sales and income tax. That may be true, but those taxes are still not paid by the company.
Third, HB 1776 does not actually eliminate all property tax. There will still be a property tax levied for the life of a districts debt service.
In Bethlehem there are bonds that go out 30 years covering the past construction debt that will be covered by property tax. It will be less than the total current tax bill, but none the less it will exist. This bill also does not eliminate Municipal or County property tax.
Finally, HB 1776 makes it extremely difficult for districts to raise needed revenue in the future. Five years from now the PSERS pension system contributions from local districts will skyrocket. This is a result of mismanagement, raiding of the fund by Harrisburg, and Legislators giving themselves pension raises in 2001.
This was not caused by local districts or “greedy” teachers and administrators. How will districts fund their mandated programs, meet the PSERS obligations, and continue to educate students with no long term funding structure? Here is the funding explanation from the bill’s author:
“Schools will receive their property tax replacement funding directly from the state. Initially, the Property Tax Independence Act will fully fund the districts at their current per-pupil level, with a long-term funding formula to be determined by the legislature. All students in Pennsylvania, regardless of their location or their area's economic condition, will have the opportunity for a quality education.”
Take special note of the bold sentence. A long term funding formula to be determined by the legislature. How can we completely change the school funding system without knowing what we will do long term?
There is no doubt property tax hurts. I would love to have that money to invest in my home or spend how I see fit. Who wouldn’t? The problem is we need a system that will meet the needs of today’s educational system. There has to be some hybrid mix of property and sales or income tax that can be composed to fund schools with less dependence on property tax. There also must be local control over part of the funding.
A quality school district helps a community thrive. It makes people want to live in that community. It brings good business to the area. First time home buyers and young families want to live where there kids will get a good quality education.
There is so much more to this bill that can be discussed and I do hope you take the time to investigate it more. Here is a link to Rep. Cox’s website where you can find all the details and the bill itself.
I would love to hear from the community of what you think of this bill. (Tell us in the comments.)
The BASD board will discuss it on June 18. It’s slated for a vote by the House Finance Committee on June 11. If it makes it out of committee it could be approved by the legislature this session
TS
2:44 pm on Tuesday, June 5, 2012
Mike, We property owners pay the majority of the school load for each school district. We will no longer allow the vast majority of school districts to be negligent and grossly incompetent in their fiscal responsibilities. In this end, we are demanding that HB 1776 be passed to allow a more equitable based tax system fund our schools. Tell the tens of thousands that have been forced from their homes because of excessive school taxes that this current systems is the best way to fund out schools! You're not going to like their responses.
Daryl Nerl
4:30 pm on Tuesday, June 5, 2012
Tens of thousands forced from their homes by school taxes? I'm quite certain that isn't true. While I would agree that the burden on homeowners is too high, I would say that increasing sales tax would be an even more onerous solution for most families. And taking the tax burden away from high-earning big box retailers and corporations that earn millions makes absolutely no sense to me at all.
Carol Ann
12:54 pm on Tuesday, June 12, 2012
This all comes down to dollars and sense. Local School Boards raise taxes on homeowners and then spend over $100,000,000. a year "Like Water" because, it's NOT their money. ........... "Who cares" if "a few" seniors are forced out of their homes after 30 yrs.? The PSBA (Pennsylvania School Boards Association) will fight any change in who controls the money even if half the homeowners are forced to loss their homes. ......................................... Today, senior homeowners will tell you that they know people that must choose between buying food, medicine, repairing their house, and paying their School Property Tax. ....................... Some children grow up never getting to know their own parents because the household bills are so high. ................ IF you are a property owners, eliminating The School Property Tax = leaving a few hundred dollars every month in your pocket. ................. Oh, and if you think Big Box Stores/corporations do NOT now charge shoppers for the property taxes and every other penny in overhead they pay out, where do you believe that money comes from?
Jim Laverty
9:57 pm on Tuesday, June 5, 2012
HB 1776 sounds like a good solution to the current unfair and unstable school property tax mechanism in PA. The current system puts a big part of the burden of funding the PA public school system on the backs of property owners. When the economy slumps, big companies and other organizations with the means, file for a lower reassessment, which further puts the burden on average property owners. HB 1776 shifts the tax burden to a broader population through the income tax and the sales tax (wage earners and consumers, including vistors to PA) . Both of these taxes are more closely linked to economic activity and the individual's ability to pay. Both younger people (trying to buy a home) and retired people (on fixed incomes) are severely hurt by the current school property tax mechanism. No tax should be allowed to make you homeless. Even one person who loses their home due to the current unfair school property tax system is too many. One of the biggest expenses for businesses (especially small businesses) is the property tax. Elimination of the school property tax is a potential boom to our PA economy, which will benefit all of us. A growing economy is one of the best ways to ensure adequate and sustainable funding for our schools will be available now and into the future. Also, HB 1776 allows the local school district to raise additional funding (for school buildings, etc.) through a voter's referendum. That sounds to me like a flexible system under local control.
Daryl Nerl
10:54 pm on Tuesday, June 5, 2012
I would like to see proof that anyone has been made homeless by the school property tax system. It's the biggest myth in this whole argument. And as bad as the property tax is, you mean to tell me that it is better than charging seniors and young families more for groceries, drugs and other necessities (clothes for children?) by increasing the sales tax? I'm not buying that. I also do not believe that Harrisburg is capable of handling the responsibility of properly funding public schools. Governors and Legislatures have failed to fund schools at their constitutionally mandated rates for decades. Bill 1776 isn't going to change that. Property taxes is a real problem. But this is a fake solution.
