Growing Government by Raising Property Taxes

In a publication from Lebanon County it states that “Unfortunately, there are a rising number of households on public assistance. According to US Census data from 2014, 10.8% of the 9,956 households in Lebanon City receive supplemental security income, up from 8.9% in 2010.  9.3% of households receive cash public assistance income, up from 5.2% in 2010.  29.4% of households have received food stamp/SNAP benefits in the past 12 months, up from 21.1% in 2010.”  In looking at other 3rd Class cities like Lebanon, this seems to be more common than uncommon.

This publication is part of a program meant to revitalize Lebanon.  It’s called the Business Improvement District (BID) program.

However well intended this program is I don’t feel as though they really understand some of the existing problems that contribute to the issues they cite above.

I find it incredibly ironic that in these types of publications no correlation is made between the rising school district property taxes and the impact this has on the families in our communities.

Many of the people mentioned in the above statistics aren’t home owners so we often mistakenly think that, since they don’t pay an actual property tax bill, they don’t pay towards the property tax.

It continually amazes me that so few understand that when the property tax goes up on the property of a landlord, the cost of rent will increase to accommodate for that cost.  This is just one aspect of the Cascade Effect of the property tax.  And no, that increase doesn’t automatically make a landlord a bad person.

A landlord must make a profit on the property they rent or they won’t be landlords very long.  A least they have to be breaking even.  Higher property taxes results in higher rent. As rent increases the spending ability of the individual decreases unless their wages also increase to make the increase necessary to meet that rental increase.  That’s not the case as we’ll see later.

When the school district raises the property tax on a landlord, the rent goes up for the renter.  For many working families, this means less disposable income which contributes to the rise in supplemental security income, cash public assistance income and Food Stamp/SNAP benefits.  The money to provide for these services doesn’t just fall off trees.

As those revenue needs grow, that money has to come from Federal and State programs which means that we have to pay the taxes that support these programs.  As a result, the State and Federal government must either increase existing taxes, look for new things to tax or cut services in other areas.

The same applies to a business owner who rents their property.  When the land owners school property taxes increase, the business owner sees an increase in their rent.  That revenue has to be made up somewhere so it’s either cut operating costs (less employees, lower wages, fewer jobs) or raise the cost of the goods or services they provide. Any increase in that cost means less money for the consumer to spend on other goods.  That reduces consumption which reduces jobs.

Look, this isn’t rocket science.  This is simple common sense but let me explain.

In essence we have a constantly rising property tax that cuts in to more people’s disposable income making more people dependent on government programs that have to be paid for from other taxes.

Because the constantly rising property tax has a Cascade effect, every business or service provider that must pay that tax has to pass that cost down to the consumer.  This raises the cost of everything from clothing, food, milk, diapers, baby sitters, doctors, lawyers…you name it.

The constantly rising property taxes are helping to contribute to the need for higher prices on everything we purchase and every service we use.  This creates a greater need for people to turn to government programs to supplement their income in order to provide for the essentials they need to survive.  That greater need creates a revenue problem that results in more taxation that only continues to further drive up the cost of the things we need.

A recent website was launched that tries to defend the property tax in its attempt to stop the passage of HB/SB 76, a bill that would eliminate the school property tax by raising the PIT and Sales Tax to raise the same revenue currently generated by the school property tax.  This modest shift in taxation, which is overtly exaggerated by the anti-76ers, is a revenue neutral tax shift.  That differs from maintaining the status quo which needs constant increases to meet its spending growth.

The shift is a one-time shift that actually undoes a myriad of other tax-shifting programs already in place by the government.  It ends the need for the number of KOZ, LERTA and other programs;  Seriously cuts into the need for Clean And Green; Makes constant and expensive county-wide property reassessments less necessary; Makes property tax abatement programs less costly and necessary and so much more!

