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Property Tax Reform Fails in Pennsylvania

by Tom Branham, Washington D.C., November 2014


Another Pennsylvania legislative session has ended with no consensus on how to reform the property tax system. It's a familiar pattern. Property tax reform has been introduced in every session the past two decades and only modest changes have ever been approved.


Tax Shift Measure Dies


This year, corresponding House and Senate Bills 76 sought to do away with property tax funding for schools in exchange for increased taxes on other goods and services. They were not tax elimination bills, but tax shift bills that spread the burden of funding education elsewhere.


The Pennsylvania House passed HB 76 last fall. However, SB 76 stalled in committee and never came up for a vote by the full Senate.


Property Tax Repeal is Not the Answer


A report issued by the Pennsylvania Budget and Policy Center called Reform Not Repeal says reforms are needed but a legislative effort to get rid of school property taxes entirely is misguided and unnecessary.


Property taxes throughout Pennsylvania average about 3.07 percent of personal income, slightly lower than the national average of 3.31 percent. However, rates vary throughout the state, and in 30 school districts property taxes exceed four percent of income, which is considered high.


The report says, "Because a limited number of school districts have high property taxes, reforms should target those communities and the people having trouble paying them. A one size fits all approach is costly and creates more problems than it solves."


The analysis also suggests that reform would be best accomplished by updating property tax assessments statewide. "Counties have done a poor job keeping up on property tax reassessments. Without regular reassessments, similar properties can have very different property tax, which makes the system unfair. Seventeen counties haven’t reassessed property in more than 35 years."


What's Ahead?


Considering past trends, the idea of swapping property taxes for other taxes will likely come up for consideration again in 2015. But economist David Davare of the Pennsylvania Economy League doubts that it will pass. "I'd give it about a 95% probability that it'll be re-introduced in some form," he told The Times Leader.


Davare explains that the property tax is the most stable way to pay for public education. Service, sales and income taxes are subject to variation and are therefore not reliable enough for school funding, he said.