Jim Laverty
12:15 am on Wednesday, June 6, 2012
In watching the House Finance Committee's public hearings on HB 1776, recently via the internet, testimony from people on both sides of the bill acknowledged that people do lose their homes to non-payment of school property taxes. The only dispute was the number. I agree that it is healthy to be skeptical about government's ability to adequately allocate funding and spend responsibly. It requires our vigilence to ensure it is done properly. I think that we should acknowledge that the current system is not working. We can do better for our children. No recent objective study of our public education system in our country would contend that we do not spend enough money on K-12 public education. It is not that we do not spend enough. It is how we spend it. Our country spends as much, or more, on education than other countries, but the performance of our education system is weak compared to other countries. That is not opinion. It is documented in numerous studies. We owe our children better than they are currently getting. In PA, over the last 10 years, adjusted for inflation, education spending has doubled, academic performance remains flat, student enrollment is down 1%, and school district staff increased 14%. That does not sound like the system is set up to serve and prioritize the students. HB 1776 will not solve the myriad of problems that exist in our education system. Yet, it is a solid first step to getting a sustainable and more fair funding system in place.
Chris Miller
9:16 am on Wednesday, June 6, 2012
Jim
You are correct. It is how we spend the money. On top of that the schools, and I have come to believe they do this willing, do absolutely nothing to stop the state activity of handing out money all over the place. They calll them grants and the schools have a person, usually an administrator, who spends his tim looking for those education grants. We have people who fail to realize that this is their money. Look at Bethlehem, How many millions did they get to put in A SKATE PARK. And some of that was my money. I find it interesting that no one wants to stop the shoveling of money down the education rat hole. Keep up your good work.
Daryl Nerl
1:13 am on Wednesday, June 6, 2012
I'll concede systemic problems with the education system, but that has little to do with my point or yours. Bill 1776 won't do anything to solve the problems you cite, other than drain more money out of the system, which is great if your aim is to destroy public schools. All it will do is push the remaining educational expenses the Legislature deigns to fund onto poorer people. It is a fact that sales taxes are the most regressive taxes that a government can impose. The people with the least income will pay a disproportionately higher percentage of that income in taxes than everyone else. This also could result in homes being lost -- but with the money being taken out of a different pocket. And I'm still not buying that any homes are being lost on property taxes. It's pure political mythology. As a side note, an increase in sales tax will do nothing for Pennsylvania's tourism industry, which you cited in a previous post.
Chris Miller
9:25 am on Wednesday, June 6, 2012
Specialist in the building who "gather data" on the PSSA test. Teaching and preping to the PSSA and Keystone Tests. Planning to change the test. A room where students can move from the bottom of the wall to the top of the wall. Meanwhile what are we teaching and when are we doing it. The districts are constantly bad mouthing the testing but they continue to cooperate with the state instead of telling them to stop. Note too that there is no History test for PSSA, the very core and foundation of our nationl. Property taxes were put in place by William Penn because land was the only thing of value. Initially the sales tax was suppose to be used for school funding. and did until the state legislature moved that money into the general fund. It is time to put HB1776 into place
Jim Laverty
2:03 am on Wednesday, June 6, 2012
I was not on the broader point of comprehenisve school system reform until you brought it up. You implied that there is a problem of not enough spending on public education in PA. I respectfully disagree with your premise and given examples of why. How has money been drained from the system, when spending on public education over the last 10 years has doubled, after adjustment for inflation. That is sourced from the PA Department of Education. I did not imply or state that HB 1776 would specifically improve PA tourism. All I said was that tourists will also pay sales tax, which will contribute to PA education funding under HB 1776. My point was that the attractiveness of starting and growing a business in PA will be enhanced by eliminating the existing school property tax. HB 1776 exempts all food on the WIC list, prescription drugs, and all individual clothing items of $50 or less from the sales tax. The PA income tax already provides for a standard deduction that is disproportionately favorable to lower income earners. The property tax is not aligned with earnings or a person's ability to pay the tax. It is an antiquated taxation vehicle. There is no way reasonable to control the tax you pay via a property tax, which continue to increase. Sales tax is a consumption tax, where an individual might be able to adjust their spending behavior to reduce their tax liability. Based on what I have described, HB 1776 seems like a fair, balanced, and responsible shift of taxes.
Chesco Taxpayer
6:55 am on Wednesday, June 6, 2012
Do you really think that the big bad businesses pay taxes now? Businesses don't pay taxes, people pay taxes. Do you really think businesses exclude property taxes, income taxes, and other taxes they pay from the price of the products you buy? I can tell you firsthand that when the price of a product is developed, the expense to produce and sell the product includes a line for "taxes" when developing the profit margin. "Business tax" is simply a "hidden personal tax" paid by individuals when they buy the product.
Now, you can argue that the price of the product won't go down when the tax is eliminated thus enriching the businesses. Maybe at the beginning it won't, but very soon after, it will, it HAS to. If one merchant doesn't lower prices (because the cost of the product is now lower), the next merchant WILL. The end result will be the hidden tax in the products we buy will be eliminated when the cost to produce or sell it goes down.
Businesses don't pay taxes now - people (buyers, individuals) pay taxes.
Chris Miller
9:09 am on Wednesday, June 6, 2012
As a matter of record I taught in the BASD for 32 years and retired in 1999. As to Mr. Faccientto comment on citizens being abel to speak out at meetings, well that is true as long as you do not speak longer then 3 minutes and make sure your board does not pay attention.
