Governor Wolf’s has compared his property tax proposal to HB/SB 76 and many Pennsylvanians are falling for it. Don’t let this happen to you. Other than using the two main funding mechanisms The Governor’s Proposal has nothing in common with HB/SB 76. By using these two mechanisms, the Governor’s proposal would kill HB/SB 76.
During Governor Tom Wolf’s budget address on February 3 he said “My plan will cut property taxes by an average 50%. Homeowners will see a $1000 reduction in their property taxes. Many homeowners will see their property taxes eliminated completely.”
HB/SB 76 completely eliminates the school property tax for everyone, not just those chosen through the Governor’s massive scheme of socialized wealth redistribution. In fact under the Governor’s plan, while some homeowners may see not have to pay the property taxes far more property owners won’t see reduction at all even though they’d be paying a higher PIT and Sales Tax that is also expanded to cover more items.
The Governor calls for a 3.07 percent to 3.7 increase in the PIT that may also include a poverty exemption, according to a briefing document prepared by the administration. He also calls for increasing the state sales tax in January 2016 from 6 to 6.6 percent while broadening what the tax applies to. He states his plan will raise will generate $3.2 billion for property tax relief. The total funds collected last year through the school property tax was $12.7 billion. The Governor’s proposal will only generate about one-fourth of that amount and yet he “promised” an average 50% reduction even going so far as to say that some properties will be completely eliminated. That’s the thing….by using an average for his claim, if one person gets no reduction and another has their taxes completely eliminated, that’s an average of 50%. That is wealth redistribution but it’s wealth redistribution based on an assumed value of property, not based on actual income.
“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” — Thomas Jefferson, letter to Joseph Milligan, April 6, 1816
Under the Governor’s plan 113 school districts would get the maximum benefit….there are 500 school districts. The 113 districts would see a reduction targeted at the median assessed property values. Once again, the median assessed value is an average where half of the homeowners are higher than the median assessed value and half are below it. That means that not all homeowners in that district will see the same amount of reduction. If there is money left after the first reduction a second reduction is applied that if distributed by lowering the millage rate; that’s if there is money left over. The complete breakdown of school district by school district allocation of funding can be found on an excel sheet available here:
As David Baldinger of the Pennsylvania Taxpayers Cyber Coalition (PTCC) wrote “The percentage “relief” under the governor’s proposal ranges from 15.2% in the Mars SD in Butler County to 306.89% (no, this is NOT a typo!) in the West Greene SD in Greene County.”
He also complained that the plan rewards districts with the highest rates of state subsidies and low academic performance already. In Berks, for example, only Reading get the maximum break. “It’s just another lousy redistribution of wealth scheme that hammers many homeowners for the benefit of the few,” Baldinger said.
Sen. David Argall, who introduced SB 76 to the Senate, agreed. “This really looks to me like a bait and switch, with a permanent increase in income (taxes), permanent increase in sales taxes, and a temporary decrease in school district property taxes. In a few years, those property taxes will grow and taxpayers will be left with higher income taxes, higher sales taxes and again, high school property taxes,” Argall predicted. “That doesn’t look like a good deal at all for anyone who pays school district property taxes in Pennsylvania.”
HB/SB 76 doesn’t work anything like Wolf’s redistributive scheme. HB/SB 76 eliminates the school property tax for everyone completely ending the tax. Wolf’s plan keeps property tax in place for the majority of Pennsylvania property owners. That means that any temporary reduction you may see can be dissolved by future increases in the school property tax. That will most assuredly happen because Wolf ‘s budget plan fails to address the Pension Tsunami, instead preferring to tax everyone else to provide for the Cadillac retirements of the Public Sector.
There are other differences:
- Governor’s Wolf’s plan does not cap future education spending. HB/SB 76 does.
- Governor’s Wolf’s proposal would not restrict future unfunded mandates. HB/SB 76 does.
- Governor’s Wolf’s proposal does not include a no-exemption voter referendum for all future school district spending. HB/SB 76
- Governor Wolf’s proposal does not include a clause stating that if the revenue collected exceeds the revenue needed there is a reduction in the PIT. HB/SB 76 does.
- Governor Wolf’s proposal does nothing to curtail future increases demanded by the Unions. HB/SB 76.
- Governor’s Wolf’s proposal is not a dollar for dollar revenue neutral tax shift HB/SB 76 is.
- Governor’s Wolf’s proposal does not include a lock box for the funding raised by the increases in PIT and Sales Tax. HB/SB 76 does.
It’s time for both the Governor and the media to stop repeating that the Governor’s proposal is similar to HB/SB 76. It’s not. It’s not even close.
The fact of the matter is that Governor’s Wolf’s promises sound an awful lot like the same promises that Governor Rendell made when he pushed for Gambling in the state. Like the promises made with virtually every “reduction” plan, Pennsylvania saw the property tax increase far outweigh any reduction we saw in the property tax.
HB/SB 76 was completely vetted by the Independent Fiscal Office. No other legislation has been vetted the way the HB/SB 76 has been but maybe they should. Will the Governor’s Proposal receive equal scrutiny?
In my assessment, Governor Wolf’s proposal in the most progressive socialized system of wealth redistribution through taxation ever put before the Pennsylvania General Assembly.