That anti-76 website makes the claim that we will see annual increases statewide of $1 billion dollars in the property tax.  That’s annual increases, not a one-time shift to alternate methods of taxation like we would see with HB/SB 76, and yet they somehow think that this is okay…that the existing path is somehow sustainable.

Taking $1 billion more out of the economy next year is a travesty.  It will grow the numbers of families who will need to become more dependent on government supplemental services in order to survive.  Taking $10 billion out of the economy over the next ten years will be devastating which will result in school property taxes almost doubling from their current $12.8 billion statewide to $22.8 billion.

The website that attacks HB/SB 76 makes sure to use pictures of children while making the claims that the passage of HB/SB 76 will hurt the children.  The education industrial complex always does this.  The one thing they don’t want you to do is the math!  They want to appeal to an emotional level that distracts you from looking at what they are really saying.

You see little Johnny and Susie who are 12 years old now and in the 6th grade will be out of school in 10 years when the school property tax will virtually double to hit that $23 billion mark.  They’ll be 22.  If they’ve gone to college they will probably already be facing a massive college debt.  Won’t adding $6 billion in property tax burden by the time they are 18 result in fewer children being able to afford a college education?

Certainly increasing mom and dad’s property tax burden so that that it adds more than half to what they are paying now will make college funding less affordable for many.   If they are paying $3,000 in school property taxes now and this increases like the anti-76ers claim, their school property tax will be approaching $5,000 annually.  By the time these children reach 22 years of age their parent property taxes will have doubled.

For those who haven’t gone to college it’s out into the workforce in a dwindling job market in the Commonwealth.  Stagnate wages and rising taxes will have made things more difficult for jobs to stay in Pennsylvania making it more difficult to find a job with family sustaining wages.

From 1970 to 2014, Pennsylvania ranked a dismal 49th in job growth, 45th in personal income growth, and 48th in population growth according to the Commonwealth Foundation. Granted that doesn’t put us in last place in each category yet but maintaining the status quo and doing what the anti-76ers want will keep us on the path to getting there.

For many the status quo for the future will mean home ownership will be less affordable with an additional $10 billion in statewide school property taxes to pay so they will turn to renting.  Rather than investing in their own future through the purchase of a home, they will be investing in the future of others.  Rather than becoming more independent they will become more dependent on others.

With a job market that cannot keep up with the population demands, even with a population that is shrinking as people out-migrate to other states, Pennsylvania faces a bleak future.

As property taxes rise, so will the rent and so will the cost of everything else these children will need to survive now that they’ve reached the age of 22.  The dollar will buy less so they can pay more in taxes to an educational system that said they cared about the future of these children.

Children in school today will be facing the payment of a growing pension debt that is around the $100 billion mark.  Add that to the doubling of school property taxes for an additional $10 billion dollars a year just from the property tax alone according to the anti-76ers.

The $1 billion increase represent the numbers from the anti-76ers.  They admit to this so this is the legacy they want to force on our children:  An unsustainable future where the American Dream of Home Ownership is virtually crushed for a very large portion of the Commonwealth population.

Frankly I’m really tired of the way the school districts and those who choose to protect the status quo exploit children by not being honest with us about the future they are knowingly giving them.  They are the first to roll out the rhetoric of “It’s all for the children” as their excuse for irresponsible actions.  In reality, they are willing to pass on a debt to our future generations that will be virtually impossible to repay and this doesn’t seem to matter to them in the least.

Looking at the statistics from flyer in Lebanon City about this BID program we can add some additional informational data for comparison.

In 2010 the median household income in the city of Lebanon was $33,840.   Today the median household income is, according to census data, $34,072.  In other words, median household income has increased by only $232 in the last six years.  In January of this year the Lebanon Daily News cited the possibility of yet another increase in the city school district property taxes.   They projected that this would amount to an average $119 tax increase for the families of Lebanon City…that’s just for one year.  (

That represents more than half of the increase the average family has seen in their wages over 6 years; That amounts to a $10 monthly increase in rent, at the bare minimum.