Today I am a member of the Nazareth Area School Board. With the help of othes I put together a group, CC-NASD, to stop the spending of enormous amouts of money. For the 2011-2012 school year we managed to get the budget down a bit over $1million. For the coming school year the budget went up over $2 million. From $66,M to $68M. The reason for the increase was the beginning of the teacher contract and benefits that totaled over $2M in the increase with 2.2% increase in your taxes. There was no wimpering because this is what school districts do, they spend and spend and spend your money and they do it with a smile on their face. Keep in mind that the district did sign the new contract that brought about these wage increases and benefits. If you were to look at the projected budgets, the NASD is looking at acquiring $81,269,535 in revenue for the 2017 school year. In short there is nothing but increases in the budget from 2012-2017. People who own property are going to pay that bill. NASD is spending $14K per student. That's a lot of money considering what we are getting for it. Rest asured this goes on in every school district across the Commonwealth. Time to turn out at school board meetings. .
David Baldinger
11:39 am on Wednesday, June 6, 2012
Mr. Faccinetto obviously wants to maintain the status quo where school boards are free to tax and spend at will. For far too long they have been given a blank check to use at the homeowners’ expanse and have abused the privilege and our trust.
In 2004 total school property taxes statewide were about $8 billion. That total is now $12.7 billion, an increase of almost 40% in just eight years that far outpaces inflation. How long does Mr. Faccinetto think this can continue before the taxpayers are drained and the education funding system collapses?
This needs to end now and HB 1776 is the way to accomplish this.
For the real scoop about how school boards operate, please see this short video from Dr. Catherine Fike, a school director from Westmoreland County who spoke at the Property Tax Independence Rally on May 7: http://www.youtube.com/watch?v=pMf00OJnY68
Mike Faccinetto
12:14 pm on Wednesday, June 6, 2012
First off thank you for all the honest debate. I cannot agree more that there needs to be a new way to fund public education. There are two very different issues being discussed here. The first is the cost of education and the other is the way to fund it. I will try my best to address most of the points from prior posts.
My first and main priority is the Bethlehem Area School District and it's students and taxpayers. In the Greater Lehigh Valley BASD residents pay nearly the lowest of all school property tax, the lowest in Northampton County - that is a fact. That being said our taxes are definitely a burden on some residents. I do not enjoy paying taxes and they are significant relative to my personal family budget. We must also acknowledge that a large portion of PA resident favor the property tax system because they receive large portions of their school budget revenue from Harrisburg. 1776 is a piece of legislation written for the Southeastern portion of PA. Berks, Montgomery, Chester, Delaware, Bucks counties, etc in my opinion. If you look at the data counties north and west of our area pay far lower property taxes and receive upwards of 65% of their budgets from Harrisburg. Bethlehem receives less than 35%. This is a problem with the funding mechanism that I will come back to later.
oops..running out of space, will post another.
Mike Faccinetto
12:24 pm on Wednesday, June 6, 2012
One of my biggest concerns with 1776 is typical big government mentality of hurry up and pass this and we'll work out the details later. There is no long term funding plan in place. On Monday it was revealed that initial figures were off by $3 Billion. Rep. Cox stated we could raise the income tax rate to make up for that. There needs to be hard data and long term studies to prove this will work before I sign on. The lack of financial data on this bill scares me. If I missed these documents somewhere please send me the links. I also have zero faith that the legislature, either now or in the future, will pay districts what they owe them. Someone above noted the entire 65 sales tax is supposed to go to education but it does not. What happens to districts when the state needs the cash and cuts funding? What happens when the PSERS rate spike really hits in a few years? Will will recieve increases inline with these uncontrollable costs? After all the legislature, not districts, caused this mess. Many "conservative" lawmakers were quick to vote to increase their pensions and now demand property tax reform? Really? PSERS is one of the main drivers of budget increases over the past few years.
I still maintain there is no local control if 1776 as it's currently written is imposed. I am fine with a referendum for major bonds and buildings but how do we account for mandated costs that Harrisburg passes on. PSERS, SpEd, charters, etc?
Out of space again, more to come
Mike Faccinetto
12:35 pm on Wednesday, June 6, 2012
Onto businesses...big box stores will not, in my opinion, lowers prices on items over time. Let's take WalMart, Sears, Lowes and Olive garden. Their prices are set by corporate and I cannot imagine a small savings, by their definition, of $500,000 a year will cause them to reduce prices. As a small business owner and in a business that works with many small business property taxes are not the burden on them as they are on homeowners. If we look in Bethlehem many true small business rent space and do not pay the tax except through whatever portion of their rent goes to cover costs. I doubt many landlords lower rents if property taxes go away. I could wrong on this as no one can really predict that at this point, just my opinion.
Now my other point is that the cost of education is out of control. Someone mentioned PSSA's. Finally 2 years ago we took the first steps in moving away from PSSA's with the 10 part Keystone Exams. End of class exams that would test students on actual curriculum when they learn it, not just in 11th grade. This was to be a real step forward in my opinion. Difficult tests that would give an accurate picture of true learning. They were unfortunately scaled back from 10 to 3 in this years state budget to save money. That is sad. Districts are mandated by the state to provide a multitude of services at our cost.
Mike Faccinetto
12:46 pm on Wednesday, June 6, 2012
I forgot to mention that we do stand up to the state on PSSA's. However PDE has a neat way of silencing the masses. Don't give PSSA's, withhold payment to a failing charter, fight special ed costs...they don't pay the district. They simple deduct costs from our state allotment.
