The Future Looks Grim for Pennsylvania

031213WereScrewed2I want you to take a very close look at that chart.  It comes from a study that was recently reviewed on PA Independent  (Link).  The chart doesn’t look good as it looks at the future for Pennsylvania related to the Pension crisis.

Then as you read the article you find this glaring statement:

And here’s what it will take in terms of state taxpayer contributions (not counting what school districts will have to pay with local tax dollars) to finally tame that debt burden.

Why is it that in all of these studies on the future economic status of the State they never include the impact of pension costs through the local School District Property Taxes? Pardon my cynicism but after the Senate Hearing on School Property Tax Independence I’m starting to think its because  the policy groups that work through the special interests that seek to control our government through the lobbying schemes just don’t give a rat’s butt about the average citizen in the state anymore.

I have nothing personal against a public sector union employee, nor do I hold any animosity against teachers or legislators but things are rapidly growing wildly out of control.   The median HOUSEHOLD income in the state of Pennsylvania, according to the Census Bureau is $52,267.  Just in case you missed the Capitol letters….that’s median HOUSEHOLD INCOME or the COMBINED MEDIAN INCOME of everyone in that household.

As of 2005 the base salary of a member of the legislature was $78,315 according to The Times Tribune (link).  While there is a lot of variation across the state the average starting salaries for teachers is $41,192 and average overall salaries for teachers is $60,760 making Pennsylvania the 4th friendliest state for teachers in the nation (according to Teacher’s Portal).  So the combined median household income for families in the state is 8 thousand dollars less than the average individual teacher’s salary and $26,000 less than the average individual legislator’s salary and yet it is somehow OUR responsibility to provide for THEIR retirement.

John Locke said:

“Whenever the power that is put in any hands for the government of the people, and the protection of our properties, is applied to other ends, and made use of to impoverish, harass or subdue them to the arbitrary and irregular commands of those that have it; there it presently becomes tyranny, whether those that thus use it are one or many”. (John Locke – Second Treatise, Chapter 18).

The deliberate choosing to ignore the impact of the pension costs on the average school property tax can’t be a mistake.  Obviously they all know its a problem or why would PA Independent include the disclaimer or for that matter why would Eli Evankovich stand on the floor of the house during a debate on an amendment that sought to eliminate the school property tax ask the question of how the pension would be provided for if the School Property tax is eliminated?

There are those who tell us that the School Property Tax isn’t the problem.  They tell us that if we fix the pension problem or the greater spending problem, the School Property tax wouldn’t be a problem anymore.   Isn’t that a little bit like expecting the individual who has a history of credit card abuse to correct the spending problem without taking away or capping their credit cards?  That somehow, by some miracle, they will permanently be cured after some minor slap on the wrist and public reprimand for bad spending policy without any real controls over future spending problems.  The Property Tax has become the enabler of the spending and the problem will not be fixed until the revenue stream is removed.

The chart above is bad for Pennsylvania homeowners but the story is much worse because they deliberately leave out the money to be paid into the pensions through the local property taxes.  Again, this is people with a much lower median household income providing for the retirements of people who are are earning far more than they are individually.  Worse yet is that when the tax on the property exceeds the individuals ability to pay they are forced to either sell their home or wait for the government agencies to seize their properties where it will be sold on auction for a fraction of its worth.

The economy of Pennsylvania is dependent upon two things:  Agriculture and the housing industry.  Certainly the property tax is a negative for both.  Actually it’s no longer just a negative but more like a proverbial millstone tied around the neck of Pennsylvania’s economy that is rapidly pulling it down the well.  In short, without the pension issue, the growing school tax burden has already doomed the economic future of the state…maybe that’s why these future economic studies don’t want to look at the impact of the pensions of an already doomed system.

Ignoring the issue doesn’t make it go away….neither does holding endless hearings and doing nothing.  We need real and serious reform and we need it now because as the chart above clearly demonstrates the projected 5 year jump from 1 billion to 3.5 billion will be a quick death to many Pennsylvania home owners and those that manage to survive it will spend the next 15 years after that slowly and painfully dying as the state burden increases from 3.5 billion to 6 billion or 6 times the current burden WITHOUT FACTORING THE ADDITIONAL LOCAL BURDEN THROUGH THE PROPERTY TAX.  How can anybody see this as sustainable?

