Smoke And Mirrors: Ward and Fontana’s property tax bill.

Here we go again.  It seems whenever we build up momentum the same smoke and mirrors come back into play.   Senators Kim Ward and Wayne Fontana, who both jumped ship on the School Property Tax Elimination bill, are now going to come up with their own property tax elimination plan which, as we have seen time and again, is anything but an elimination plan.

In a memo that went out to other Senators we read that

We are introducing a Constitutional amendment to allow the General Assembly to adopt legislation that would grant any local government in Pennsylvania with local voter approval, the option to eliminate property taxes and choose   from alternative taxing options to make up for the lost revenue.

While it sounds an awful lot like HB1189 there is some wording here that is raising some serious concerns.   By enabling this option for “any local government” we have to realize what that encompasses.  We have 67 counties, 500 different school districts and more than 2500 municipalities (cities, townships and boroughs).  Are we talking about a potential of more that 3000 different Income taxes, Merchant taxes, Business Taxes and Sales/Use Taxes across the commonwealth?

The densely populated cities in the commonwealth are landlocked and the majority of the cities can do nothing to really expand these tax bases.  If you go shopping or go out to eat in an area outside your school district, you are paying taxes to support other schools and other municipalities.  If you go outside your county, you are paying taxes to support their county government.  The landlocked cities, where attracting new business of this nature are more difficult, will bear the brunt of this proposal.

As we’ve already discussed these cities often see higher millage rates meaning they pay more per every thousand dollars of property worth than their neighbors and the Ward/Fontana proposal will only exacerbate this.  Those cities won’t even be able to consider this as an option leaving the surrounding, often wealthier municipalities with the ability to expand for new retailers and other business options, seeing the potential of reducing or eliminating the property tax.  Not so with the cities.

For many cities the only way to expand their sales or business tax is to take over neighborhoods through gentrification and eminent domain laws resulting in the seizure of properties which, in my opinion, is the real reason we need to put an end to the property tax to begin with.   We want people to feel secure in their property (like the Commonwealth Constitution declares) not turning our local governments into feudal land barons who determine the common good at the expense of our personal liberty and property.

Doing this would call for a Constitutional Amendment which would require that it passes both chambers of our General Assembly in two consecutive session before it goes out to the voters to be approved through the ballots box.  Considering the difficulty we’ve had with getting any property tax bill through any chamber in any single session this is little more than a stalling and diversionary tactic to get us to stop talking a real possibility for a school property tax elimination bill.  I am convinced that both Ward and Fontana know this has a snowball’s chance in hell of passing and they are offering it because they and the interests that they pander too have become so afraid of the passage of SB 76 that they will take any desperate measure they can think of to divert, distract and destroy 76.

The memo goes on to say

While we originally supported Senate Bill 76 because of its goal to eliminate school property taxes throughout the Commonwealth, the legislation ultimately proved to be problematic for our constituents.  It became clear the bill would alleviate tax burdens for some people in some parts of the state while creating much larger overall tax burdens for most taxpayers in areas like ours.  A tax shift is only a tax shift for those who don’t end up paying more.  For everyone else, it’s a tax hike.  Senate Bill 76 would have been just that for the majority of the people we represent.

This is an absolute misrepresentation of the legislation in SB 76.   Yes, it is a tax shift.  It is a tax shift where we eliminate a fowl, corrupt and exploitable system of taxation that unfairly placed a higher burden on the working lower income families and we create a tax that is equally applied to all at the same rate.  It is essentially the common sense logic of a flat tax.   It is the ultimate fulfillment of the uniformity clause of the Commonwealth Constitution when it comes to funding education.

The Ward/Fontana proposal takes a bad situation and makes it worse.  It will grow government bureaucracies and expand their controls over us.   While they will surely promote this as a “local control” legislation don’t be fooled when they use those words.  More often than not, when politicians use the words “Local Control” they mean control over the locals, not in giving you more control over your own choices.

David Baldinger, founder of the PCTA/PTCC, had this to say about this section of the Ward/Fontana memo:

Here are the real numbers:

According to the US Census Bureau the Westmoreland County median home market value is $133,600. Westmoreland County’s common level ratio factor is 0.198. 133,600 x 0.198 = $26,453 median assessed value.

Average Westmoreland County school property tax rate is 79.63 mills. 26,453 x .07963 = $2106 average school property tax for Westmoreland County.

According to the US Census Bureau the median household income for Westmoreland County is $50,736. The increase in the income tax under SB 76 is 1.88%. 50,736 x .0188 = $954 additional income tax under SB 76. Net gain for the average homeowner is $2106 – 954 = $1,152 savings.

Regarding the 7% expanded sales tax, this homeowner would have to spend $16,457 on newly-taxed items and services ($1152/.07) to equal the amount of property tax that has been eliminated.

What are the chances of THAT?

The median household income is the middle of the road meaning that 1/2 of the population in Westmoreland County, according to David’s numbers see substantial savings through SB 76.   Adjusting those numbers upward we still see the substantial savings so her claim that the majority of the people in Westmoreland would have seen a tax increase through the SB 76 shift is not only a misrepresentation…it it unfounded!

While the misrepresentation of the Ward/Fontana proposal in that paragraph is bad the next excerpt is an outright lie.