Mike Faccinetto
12:44 pm on Wednesday, June 6, 2012
If you look at BASD budget increases over the past several years you will see Special Ed as a major budget driver. The services we are required to provide, good or bad, are a major burden on the budget. If special ed services increase at 5% per year and our funding under 1776 increases at 2% how do we work that out? The first answer is likely make cuts. What happens when there are no cuts left to be made and all we have are mandated services. Is a bare bones education system what we really want? I don't. I believe in the value of the arts, sports, dual enrollment, and the many other "extras" we now provide. Am I exaggerating? Am I trying to excite the masses by saying cut arts and sports? Not in 5 years I'm not when BASD's PSERS contributions rise for $8 million annually to $23 million annually and remain there for 15 years. How will 1776 address that?
Another problem with the costs are the charters who we are required to pay a predetermined amount irregardless of the actual cost. Charter reform is needed and would go perfectly with a revised taxing system. The saving there are enormous each year. Unfortunately a leading Corbett campaign donor is the CEO of PA's largest for profit cyber charter.
I want to wrap this up for now by saying I do believe we need to find a way to put less of a burden on property owners and 1776 may be a start but it need revisions or at least a real feasibility study that address future issues before I can support it.
Chris Miller
3:01 pm on Wednesday, June 6, 2012
First and foremost you and other districts are now turning to the charter schools with the intent of destroying them. Not that you are interested in bring those students back for a better education. You are interested in recouping the dollars. The problem with you and others is that you refuse to call upon your community to stand up against those in Harrisburg who are willing to give away lots of dollars for education to the point where the state is paying $14k per year per student. Rendell was so enamored by education that instead of putting the stimulus money into roads and bridges he gave it to the damnable teachers union. Joining the teachers union was one of the dumbest things i ever did. Why don't you move to stop collecting dues for the union. See what would happen if you did that.
Mike Faccinetto
3:12 pm on Wednesday, June 6, 2012
I am in no way trying to destroy charter schools. I do not appreciate being generalized or lumped in with what you feel boards are about. In Bethlehem we have one of the best charters around in the Lehigh Valley Performing Arts Academy. They do great work and deserve support. All I ask is if we are working to eliminate waste that they do the same. You can't ask boards to cut, cut, cut all the while some charters are making boat loads of money. We are told by law what our fund balance can be relative to the size of our budget, 5-8%. Why should certain charters carry 21% of budget fund balances and why should others that are for profit get rich at the expense of taxpayers? Would this not help lower costs of education?
Gerry
2:14 pm on Wednesday, June 6, 2012
Property owners from throughout the state of Pennsylvania have been burdened for decades by the unfair and unequal property tax. Homeowners should not face each year with the fear of losing their home to property tax increases. Special bills have been given tax breaks to business, farmers and tax exempt properties. These tax breaks have increased homeowners share to the breaking point. NO TAX SHOULD HAVE THE POWER TO LEAVE YOU HOMELESS!! Your own statementy says it all: "Finally, HB 1776 makes it extremely difficult for districts to raise needed revenue in the future. Five years from now the PSERS pension system contributions from local districts will skyrocket. This is a result of mismanagement, raiding of the fund by Harrisburg, and Legislators giving themselves pension raises in 2001." Should property owners continue to pay increased taxes for such mismanagement?
Western Pa homeowner since 1966
Mike Faccinetto
2:24 pm on Wednesday, June 6, 2012
No they should not have to but someone does. Should we dismantle the education system to make up for the sins of career politicians?
Mike Faccinetto
2:26 pm on Wednesday, June 6, 2012
I had hoped for a Bethlehem discussion to see how residents of the BASD felt on this issue. Curious how all but one post is from out of this area? I do not mind but just has me wondering.
Chris Miller
2:48 pm on Wednesday, June 6, 2012
Well Mike, when you limit speech at your Board meeting to 3 minutes what do you think is going to happen. Nazareth did the samething and now no one shows up at the meetings. Hopefully with the new guard this will change. As to HB 1776, if the sales tax is used you will gather money from those who do not pay taxes--drug dealers for example. You are famiiar with the fact that the sales tax was created to fund education until it was put into the general fund. Now we have all the turkeys from both parties running to satisfiy those oppossed to HB1776 so that they can manitain their political position and all the power that goes with it. I would suggest you look to the north and west to Wisconsin and a man named Scott Walker. Lessons will be learned.
Mike Faccinetto
3:02 pm on Wednesday, June 6, 2012
Chris you'd be happy to know as board president I do not limit time to 3 minutes nor have I ever cut someone short. I believe very much in hearing the public. It's one of the reasons I blog on patch. My committee chairs do not either. We use common sense which should have happened years ago. If there are 3 people to speak then give them time. If 20 are lined up the keep is a bit shorter. All I am looking for is healthy debate and not this unwilling to compromise attitude that has overtaker both parties in our government. If we do not work together to find a solution to school costs / funding then whatever is solved will only last as long as one particular party has control of Harrisburg.
Wisconsin is a whole other discussion. I'll let you write that one first!
Chris Miller
3:29 pm on Wednesday, June 6, 2012
I guess the people I know are not telling me the truth. Wisconsin is vey simple, public unions, something that should never have come into existence in the first place, will be gone. I would suggest that if the districts don't shape up you will see private education and more home schooling.
Mike Faccinetto
3:43 pm on Wednesday, June 6, 2012
It was an unwritten rule in the past. I have never enforced it and recently the board decided to give the meeting chair discretion to all comments to go on within reason depending on the amount of speakers.
Chris Miller
3:49 pm on Wednesday, June 6, 2012
So do you have a time limit or not.
Mike Faccinetto
4:35 pm on Wednesday, June 6, 2012
We do not. I only ask folks to be considerate and not abuse the policy. As a fellow board member you know we can often have full agendas and cant have and hour long courtesy of the floor for 2 or 3 people. If it take 5 or 6 minutes to make a point I think allowing that is the least we could do.
