Senate Finance Committee – Property Tax Hearing Testimony 6-10-15

Note: I was priviledged to provide testimony on behalf of the PCTA with regards to School Property Tax Independence and our refusal to support either the Governor’s property tax proposal or the bill that just came up from the house.  Due to limited time, the oral testimony given during the hearing needed to be abbreviated.  Each of the Senators on the Finance Committee received this written testimony that will be part of the record on the hearings today.  The video of the oral testimony can be seen on the Lebanon 9-12 Project website (

I am here today as a representative of the Pennsylvania Coalition of Taxpayers Association which consists of over 80 organizations across this state for the purpose of School property Tax Elimination. Those 80 organizations represent thousands of Pennsylvanians who have grown weary of the broken and empty promises of the past. They are people just like me, regular citizens who have become engaged in the process because the issue matters to them. We have watched as the School Property Tax has become the fastest growing and most egregious tax placing an unfair burden on homeowners in the funding of education.

We aren’t a well-funded political machine. We are simply citizens who have banded together across all realms of the political spectrum organizing town halls in our own communities; going out in door to door canvassing efforts to spread the word; designing printing and paying for our own promotional materials; attending community and civic events where we’ve set up booths to promote the issue and have even organized rallies and citizen lobbying days all on our own dime because the issue is that important to us. While the economy has played a part in this debate for most of us this is really a moral issue.

Central to the debate here today we are determining if raising the PIT and Sales/Use Tax is a viable alternative to the property tax. That is the argument we’ve been making since we began fighting for the School property Tax Independence Act. However, the legislation currently related to this discussion is increasing the PIT and Sales/Use Tax while keeping the Property Tax in place offering only a temporary reduction and to that end we cannot, nor will we ever support such an effort. If we are going shift taxes from one source to another it has to be a complete shift or nothing because any reduction plan is only temporary reduction and that results in a tax increase.

As the School Property Tax remains without any checks to it, The School Property Tax, as evidenced by the Independent Fiscal Office study on School Property Tax Independence, will continue to do what it has done for the past 30 years. In a very short time, it will exceed its current rates while leaving us with higher PIT and Sales Tax in the process.   The reduction plans are then tax increases, not a simple tax shift.

Because of the current hold harmless funding formula, shrinking districts are greatly benefiting from the state funding method while growing districts are punished. Fixing the funding formula will help but that still does not alleviate the problem that homeowners will continue to bear the greater burden on an annual tax on a property that over time results in a tax that can exceed the actual value of the property. It is the only tax that will do this. A PIT is only on new earned income and the Sales/Use Tax is applied to new purchases.

When an individual purchases a lamp at the store, the tax collector doesn’t show up the following year to collect the tax on that lamp again. They certainly don’t make adjustments to the tax on that lamp because you improved the lampshade or put a brighter bulb in the lamp. Yet this is exactly how the Property Tax Works. Nor does the tax bill turn up to collect the PIT from previous year‘s earning, only for the current earned income. Why do we treat the property of homes differently?

Survey’s and Polls have demonstrated that the public will support a tax shift but an informed public also realizes that the reduction plans are temporary and once informed of the other option, the majority will only support the shift if it is for complete elimination of the School Property Taxes as exemplified in the formerly introduced HB and SB 76.

We are further annoyed that the reduction plans seek to remove our funding mechanisms for School Property Tax Independence making it nearly impossible for us to continue to pursue that course of action. While it appears to be a compromise it is not. It’s not the best we can do because we can achieve elimination. By increasing the PIT by 2/3 of a penny we can eliminate the School Property Tax through a reasonable and responsible plan like we saw with 76 and that is the only measure we will support.

In 1679 William Penn, the founder of this Commonwealth argued for the recognition of three fundamental rights that all men have: the right to property, the right to share in the making of the laws, and the right to be judged by a jury of one’s peers

Concerning our Right to Property Penn explained that property is, Right and Title to your own Lives, Liberties and Estates: In this, every Man is a Sort of Little Sovereign to himself: No Man has Power over his Person, to Imprison or hurt it, or over his Estate to Invade or Usurp it: Only your own Transgression of the Laws, (and those of your own making too) lays you open to Loss; which is but the Punishment due to your Offences, and this but in Proportion to the Fault committed.

I have a simple question, when the school property increases beyond a citizens ability to pay, as it has for thousands of people in this Commonwealth, what crime have they committed that warrants the punishment of the seizure of their home? How can anyone see this as justice?

In our Commonwealth’s Constitution it is the responsibility of our elected representatives to uphold both Article 1, Section 1; which guarantees the people the protection of their right to property as well as providing for a thorough and efficient system of public education as stated in Article 3, Section 14.

