Lawmakers Tread Water on Property Tax Reform

By Melissa Daniels | PA Independent

HARRISBURG — State Rep. Nick Micozzie, R-Montgomery, served on a property tax committee around 12 years ago, he said. The committee also crafted a report to reform school property taxes. And then it failed to secure the votes on any legislation.

He said he doesn’t see that changing this time either.

“I think we’re going to spin our wheels a lot of times, like I have done over the years,” he said.

Micozzie joined 12 other members of the House Select Committee on Property Tax Reform last week and heard the same arguments for property tax reform lawmakers made this past session, treading water until a new fiscal analysis comes out in the fall.

The committee is expected to file a report on property tax relief measures by Nov. 30, examining municipal and school property tax rates and their cost drivers.

The committee heard testimony on three property tax reform proposals from the bills’ sponsors:

• The Property Tax Independence Act, which would swap school property taxes with higher personal income and sales taxes, as well as expand the tax base to include certain goods and services, like clothing purchases over $50;
• A bill that would give municipal governments the power to levy new taxes for school funding per voter referendum in exchange for lower property tax rates;
• A measure that would seek a constitutional amendment relating to homestead property.

Among the issues discussed Monday were:

• Should the state take control away from the school districts, which collect and set the property taxes?
• Is the tax shift conceptually fair, or revenue neutral?
• How many taxpayers would pay more than they already are?

Estimates on the Property Tax Independence Act, or House Bill 1776 and Senate Bill 1400, from the state Department of Revenue suggest the tax shift would generate around $9.1 billion, while school property taxes bring in around $12.5 billion annually. That disparity was a main reason why HB 1776 stalled in committee earlier this year.

But, SB1400 sponsor state Sen. David Argall, R-Berks, said the Independent Fiscal Office, a state legislative version of the federal Congressional Budget Office, will provide a new analysis on revenue streams. The committee will hear those in September.

Argall said he’s “frustrated” nothing has moved on the issue of property tax relief and is willing to discuss potential changes to the tax shift to get something passed.

State Rep. Madeline Dean, D-Montgomery, said the committee will need to look at new information, and the context of what lawmakers have tried to do in the past, to reach a consensus. A final plan should not leave the committee, falling on partisan lines, with seven Republicans and six Democrats, she said.

“If we leave like that in November, I think we’ve risked wasting each others’ time,” she said.

Committee chairman state Rep. Tom Quigley, R-Montgomery, said the IFO analysis combined with past research could yield new plans. He said the goal is to get legislation in front of the new session of the General Assembly come January.

He said he’s not concerned about the short timeline.

“Even though we have this short window to work in, I think there’s been so much research and so many other studies that have been done, that we can use a lot of that material and just try to work with it in the right way,” he said.