A new bill, a new legislative session. But the math of property tax reform remains as daunting as ever | Analysis
State Rep. Frank Ryan, a Lebanon County Republican (R) talks property tax reform with “Face the State” host Robb Hanrahan during a March 3 interview on CBS-21 TV in Harrisburg (screen capture)
If there’s one thing you can count on with the start of every new legislative session, it’s that tax hawks in the state House and Senate will inevitably float bills aimed at ridding Pennsylvania of school property taxes.
It’s a scenario that’s played out for years — with the same, predictable result: The bills inevitably fail, and Pennsylvanians still pay school real estate taxes, and still — particularly if they’re senior citizens — complain about having to pay them.
Undaunted, state Sen. David Argall, R-Schuylkill, has reintroduced his “Property Tax Independence Act.” The tax elimination plan, formally known as Senate Bill 76 (because, “independence,” geddit?) is now before the Senate Finance Committee, where, if past is prologue, it will remain mired, suffering through its own long, dark Valley Forge of the soul.
Over in the House, Rep. Frank Ryan, a Lebanon County Republican and a former Marine — which means he knows a thing or two about longshot offensives — is prepping his own bill.
Reformers came close as they’ve ever come to a win in 2015, when the Senate voted 25-24, with then-Lt. Gov. Mike Stack casting a rare tie-breaker, to reject that year’s version of the bill. As was widely reported at the time, the bill came to the floor with some heavy-duty opposition — including from Gov. Tom Wolf — and without an independent analysis proving that the bill could raise the money it said it could raise.
And that’s always been the rub: Replacing the revenue that would be lost with a full elimination, which, as recently as four years ago, was a relatively quaint $14 billion.
And now, as a new report by the Legislature’s Independent Fiscal Office makes clear, the hill that reformers will push their tax boulder up this year is even steeper. According to IFO projections, property tax collections will total nearly $15 billion when the current fiscal year ends on June 30.
Collections are projected to grow to $15.2 billion during fiscal 2019-20, and then swell each year, hitting $17.3 billion by fiscal 2023-24, the budgetary watchdog office’s data shows.
State Sen. Mike Folmer, R-Lebanon, one of the Legislature’s foremost tax hawks and a co-sponsor of the latest elimination bill, said Tuesday that he hadn’t reviewed the new IFO projections. But he acknowledged the heavy fiscal lift that reformers now face.
Folmer said reformers could stick with their plan to try to fully eliminate real estate taxes for all property owners — residential and business alike — which means they’d need to come up with the full $14.8 billion needed by June 30. Or they could go with a slimmed down, homeowners-only version, which would require less revenue (but almost certainly enrage the business community).
“We have some thinking to do,” he acknowledged, adding later, “We’ve got to do something.”
Ryan’s House proposal, which has not been formally introduced yet, similarly relies on a higher income tax and higher — and expanded — sales tax. But his bill would also tax some retirement income — but not Social Security.
The latter provision is a shot over the bow of seniors, a powerful and vocal voting bloc who flocked to Pennsylvania specifically because the Keystone State doesn’t tax retirement income.
“I’ve met with some folks at the AARP and they’ve been fairly supportive of the effort,” Ryan said during a March 3 interview on “Face the State,” the Sunday public affairs show produced by CBS-21 TV in Harrisburg.
And by “fairly supportive,” we’re going to assume Ryan really meant “Didn’t chase me out of the room with pitchforks.”
Because that’s always been the other thing about trying to eliminate property taxes: The bills get sliced down, “Black Knight”-style by one or another interest group.
An expanded sales tax, for instance, means sticking it to professional services, which means architects and accountants go bonkers (insofar as accountants go bonkers). Advocates for the poor justifiably fire back at attempts to tax grocery store staples or clothing.
A spokesperson for Wolf, who took his own run at property tax reform (not elimination) in 2015, said any bill that expands the sales tax to food or clothing is a non-starter.
The administration is reviewing the IFO’s report and “looks forward to continuing to hear from Democrats and Republicans in the General Assembly on their ideas to reduce property taxes in a way that is equitable,” and doesn’t hit “vulnerable populations or [provide] a tax giveaway to big corporations,” the spokesperson, J.J. Abbott, said in an email.
Because as intimidating as that $17 billion collection total seems, there are three other numbers, far smaller, that matter even more: 102, 50, and one.
In other words, the vote totals needed in the House and Senate for approval of any elimination plan, and that coveted gubernatorial signature.
That’s math that no one has been able to make work yet.
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