As I have followed this issue; as I have gone around this state to participate in town halls and debates on this issue; I can confidently state that, as a Commonwealth, we are failing in upholding the first half of that obligation. Ripping families from their homes to provide for education should not be an option.

Yes, we need to properly fund education. It should be both thorough and efficient but throwing law-abiding citizens of any age out in the street simply because the taxes have exceeded their ability to pay should be repulsive; And if does impact people of all ages. Here in this Commonwealth we are turning the American Dream of home-ownership into a nightmare.

Throughout this debate we have constantly heard about the stability of the school property tax but I would suggest that stability has always been in the context of the stability for the tax collector while ignoring the instability it causes for those of us who have to pay this onerous tax.  Here are just a few of the facts related to the instability this provides to home-owners in the Commonwealth of Pennsylvania

We have over 350 thousand abandoned properties in this state, many of those in areas where we are constantly told that there isn’t a problem with property taxes. That doesn’t take into account the countless homes that are falling into blighted status.  School districts around the state provide services to approximately 13,000 homeless children.

According to the Census Bureau, the state lost 31,400 residents to other states in net domestic migration.

The rising property taxes drives up rental rates forcing families to overcrowd or move creating an instability through the uprooting of those families.

The rising property taxes prevent younger couples from purchasing homes and establishing roots that would be beneficial to our communities.

The rising property tax forces many people to sell their homes or go into bankruptcy or foreclosure simply because they can’t simply because their taxes are unaffordable.

We see an estimated 10,000 individuals threatened with loss of their home across this Commonwealth each year. Those 10,00 people reflect all age groups.

We see family farms threatened by the ever-increasing School Property Taxes. Family farms that have existed for generations until the property tax steps in a makes them unable to continue on that farm without government intervention through programs and subsidies that come at the expense of revenue from other areas of taxation.

While the School Property might not be the singular reason for these things it is a major contributing factor.

Statistics show us that pensions are playing a critical role in the inflation of the local school property taxes as are rising medical costs. Over the last decade, school districts’ spending on school salaries grew by 22% while spending on employee benefits grew by 108% while median household income over the same period of time has remained stagnant. At the same time inflation is driving up the cost of living. As homeowners we are expected to do more with less and if we can’t keep up; if we can’t provide for the wages and benefits of the public sector, our homes are taken from us. I would remind you that when a school district increases the wages in their district and the taxes increase as a result, the wage increase for the public sector will be enough to compensate for the property tax increase but that’s not happening in the private sector. Ewith each school property tax increase more private sector homes are put at risk, again, are we no longer anything more than collateral damage?

We are told that it is unconstitutional to take away pensions and benefits from public sector employees, pensions and benefits that many in the private sector cannot afford to provide for themselves, and yet we are also told its perfectly fine by our constitution to take away our homes when we can no longer provide for the retirement and healthcare of others. There is something morally reprehensible with that.

In traveling around the state through the town halls and door to door efforts we have heard the stories of seniors who were retired and are now being forced back into the workplace in an attempt to hold on to their homes through the rising school property taxes. Others approaching retirement age have told us that retirement will not be an option for them. How is it morally okay to force a senior out of retirement to keep their homes so they can provide for the early retirement of others?

While many are able to prepare for a retirement, the death of a spouse has a devastating impact on the financial income of the senior. Once again, the result is being forced to sell, if that is possible, or facing losing their property.

We feel as though those of us who can no longer keep up with the rising demands of everyone else for their slice of our homes, we are viewed as mere collateral damage; a casualty in the war on home-ownership.   While our home budgets must be carefully framed around how much we have to spend, this is not the reality that has been playing out in many of our school districts.

Because of how the school tax is structured, school districts are able to submit their budgets before they know how much they will be receiving from the state. This allows them a path around the Act 1 limits. When it is then learned they will receive more money from the state than they had budgeted, the money is often diverted in a reserve account and not returned to the taxpayers. This has happened three times in the last three in the school district where I live. There’s always a reason, there’s always an excuse and there’s always more empty homes, more facing the inability to pay the school property tax and the cycle just continues.

I would hope we have not reached that point in this Commonwealth where homeowners no longer matter because I, like many of my friends in the PCTA would like to continue to call Pennsylvania our home but the way things are going, that option is being removed for many of us.

I know that to some people these statistics aren’t significant enough to do anything about it but I disagree. If you aren’t yet in a position to have to face the possibility of losing your home to taxes it may be hard to feel the pain of the 10’s of thousands who are? How do we reach a point in a civil society where we have refused to accept the right of property as the sacred right John Adams and our founders, including William Penn, declared it to be?