Chesco Taxpayer
4:03 pm on Wednesday, June 6, 2012
Mike, I disagree with your assertion that Olive Garden, Walmart, etc. would not adjust prices. To say so means that you reject the argument that taxes are built in to the price of the product. I know as fact (I am a businessman by the way) that there ARE differences in prices from one Olive Garden to the next and from one big box store to the next. Simply go to most online sites (e.g., Wegman's). If you want the actual price of a product you find online, you have to select "your" store. Know why? They are factoring in locals costs which include labor, taxes, etc.
As for the business tenants, there are many unoccupied units. Do you think for a second that the owners of those unoccupied properties wouldn't lower their rent to account for it in order to draw in a tenant? Once they do, guess what happens to the rent in similar properties in the region that are occupied?
It won't happen instantaneously, but it will happen. That’s how business works. It may be a few cents to a few dollars on a particular product, maybe unnoticeable, but it adds up. It’s the tax we all pay in order to pay the tax of the business.
The argument of whether the state legislature will keep their commitment may be a valid argument (but that can probably be solved), but the notion that the removal of taxes won't flow through to the buyer is a red herring.
Once again, "businesses don't pay taxes, people do."
David Baldinger
4:53 pm on Wednesday, June 6, 2012
Mr. Faccinetto, you rail about "big box stores" getting a tax break like businesses are the enemy of the people. But your argument is specious. For the moment, ignore these stores and other large Pennsylvania corporations and consider this from my testimony to the House Finance Committee on May 21:
"Eighty percent of non-government jobs in Pennsylvania are provided by small businesses. As the second biggest fixed expense for these job creators, the property tax, through its uncertain nature, discourages small business expansion and hinders job growth.
A small business owner from York County recently wrote this, “As a small company owner in the auto and truck repair trade that already has five workers, we were looking to open a second branch in York. We would have been able to hire at least three to five more people to run the second location. The monthly lease payment was two thousand dollars, but then our lawyer found that the school taxes would be twenty-three thousand dollars per year. We have now put the brakes on opening a second branch in Pennsylvania and we have been looking at other states to open our new location.”
Continued in next post...
David Baldinger
4:54 pm on Wednesday, June 6, 2012
Continued...
"The enactment of HB 1776 would give these entrepreneurs a well-deserved break and would allow them to expand their businesses and create much-needed jobs for Pennsylvania.
And through Keystone Opportunity Zones we already know that targeted property tax abatements attract new businesses to Pennsylvania. Why not eliminate the property tax and welcome new businesses by making the entire state a KOZ?
In a February 29, 2012, Tax Foundation “Comparative Analysis of State Tax Costs on Business,” a measure of business friendliness, Pennsylvania was ranked number forty-nine of fifty for new firms and dead last, at number fifty, for mature, established, firms. Not only is Pennsylvania’s tax burden, which includes the property tax, discouraging new businesses and the jobs they create from locating here, it is also driving existing businesses and their jobs from Pennsylvania."
David Baldinger
4:56 pm on Wednesday, June 6, 2012
And while we're at it, let's consider farmers:
"Agriculture, Pennsylvania’s largest industry, is being decimated by the property tax as farms that have been in families for generations are being sold acre-by-acre by owners who trade their land for property tax payments.
A few months ago during one of my presentations about HB 1776 to a group in Monroe County, a woman told me how her father, a Christmas tree farmer, has sold thirty of his forty acres piecemeal in the past ten years simply to pay his property tax. And at the Capitol Property Tax Independence Rally on May seventh another farmer talked about selling homemade baked goods in addition to his farming to raise enough money to pay his property tax.
Farming – Pennsylvania’s heritage and its lifeblood – is being destroyed by the property tax. This could end now with the enactment of HB 1776."
Jim Laverty
7:18 pm on Wednesday, June 6, 2012
I see that there has been a lot of interaction since I have been away. When I get a break from work tonight, I will try to catch up on all of the comments and see if I can contribute anything.
Jim Laverty
12:21 am on Thursday, June 7, 2012
I would like to thank all of the commentary contributors and Mr. Faccinetto for his article. I think there was a healthy exchange of ideas on this topic, HB 1776. The summary of my perspective is that HB 1776 is good, solid, and balanced legislation that directly addresses the current unfair and antiquated school property tax mechanism, which is currently hurting many people in both BASD and across the state. HB 1776 already has 70 cosponsors in the House. The support is bi-partisan. This is not a democrat vs. republican issue. The bill is supported and developed by (72) grass roots citizens groups from across the state. The time to fix the unfair school property tax mechanism is now. HB 1776 will end this unfair and antiquated mechanism in a reasonable and responsible way, while shifting to more fair and adequate funding sources.
bill frome
11:13 am on Thursday, June 7, 2012
There needs to be school reform in PA before there is any tax reform that happens. As long as you have schools spending nearly 70% of their budget just on teachers nothing will ever get fixed we the tax payers will just keep throwing our money away.
Jim Laverty
12:06 pm on Thursday, June 7, 2012
As a post script to the exchange on HB 1776, I went back to validate the claim made in one of the commentary posts that there is a $3B gap in the funding of the bill. I went back to the original source who worked with the House Appropriations staff to develop the official funding estimates of the bill. In addition, I went back and re-watched the two sessions of House Finance Committee hearings on HB 1776. I have confirmed that there is NO funding gap of any amount. HB 1776 is fully funded as presented during the hearings, to replace school property tax dollars. There has been no acknowledgement by Rep. Cox of any funding gaps or holes. During the House Finance Committee hearings, Finance Committee co-chair Rep. Mundy stated a $3.5B underfunding shortfall. This was due to her confusion and misunderstanding of how the bill works. Through the additional testimony and Q&A exchange at the hearing, it was reinforced that there is NO funding gap.
