The Governor’s Property Tax Plan is the gift that you’ll keep paying for!

As more details of the Governor’s Property Tax plans come forward, the more reasons we have to be concerned about its implementation. 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.”

More recently The Governor said, according to ABC27 “I’m moving to a place where over 270,000 homeowners are gonna have no property tax at all for the purpose of funding education,” Wolf said Monday morning. “I’m not sure what’s not to like about that?” (http://abc27.com/2015/03/09/wolf-budget-proposal-called-tax-and-spend-shell-game-by-conservatives/]

At first glance that sounds like a large number. Well, according to the Census data, there are 3,462,512 owner occupied housing units in the state. Remembers, that’s owner occupied housing units, not people. What happens with the people in those other 3,200,000 owner occupied homes? Less than 8% of the owner occupied homes will have their taxes eliminated under the governor’s plan, according to the governor. There’s a lot to be concerned about if you aren’t in that 8% of the owner occupied homes. It turns out there is even a lot to be concerned about even if you are.

Revenue Secretary Eileen McNulty said Wolf’s plan “reduces property taxes more than 50 percent for many homeowners and eliminates them for 30 percent of senior homeowners” http://triblive.com/news/adminpage/7932941-74/wolf-tax-property#ixzz3U1VVNMGE. Eileen McNulty was one of Tom Wolf’s picks for his Cabinet (http://www.politicspa.com/pa-gov-wolf-announces-two-cabinet-selections/62690/)

Once again we see throwing numbers out without real points of reference. McNulty says “reduces property taxes more than 50 percent for many” but how many is many? 100,000 sounds like many but then again there are 3,462,512 owner occupied housing units. If we start to factor in owner occupied homes with 2 or more wage earners in that household, things don’t look nearly as promising. While it eliminates, or so McNulty claims, taxes on 30% of the Senior homeowners, what about the other 70% of the Senior Homeowners.

It seems there’s a lot of fuzzy numbers being thrown around to make the plan look like the best thing since sliced bread but once you start to scrutinize those numbers the fuzzy math doesn’t work.

The Trib Live article cited above quotes the governor’s spokesman, Jeffrey Sheridan as saying that Wolf’s plan “balances the budget and closes the deficit without the one-time gimmicks we are used to seeing.”

I take particular exception to that statement. Actually I find that statement to be somewhat offensive. It makes me feel like the Scarecrow when the Wizard tells him to pay no attention to the man behind the curtain.  What will Governor Wolf do next year to offset the increases in school spending? Without something to cap that spending, especially related to school Pensions, Healthcare and Special Education costs, Education spending continues to outpace income growth. Remember that very uncomfortable looking Independent Fiscal Office Cumulative Growth Rates chart:

13 Governor Wolf’s plan does nothing to change this so it is a one time gimmick.  It is obvious to anyone that the Governor’s plan is an increase in the PIT and the Sales tax with no caps on Education Spending that will eliminate for some, reduce for some, and increase the tax burden for the majority.  In fact, the Governor keeps talking about spending more and more on Education and that’s going to take more and more from the School Property Tax.  It won’t take long before those who saw the brief benefit of this “gimmick” will watch it vanish in the wind while those who saw nothing will already be paying more than they are now.  In order to sell this “gimmick” the proponents are rolling out the same arguments we heard about the “Casino” relief, and there will be those who buy into the rhetoric or feel all warm and fuzzy inside with the homespun graphics being used to sell this plan. The Governor is certainly adept in using visual imagery to sell his plan but those smiling pictures of the Governor in a room full of children doesn’t change the fact that he plans to increase education funding and his PIT and Sales Tax expansion doesn’t add up the the amount he wants to spend.

That leaves the property tax and that means the School Property will not only increase, it will increase faster than the Cumulative Growth Rate chart above.  Yes, the Property Tax will take a dip next year and I’m sure there will be those praising the governor with political high-fives but what happens the year after that, and the year after that?

This is a tax reduction we can’t afford because it is a gimmick.  It’s not even really a tax reduction, it’s an illusion that comes with the political equivalent of Hocus Pocus when trying to sell the plan.  It only makes sense if you don’t really think about it.  When you do think about it you’ll quickly realize that yes, there is a man behind the curtain pulling all the strings and its not really magical at all;  it’s a gimmick.  One that will cost the tax payers dearly.

 

 

 

 

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