I would add that most Pennsylvanian’s find it abhorrent to apply a sales tax to a loaf of bread and yet we will tax the property the wheat is grown on; we’ll then tax the property of the baker who makes the bread; we’ll tax the property of the shipper who ships the wheat and bread and then we’ll tax the property of the retailer who sells us the bread. Shouldn’t we find this equally abhorrent?   Are we so foolish that we fail to see how the school property tax is a major factor in driving up the cost of the essentials we need to survive?

For those of us who have continually fought for elimination of the School Property Tax we are told we have to compromise. Well, we’ve been compromising for 30 years and in those compromises the losers are the homeowners of this state. We have already compromised with the School Property Tax Independence Act and the Amendments to the bill have reflected that willingness to compromise. We’re just tired of being asked to compromise when that sacrifice continually means sacrificing our right to be secure in our property.

We are, after all, talking about people’s homes here. That’s really what we are negotiating with in every contract in our school districts. It isn’t our income because our home value isn’t based on our income. We are negotiating with a larger and larger piece of a homeowner’s property. With every increase more family’s homes are put on the line. With every increase, renter’s face rising rent. Every time we ignore elimination for some other temporary fix we are doing the same thing, jeopardizing the homes of more families. Our homes need to be looked at as something more than collateral damage in this process: Our homes are not business that generates an annual income that allows us to pay higher and higher property taxes. Our homes are simply where we live, for as long as we can until we become the next piece of collateral damage.

These are homes that require constant maintenance and upkeep that many are prevented from doing because they can’t keep up with the taxes. Then we can face being fined for not doing that upkeep because we had to choose between paying the taxes or doing necessary repairs on our home.

In the process many homeowners are prevented from providing for their own future investment so that they can provide for the investment in the future of others, a future that is far more plentiful than they would have been able to provide for themselves. To me there is just something morally wrong with that concept. Why must we provide for the future security on the property of those in the public sector at the sacrifice of so many in the private sector, or are we really just collateral damage?

We are talking about a lifetime of memories trampled simply because the taxes have exceeded their ability to pay and for this we are treated like criminals. Our opponents call this ability to seize our property preserving Local control but I ask you, local control of what. Certainly not our homes, certainly not our schools with thousands of pages of regulations and citations to other laws through the Public School Code of 1949 and Tittle 22 of the Pennsylvania code that require our school districts to have solicitors to make sure they are in compliance with all the regulations.

We aren’t asking to be excused from paying taxes to provide for education. We aren’t asking for exemptions. We want a system for education funding that is everyone’s responsibility in a manner that is both uniform and equitable, based on income and spending power. There is only one bill that does this and that is the bill that we support.

There is also only one bill that caps future education spending to the rate of inflation. Many have referred to this as a shortfall but that is incorrectly using the term. Based on previous spending, the rising school property tax has already proven to be unsustainable for many homeowners which has resulted in the seizure of their property. If this continues, and those who use the term “shortfall” would indicate they want it to continue, the only real shortfall will be a shortfall in more homeowners ability to pay the tax.

A property tax increase on a business translates into higher prices for goods and services that business provides. That is NOT a criticism of business. They are in business to stay in business and that requires a profit. For the homeowner, there is no one to turn to. The buck stops at our door. We can’t pass the cost of increased property tax on to anything or anyone else. We have to adjust our budgets accordingly. If we can’t, if there’s nothing else to cut, our homes are taken from us.

Maybe, as I have been accused, I am naive enough to believe that the appeal can still be made to our legislators to do the right thing simply because it is the right thing to do. I make no apologies for my desire to believe that the principle that founded this Commonwealth and this Nation concerning our indefeasible right to our home is as precious today as it was when our Commonwealth and Nation was founded.

I simply refuse to accept that we have traveled so far away from those principles that the people and their homes no longer matter. Give the people what they want as survey after survey, petition after petition demonstrates; the right to be secure in their homes while providing for replacement revenue to fully fund education dollar for dollar through the School Property Tax Independence Act. Show to us that we the people still matter. Show us that this is more that campaign rhetoric. For many of us, time is running out; for many others it’s already too late.

Let’s encourage home-ownership, establish firm community roots and grow the economy because we know KOZ’s work as long as the exemption is there but when the exemption disappears we see many businesses relocate. Those KOZ’s create jobs and put money back in our community. Let’s keep those businesses in place by making the entire Commonwealth a permanent Keystone Opportunity Zone for everyone: for business, for homeowners, FOREVER!