Mike Faccinetto
12:22 pm on Thursday, June 7, 2012
Thanks for the clarification. I read that in 2 separate articles published Tuesday, but trust the recordings of testimony rather than the media. Here is the quote:
"New figures from the state Department of Revenue show a $3.5 billion gap between the estimated $12.5 billion earned by property taxes, and what the new tax structure would raise. In response, Cox said he and bill co-sponsors would consider increasing the personal income tax even further to meet the mark."
Jim Laverty
1:04 pm on Thursday, June 7, 2012
I will need some time to do some digging to find the quota source and context to respond. I know that Rep. Cox was pushed during the hearing to respond to a claim that "if' there was a funding how would he handle it. He responded that the income tax rate would be the lever to adjust, but he clearly reinforced that there was no funding gap in the bill. No time to do the digging now. Will try to get back late tonight or tomorrow with an update.
David Baldinger
2:54 pm on Thursday, June 7, 2012
There is NO $3 billion hole. I know the numbers from all angles and I can guarantee that the financing is sound. And Rep. Cox admitted no such thing.
The $3.5 billion shortfall figure was stated by Finance Committee co-chair Phyllis Mundy. At the first hearing for HB 1776 Representative Mundy was obviously confused about the plan’s finances and even after having it explained to her she still didn’t grasp it. On Monday she claimed the plan is $3.5 billion, or 28%, underfunded. During the crafting of the legislation I worked very closely with the numbers; I know to a certainty that the finances work exactly as stated and can’t possibly be underfunded by that amount, especially since revenue projections have increased since HB 1776 was introduced. Her assertion is simply not possible, so she apparently is still confused. Unfortunately, her confusion is sending negative impressions about HB 1776.
Continued ...
David Baldinger
2:55 pm on Thursday, June 7, 2012
Continued ...
Next, in both the piece about the first hearing and again in this one, PA Independent sensationalized the negatives while pretty much ignoring the positives.
The first piece by Eric Boehm on May 21 was titled “PA property tax elimination plan hits roadblocks.” This was a gross exaggeration that he justified by emphasizing the negative testimony while completely ignoring positive testimony from both me and the Pennsylvania Association of Realtors. Even so, it was hardly a “roadblock.” It was negative testimony and nothing more. http://paindependent.com/2012/05/pa-property-tax-elimination-plan-hits-roadblocks/
In the piece about Monday’s hearing by Melissa Daniels titled “PA politicos eye even higher income taxes if property taxes killed,” Ms. Daniels strongly implies that, based on Rep. Mundy’s statement, the income tax will need to be raised above the target 4.01%. Ms. Daniels stated that the new figures came from the Department of Revenue while, in fact, Representative Mundy said that they were from the Democratic Appropriations Committee staff, not the DOR. That’s a BIG difference.
Continued ...
David Baldinger
2:56 pm on Thursday, June 7, 2012
Continued ...
Representative Cox did say that if there is a shortfall the income tax would be used to close the gap but also indicated that he doubted the $3.5 billion shortfall figure. His doubt was de-emphasized in the piece.
Why the negative spin on two occasions from PA Independent about HB 1776? This kind of trash reporting tends to turn people against the plan and causes us to do more damage control. You don’t suppose their location in a suite next to the Commonwealth Foundation, an organization that has never supported this plan, has anything to do with their apparent bias, do you?
Late Monday evening I received a Google news alert for a PA Independent story titled “Property tax elimination plan still in flux.” From the few lines that were included it was obviously the same story as “PA politicos eye even higher income taxes if property taxes killed,” but with a less provocative title. The story with the “flux” title had been deleted.
I guess the original title wasn’t negative enough for the powers at PA Independent.
Citizen
7:37 am on Friday, June 8, 2012
Mike, I am coming into this discussion a bit delayed...but was intrigued to see that you are saying BASD does not have a 3 minute time limit for discussion by the public! In fact, you do have it and I have attended many Board meetings when it was strictly enforced by the Board President as well as by committee chairs. In fact, during my tenure on the Board, the Board enacted a policy change (which I opposed) that was intended to limit the public's ability to address the Board by delaying to the end of meetings any discussion on non-agenda items. I have seen this enforced, as well.
If the Board is genuinely interested in hearing from the public, there are ways to communicate this. One flaw in the system of accountablility for school directors is that board members do not respond, either individually or as a unit, when members of the public step forward with their questions or opinions. This can be changed but only IF the school directors are motivated to do it. In my opinion, they are not.
If the school directors are genuinely interested in hearing from the public, you can increase the information flow to the public about agenda issues. You can post supporting documents on the internet, and you can provide better communication about the meetings. You can set times when there truly is a dialogue between directors and the public. Let's see action on this!
Mike Faccinetto
8:00 am on Friday, June 8, 2012
We absloutely do not have a 3 minute time limit. We just reviewed the policy to amend and eliminate the limit and it was found that the policy never contained a time. I know it was enforced in the past and may be again in the future but I will never do so. This current board does want to hear from the public and it's why we reviewed the policy and why I write these blogs. I oppose the non agenda items first ban but I am in the minority on that. 3 times in my tenure I recommended changing that but was voted down each time. I am happy we at least have a majority who wish to allow folks make a point without a clock ticking. We have also been providing more and more documentation to the public so the meetings make sense. 9 times out of 10 if the board has a document it's available to the public in the room. The BASD website is also being overhauled and documentation will be posted there under the board section in the future. We have also developed a meeting guide, available online, in meetings, and at the Ed center detailing how the meetings run, who the players are, etc. Wether they agree with me or not I do want to hear from the public.