While a later article stated the tax increase wouldn’t be as drastic it would average to an $81 annual increase for the average family in Lebanon City.  $81 times 6 is $486 so if income growth stays the same as its been during the previous six years it will easily outpace that median household income growth in the next 6 years and that’s if there are no increases to go along with this year’s increase over the next 6 years.  That’s not very likely.  Taxes will continue to go up annually in the city just as they always have.

Lebanon City School Property taxes have increased annually since 2010.  Those School Property Tax increases have far outpaced the increase in median household income in the city.   Maybe that’s why the city is also seeing increases in the need for supplemental security income, up from 8.9% in 2010; Maybe that’s a contributing factor for 9.3% of households needing cash public assistance income, up from 5.2% in 2010.  Maybe that helps to explain why 29.4% of households have received food stamp/SNAP benefits in the past 12 months, up from 21.1% in 2010.

Statewide, since 2010, school property taxes went from $11,153,412,489.73 to $12,614,113,562.32.  That’s an increase of $1,487,701,072.59 billion dollars.  That was for 6 years.

Now the anti-76ers are telling us that this is going to go up to $1 billion annually and they think this is sustainable.  They think that, in the next six years, paying an additional $6 billion dollars while median household income stagnates for many families is doable.  It would total an increase of $4,512,298,927.41 billion dollars more than the previous 6 years.

Consider what this has already done to Lebanon City and the impact it’s had on families where those children these organizations claim to care so much about originate; Consider the future they are giving to these same children that they claim to care so much about.

As a resident of the city who lives in the heart of the city we’ve seen more than our share of small apartments that are over-crowded as families double up to save on the cost of increasing rent.  That over-crowding is not conducive to generating a quality education in the classroom:  It’s counterproductive.

School districts cry for smaller classroom size (same size rooms but with less students in them) and the cost of this for many families in our 3rd class cities is over-crowded living conditions when they get home.  Tell me again how that’s all for the children.

In a recent Lebanon Daily news Article related to increasing property taxes it states that the tax increase will include the hiring of include three elementary school teachers to ease overcrowding at a total cost of about $252,000.  Who eases the overcrowding when these children return home to an overcrowded house because families had to double up to meet the rising cost of rent?

Then, to add insult to injury, while families are being forced to do less as their school property taxes far exceed their income growth, we’re told that the hoarding of money in school district reserve funds is rapidly growing.

The State Department of Education tells us that school districts statewide have $4.4 billion dollars in reserve funding at the end of fiscal year 2015-16.  That more than 30% of the total amount of property taxes collected for the year.  It’s an amount equal to 75% of the additional monies in the state budget ear-marked for education.

In just five years the amount of reserve funding in our schools alone grew by $1 billion dollars.  That reserved fund revenue even increased in some school districts that exceeded the Act 1 limits that was supposed to keep things like this in check.

The current system simply isn’t working but that won’t stop the naysayers from piling on in their attempts to protect the status quo.

In this case, however, protecting the status quo will result in growing government.  It will result in creating more people dependent on government programs to make ends meet.  That can only happen for so long before the number of people who need that revenue exceeds the number of people able to pay for it.  When that happens the system implodes on itself.  It is unsustainable.

Many would argue, and I am among them, that this is where we are with the school property tax already.  The growing number of tax delinquency, property seizures, bankruptcy and foreclosures and all indicators.  The growing number of people fleeing Pennsylvania for more tax-friendly states is another indicator.  The reduction of home-owners statistically compared to the growth in renters is another one.

Looking at the growing number of people more dependent on government just to live is alarming.  Perhaps of even greater alarm is the inability to connect these numbers to the rising school property taxes.

Aren’t the statistics in this flyer from Lebanon already an indictment of the failure of the educational system in providing for an education that moves children into a more positive and secure future?  If this is what is happening now….if this is where we are now, I shudder to think what happens when the cost of education in public school doubles statewide but incomes for a large portion of the Commonwealth remains stagnate.