On the House: Pa. legislation would eliminate school property taxes

Posted: October 14, 2012

Whenever I write about people struggling to meet monthly mortgage payments, at least one reader reminds me that property taxes contribute mightily to this problem.

Pat Burkhart of Upper Dublin Township is one of those readers, but her correspondence focused on a legislative solution to her problem meeting tax payments, introduced as Act 1776 in the state House by Republican Rep. Jim Cox of western Berks County and as Bill 1400 in the Senate.

The measure would eliminate the school property tax and raise the sales and income levies to compensate. (If you'd like to look at the entire bill, dubbed by supporters the "Pennsylvania Property Tax Independence Act," go to http://tiny.cc/xezllw.)

The legislation "would use an increased state personal income tax and an enhanced and expanded state sales tax" to replace revenues from school district property levies, which would be phased out over two years.

The income tax would rise from 3 percent to 4 percent, and the sales tax from 6 percent to 7 percent.

Several special-interest loopholes in the sales tax also would be closed.

After the bill was introduced, the Pennsylvania Department of Revenue said the new tax plan would come up about $3.5 billion short. Property taxes account for about $12.5 billion of the $24 billion-per-year cost to fund kindergarten through 12th grade statewide, according to information provided by Cox.

Burkhart said she finds herself in a mortgage crisis, "scrambling to make ends meet so I do not lose my property." Cox's bill is "one hope that would put me on the path to financial security."

The proposal has its opponents, among them the Pennsylvania Budget and Policy Center.

In testimony before the Senate Finance Committee in July, the center's research director, Michael Wood, said that dismantling the school funding system "for a problem that doesn't affect 99.8 percent of homeowners would effectively be 'throwing the baby out with the bathwater.' "

"There are better, more targeted ways to address this specific issue," he said. "Proponents argue that 10,000 Pennsylvanians lose their homes each year [because of delinquent tax payments], which equates to less than 0.2 percent of the total homes in the state," or about five million. (Read Wood's testimony is at http://tiny.cc/sk4llw.)

But low percentages, as we learned during the last six years of record foreclosures, are of no comfort to the people affected by financial calamities.

I have no opinion on the viability of this bill. It still has a long way to go through the legislative process, and the state Revenue Department's forecast of a potential shortfall will likely have proponents scrambling to rework the numbers.

For Burkhart, passage would save her $600-plus a month, more than a mortgage modification would offer.

"Think of how many people would be helped by the passage of this bill," Burkhart said, adding that she believes it would make financing education "fairer."

The extra money saved each month "would be an enormous stimulus for the Pennsylvania economy," she said. "People buying a home would not have to cough up exorbitant escrow funds. Renters would benefit from not having their rents increase each time the school tax goes up."

Burkhart is not alone among homeowners in her support of the bill. The Pennsylvania Taxpayers Cyber Coalition's website, http://www.ptcc.us, has personal stories of many others.

One, Carol Moyer of Chester County, echoed a common theme. She and her late husband worked for years to own their houses free and clear.

"Now, I have to re-mortgage it to pay my taxes?" she asked.

"On the House" appears Sundays. Contact Alan J. Heavens at 215-854-2472, aheavens@phillynews.com or @alheavens at Twitter.

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