Dana Grubb
7:24 am on Monday, June 11, 2012
Hi Mike.
Although I have not read HB 1776, I tend to agree with Daryl's and other concerns raised here about turning full funding responsibility for public education over to state government. I also believe that many politicians jump on the 'eliminate property taxes funding stream idea' because it plays well. Dary is correct that sales taxes are regressive, so I think a combination of funding sources including sales, income and property taxes is probably the most equitable, but that the reliance on property taxes as a major funding source needs to be shifted (assuming it is the largest). Maybe the answer would be to fund one-third from sales tax, one-third from real estate taxes, and one-third from income taxes. Does anone know what the current break down is?
Chris Miller
2:11 pm on Tuesday, June 12, 2012
Dana
Allow me to remind you and others that the sales tax was initially put into place to fund education. The property tax is as old as William Penn who used land as a tax base because there was nothing else of value. Keep in mind that you will pick up all sorts of people who do not pay one iota of property taxes. Pimps and prostitutes come to mind. The big problem with land tax is that you can pay off your home after a 30 year mortgage and the property tax man can take it from you. You, me and every other citizen in the Commonwealth needs to hammer our representatives to the point where they realize WE ARE IN CHARGE.
Carol Ann
1:06 pm on Tuesday, June 12, 2012
IF you are a property owners - learn more at www.ptcc.us BEFORE deciding whether you want to continue to pay that 75% of your total property tax bill every year - for the rest of your life - or keep that [average] $4,000. a year in your pocket. ............. Then, contact your Pennsylvania State Legislature, "The Easy Way" via www.congress.org and tell them, what you think they should do!
Jim Gregory
8:58 am on Wednesday, June 13, 2012
They have been talking about property tax reform forever in Harrisburg..I remember that it actually was on the ballot in 1989 and was amazingly voted down. It just needs to be done and done soon. Corbett's education cuts have forced most local districts to raise their property taxes. On top of that, bethlehem is now talking about building another middle school..People just cannot continue paying property taxes to fund schools and education.As Chris said, they work hard their entire life and pay off their mortgages and then still have to worry about losing their homes. Something needs to be done and done soon.
Carol Ann
1:31 am on Thursday, June 14, 2012
School Property Tax Is a burden on anyone that owns a property in every state in america, except for North Dakota, where schools are NOT funded by taxing property owners - and yet, they seem to be educating their kids at least as well as the rest of us. .............. Babyboomers, being the largest group of property owners in the USA, right now; coming into retirement, might disagree with your dismal of their numbers as a mere "some" rather than the majority. If you ask seniors who have paid off their mortgages if they'd prefer to continue paying the School Property Tax for the rest of their lives. .................. Here, in the three fastest growing counties in Pennsylvania, longtime property owners are paying an average of about $4,000. per year in School Property Tax.
Carol Ann
1:31 am on Thursday, June 14, 2012
Buyers of homes built in the past decade are paying more. ................... Up here, in the fastest growing Pa counties, the state pays less than 25% of our School Property Tax bills. ........................
The hard evidence of what works and what does not can be seen by anybody that can count the number of homes in their neighborhood that look in worse condition than they did a few years ago or have for sale signs on the lawn - as compared to a few years ago. ....... The so-called, "some" who are burdened, have no choice but to let their homes fall into disrepair, their refrigerators now half empty, they've cut back on healthcare, no longer eating at their favorite restaurant because if the School Property Tax does not get paid, they'll become homeless. ....................... With the passage of Pa's HB1776 and SB1400 [The Pennsylvania Taxpayers Independence Act] NO property owners will be "burdened". .........
Carol Ann
1:31 am on Thursday, June 14, 2012
...... Newpaper publishers are against the act because they want us to believe folks will stop buying papers if a .07 sales tax is added to that $1. newspaper you buy everyday. ................. Some Pa lawmakers are against the act because they've already got all their bills paid for the rest of their lives and don't give a crap about us. ..................... Elected Tax Collectors are against this act because they're afraid we'll figure out that they're a complete waste of our money. ........................ Read the act and learn more at www.ptcc.us BEFORE you decide. Then, tell lawmakers [even if you don't live in Pa] what you think via www.congress.org
louis kootsares
10:05 am on Thursday, June 14, 2012
the quicker the better we get rid of school tax on property our apathy has got us a bunch of overpaid overstaffed freeloaders via schoolboards with ex teachers in one big money give away we rank 20th in the world in quality of education the enlightened ones are the overstaffed overpaid school administration and the tenured undrug tested teachers now we are paying for prime steak and getting rendered meat these educators talk a swell game but i would be better off not supporting garbage education let the state control it
Helen Weber
12:01 am on Sunday, June 17, 2012
Saying that this will eliminate property taxes is a misnomer. Each district is reponsible for funding 1/2 of the pensions that will be ballooning out of control within the next couple of years. Quotes are as high as causing our school taxes to double (or more) within the next few years. Imagine if this burden is put on homeowners in addition to present school taxes what the reaction of the public would be. That being said, I believe that this bill is being offered to allow the cost to be spread around, but with the increased pension bill put on the taxpayers, the homeowers will be paying the same if not more than they are now and in my opinion this bill nothing more than a scam to cover the legislators against a revolt when this does happen. If construction of schools is needed this could again be placed on the homeowners. Conservative districts which have held down spending in order not to raise taxes will get the least money (for the first year, no provision of what will happen after that) while districts which spend and spend would get the most money. For every dollar collected now a dollar is spent within that district, what will be returned from Harrisburg, maybe $.70 on the dollar? Instead of addressing the problems, one being the pensions, which are unsustainable and will bankrupt out state, the legislature tries to cover the problem by simply adding another. We will wind up being burdened by all kinds of taxes.