While no one likes property taxes, the idea of Harrisburg doling out almost all education funding sets up the very real potential that school districts like those in our districts would have seen the tax dollars of its residents shipped to other districts in the state without any local say.

It’s not simply a lie, its fear-mongering.  They ignore the fact that their legislation is the one that will actually be doing this unless you resolve yourself to never ever in your lifetime ever doing anything outside your school district that would require the spending of taxable dollars….even those hideous hidden taxes that businesses seem to prefer over the direct taxation where you know exactly what you are paying for when you get to the register.

The huge box stores have less of a problem with hiding the property tax in their cost to consumer than the small businesses, predominantly family owned.  With less product to sell the cost of those products become more dramatically impacted by ever increasing property tax in the smaller businesses.  The larger business can actually take a slight loss on increasing prices as a result of rising property taxes long enough to allow for their competing small businesses to go out of business and that’s just one way that property tax enables larger business to the detriment of the small business.  The Ward/Fontana bill would only make this worse.  The larger chains can relocate to a far more tax friendly district than the smaller business.  Their bill will only create a scenario where the landlocked and cash strapped cities will see an exodus of their businesses to nearby areas that are more tax friendly.  There is ABSOLUTELY NOTHING free market about this.  This is using taxation to drive businesses to certain wealthier areas of the state while enabling the elimination of competition from their smaller competitors.

SB 76 returns to each school district the same revenue they currently collect through the property tax adjusted each year by inflationary cost controls.  They aren’t going to get less money than they get from property taxes now so Harrisburg can send that money elsewhere.

Also, remember that we are talking about funding education here.  We are talking about children who are in a public school system that is controlled by the General Assembly and the Department of Education through the Public School Code of 1949 and Title 22 of the Pennsylvania Code.  These massive regulatory rules create a series of unfunded mandates that have to be paid for at the local level and is currently paid for through the property tax.  Instead Ward and Fontana want to protect the ability to keep passing these unfunded mandates and empowering the Department of Education to do the same but instead of through the local property tax, they’ll do it through a series of taxes that you’ll be asked to vote for approval of through a constitutional amendment before you actually know what those taxes will be.

That’s right, you’ll have to pass the amendment before you’ll know how badly they’ll screw you and that is explained in the last paragraph.

First though, we have to amend our state Constitution through statewide voter approval before the General Assembly can even begin to explore the best ways to locally empower taxpayers with freedom to decide what is best for them.  Our bill will be a joint resolution proposing to amend the Constitution enabling legislation that would ultimately permit any local government, with voter approval, to eliminate the taxes they collect on all real property and replace the lost revenue with the enactment or increase of any of the following taxing options to be levied only within that political subdivision: personal income tax, sales and use tax, or any tax authorized under the Local Tax Enabling Act.

If ultimately approved, this Constitutional amendment will allow the General Assembly to enable property tax elimination in areas that believe it is needed but hold harmless the taxpayers and school districts in parts of the state that don’t think paying more in income and sales taxes is the best answer for them.

In other words, the General Assembly will decide the winners and losers and they have determined they have such a right because they’ve been so good at this in the past.

We’ve had a lot of smoke and mirrors thrown at us over the last 40 years with regards to property tax independence but this last attempt is just running salt in the wounds of the people in this Commonwealth.

First we amend the Constitution so that it will enable the legislators to introduce bills to allow them to call the shots in this expansion of government powers all being wrapped up in the distortions of the claim expanding our local control.  This is always the problem with Constitutional Amendment where you don’t know what you get until after you giver them permission to do it and then, when you find out….well let’s just say that we Pennsylvanians are getting very tired of voter remorse with the legislators who tell us one thing to get elected but forget those promises when they walk in to the Capitol COmplex and become part of the screw the taxpayers mentality that prevails.

Frankly I don’t think either of these legislators came up with this proposal on their own.  It smells too much like the other legislation that was used in the past in the attempts to subvert 76 in the House.  In my opinion it’s being propped up by legislative controlling interests who have long since stopped working for the best interest of the people in this commonwealth as they seek to exploit our taxes in the elimination of any competition to those powerful players who are really in the business of buying and selling legislators.

Let’s be clear.  The Ward/Fontana bill is NOT about property tax elimination because it doesn’t eliminate.  The words of their own memo make that clear.  It’s not about creating a tax replacement that will be equally applied to all making it more connected to ability to pay.  It’s not about equalizing taxation and its not about uniformity.

Publishers note:  As with previous posts regarding Ward, I took no pleasure in writing this.  While she has taken the opportunity to exploit her bully pulpit by dismissing us as nothing more than disgruntled people from the eastern part of the state she’s apparently not talking to her own people in her own district who, so far, have overwhelmingly supported 76 while questioning what’s really behind her jumping ship after 4 years of support.

I mentioned voter remorse in the article.   This is how I sum up the way most constituents I talk to.feel.  The rhetoric of campaign promises quickly becomes dimmed by the reality of candidates who tell is they will do the right thing because its the right thing to do but then go to Harrisburg and only do the expedient thing because they are more concerned about the special interests who will withhold campaign funding from them or promote another candidate who will tell the same lies to get elected and then do the special interest bidding once there.




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