What happens when we do factor in the cost through the local school property tax?

Well farmland becomes impossible to keep without generous tax subsidies but that revenue has to be replaced so it gets replaced through homeowners.  That puts less available spending revenue  in the pockets of the homeowner which drives down the sales tax revenue.  It also negatively impacts the farmers bottom line which, if we are going to save the farms, will call for more farm subsidies.

In the meantime homes will be harder to sell because the taxes on them will be unaffordable and more people will face foreclosure and bankruptcy which makes lending more difficult in the state and then the state becomes an even worse place to do business than it already is.  Foreclosed and tax seized city homes will become magnates to the less desirable out of area landlords turning our cities into slums and making education in our city schools even more expensive.

There’s no way to spin this people….though certainly many do by ignoring to factor in this critical part of the future of Pennsylvania economics.  The property tax without the pension issue is already unsustainable because its an unlimited credit card to an unrepentant spoiled child who doesn’t give a damned about who pays the bills so long as they can keep spending.   With the property tax, their spending will result in the bankruptcy of those paying the bills and that means a loss of their homes as well as personal income as jobs become harder to sustain in the state.

We don’t have any more time for these legislative games or the stonewalling of bills that will help homeowners in the state by special interests who take more than their share of the pie when it comes to government spending for their own causes.  We need a system that is accountable to the people and the property tax just isn’t that system.

One of the things the school property tax system does is it spreads the problem out over 500 school districts.  In order for the outrage to correct itself, all 500 school districts would have to rebel at the same time and that’s not likely to happen.   This allows those used to playing the system to target a handful of school districts for abuse each year and then lay low in those school districts for several years while they move on to other school districts and hit them.  The ridiculous increase in one year is followed by 3 to 6 years of no or low increases. In the meantime it’s the next school district getting hit and then it moves to the next before it finally comes back around and this way they can subdue the average homeowners into a sense of helplessness.  It’s a well played and orchestrated shell game of moving the marble around so that we never really know when or where its going to turn up but it always turns up.

Those playing this game are using the myth of Local Control to perpetuate the status quo.  They tell us we need to run for school board and fix the problems there.  Let’s understand that there are 253 state legislators so we would need to elect 26 dedicated reform minded Senators for a majority in the Senate and 102 reform minded house members for a total of 128 reform minded legislators for a total majority.  They would have to be of a united mind and purpose. What are the chances of that happening?

Noiw let’s fight the same battle on the school district home front.  There are 500 school districts and you need 5 reform minded people on each school district to make the real reforms necessary across the state.  That means we would need to elect 2,500 reform minded school board members.  Then again even with those 2,500 you still need the 128 reform minded state legislators because education is mandated and controlled by the State General Assembly through the Department of Education and through the Public School Code of 1949 and Title 22 of the Pennsylvania Code which controls things like Prevailing Wage, teacher contracts, hiring and firing, building codes and regulations, policies and a myriad of other state controlled aspects of education that the 2,500 school board members have no control over.  The takeover of the school boards is a gimmick fix that’s all part of the shell game.  A strong reform minded school board just becomes an easy target for the powerful state union to attack and we’ve seen that play out several times over the years in the state.

We’re heading into a new year and as we do isn’t it time we make this year, 2014, the year of the property owner in the State of Pennsylvania.  That’s my New Years Resolution and we’ll do that by passing SB 76 and forcing the House to deal with this issue while not allowing for any more of their lame excuses.  The Governor has promised that he will sign the bill if it goes to his desk and, with this being an election year, as bad as things are for Governor Corbett, failure to keep that promise in Pennsylvania would destroy any chance of his re-election.  Not just his re-election but it has the potential of destroying the Republican party in the state as well.

That might not be a bad thing if your a Democrat but let’s be honest…they aren’t any better.  The Pennsylvania Homeowner has been shafted by both parties and they been shafted repeatedly without so much as a by your leave.

I’m going to end this with a quote from the Declaration of Independence that is very appropriate to this issue.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government.

Happy New year to you and yours with the best of wishes for 2014….The Year Of The Property Owner in Pennsylvania!

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