Carol Ann
1:00 pm on Sunday, June 17, 2012
"Misnomer"? Read the details of the Pennsylvania Taxpayers Independence Act HB1776 and SB1400 at www.ptcc.us .... You will learn that this act IS designed to eliminate the Pennsylvania School Property Tax. .... No longer will property owners have to pay "rent" to the state - for the rest of their lives - as is the case, right now. ... No longer will school boards have the power to force homeowners out of their homes. .............. The pensions that are coming due and are expected to break the backs of property owners all across Pennsylvania would be 100% funded by the state government under the Pennsylvania Taxpayers Independence Act. .......... Currently, your school board decides which property owners pay and how much the property owners pay them [an average of $4,000. a year] to operate the school district. ... Up to $150,000,000. a year/per school district or more in total. The state pays between 22% and 35% of this total; big city school districts & wealthy districts get more than rurals. ... This total includes bond/loan payments and was to include pension money but districts have underfunded pensions.
Carol Ann
1:12 pm on Sunday, June 17, 2012
Former Gov. Rendell conned us into agreeing to casino gambling under the promise that a portion of the revenue would lower our School Property Tax but, most of this money has been getting diverted to capitol projects, etc. .......... Our entire State Budget and government spending record should get a review from the federal government's general accounting folks. ...... Like many states, Pennsylvania has a long history of mismanaging the public trust. .... PennDOT spends billions on bridges few people use; allow roads to be paved with inferior material(s) and don't hold contractors accountable for doing a reckless job. ... Thousands of drivers and pedestrians are injured or killed every year because PennDOT routinely turns a blind eye to road conditions. .......... If we force property owners to chose between paying their School Property Tax or buying enough food, medicine, home/auto repairs, etc. why do we NOT opt to eliminate the School Property Tax and help keep us in the homes we've worked so hard for?
Carol Ann
1:17 pm on Sunday, June 17, 2012
If you were handed as much as $150,000,000. a year to pay 1600 employees and pay utilities on your property; you could raise this amount by threatening to throw people out of their homes and destroy their businesses, how would you feel?
Helen Weber
5:20 pm on Sunday, June 17, 2012
Carol Ann, where did you get the idea that paying for 1/2 of the pensions due or coming due where to be lifted from the local districts. This is not a matter of politics, it a matter of math. Do we really want to put more of our money in the hands of legislators who are in large part responsible for increased school taxes through their mandates and lack of legislative reform. Do we really want another buracracy set up in Harrisburg to collect and then dole back a portion of our money that they take along with even more stipulations and mandates. Do we really want to lose local control? Instead of fixing the problems which our districts face, such as, prevailing wage, pension reform and teacher strikes to name a few, they add additional problems by passing new legislation. We need a leader in PA like Scott Walker who will have the courage to deal with the problems we face. Then we like Wisconsin would see our school taxes lowered and our economy improved.
louis kootsares
7:44 am on Monday, June 18, 2012
reading these comments .. anyone who likesthe present school taxing system is benefitting from the local school boards handing out huge pay raises and pensions jessee james needed a gun eliminating the real estate school tax not only spreads the school tax out to everyone but i hope takes decisions involving money away from the stacked school boards filled with ex teachers who carte blanche the parasites aka teachers and administrators
Helen Weber
11:48 am on Monday, June 18, 2012
Louis, that is why we have elections for school board members. In our district we had exactly what you are referring to so we threw those that have a special interest off the board and replaced them. We no longer have the tax increases that were so prevelent with the previous board. With the new plan, you will still have the boards contracting with the teachers and administrators. You should run for the board in your district and become part of the solution to the problem as people in other districts are now doing. Remember some of the increases are due to state mandates. Again, if the legislators would do what needs to be done - reform it would solve some of our problems. Pension reform, right to work laws, teacher strikes, prevailing wage would go a long way to helping the local districts instead of adding to the problem which this bill does.
Helen Weber
11:51 am on Monday, June 18, 2012
Also, districts like ours which have been frugal will receive less money than those which have been spending like thieves will receive more money since the return will be based on previous budgets.
Roz Finea
1:06 pm on Wednesday, August 8, 2012
Property taxes may not be a perfect solution, but make no mistake about it, PA citizens will come out on the short end of the stick if bill 1776 passes. The rich will be taxed less and everyone else will be left to pick up the slack.
Chris Miller
5:12 pm on Wednesday, August 8, 2012
Roz
You are kidding me aren't you with the tax the rich drivel. You need to look at the enormous size of our education system not only in PA but across the nation. It is a behemoth and it needs to be slain. Spend money by the 1000 pound load they have managed to make our kids dumb and dumber
louis kootsares
2:08 pm on Wednesday, August 8, 2012
the word is everyone.. there are baby factories who pay nothing and figure that schools are free baby sitters spread out the school tax tax their welfare checks take back on food stamps i pay my way let the freeloaders get to pay something and with pensions ..freeze them, let a federal agency disburse them thats another sore subject why are these 'educators" treated with kid gloves read the newspaper we rank 20th in the world in quality of education our school systems are top heavy with overpaid administration and again i say read the newspapers but still no mandatory drug testing sobrity tests find a test to detect perverts