PA Ballot Question

Nov 7, 2017
Pa. ballot question on property taxes passed. Here’s what it means

Pennsylvania took a first step toward a potential property tax overhaul Tuesday, as voters approved a constitutional amendment that could lead to change.

The ballot question, which asked whether taxing authorities should be able to exempt residents from paying property taxes on their primary residences, was poised to pass, with preliminary results showing the amendment winning approval with 93 percent of districts reporting results.

“I’m excited that the people of Pennsylvania got to speak, and I think they made it pretty clear,” said Rep. David Maloney (R., Berks), who sponsored the bill that created the ballot question. “I think it’s a significant step forward, and I think, in some respects, the legislature probably needed to see this.”

The vote marked a concrete move toward changing or eliminating a levy that has been a long-standing source of complaint.  Lawmakers and advocates say that the current reliance on property taxes — which account for about 30 percent of local and state revenue in Pennsylvania and are a primary source of school funding — is especially harmful to homeowners on fixed incomes. The issue has gained greater traction in recent years; Gov. Wolf has said he supports the elimination of property taxes.

But Tuesday’s vote will not change anything immediately.

The referendum allows the legislature to pass a law that would permit taxing authorities to exempt residents from paying any tax on their primary residences.

Even if the legislature passes such a bill, individual taxing authorities — counties, municipalities, and school districts — would have to enact their own exemptions. They would apply only to primary residences; taxes would have to be paid on commercial and industrial properties and on second homes.

Taxing authorities would have to find replacement revenue sources, which likely would require more state legislation.

Some grassroots groups of Pennsylvania homeowners have pushed for a bill known as the Property Tax Independence Act, which would eliminate property taxes by raising sales and income taxes.

School districts have been watching the issue closely. Jay Himes, the executive director of the Pennsylvania Association of School Business Officials, told the Inquirer and Daily News that having an option to eliminate property taxes for primary residences is a good idea, provided replacement revenue is available. His group opposes the Property Tax Independence Act and other efforts to eliminate all school property taxes. Wolf has also said he sees problems with that bill.

Among the issues that school officials and other opponents have with the bill is its provision that residents would continue paying property taxes on their school districts’ existing debt, making tax payments unequal and widely variable among the state’s 501 districts. And school boards would cede some control over school funding.

But supporters of the bill, which include both Democratic and Republican lawmakers, say that the passage of the constitutional amendment Tuesday gives them more flexibility to deal with some of opponents’ issues. For example, the bill could now be amended to only eliminate school property taxes for primary residences, instead of all property taxes.

“That does send a clear message,” said Ron Boltz, president of the Pennsylvania Liberty Alliance, one of the taxpayer groups that pushed for the amendment.  Source

New Castle News
Oct 7, 2017
Voters get chance to endorse move to eliminate property tax

HARRISBURG — Voters in November will be asked whether the state Legislature should move to allow school districts to completely replace property tax.

But the ramifications of the Nov. 7 ballot question may be less earth-shaking than many voters thinks. The measure doesn’t compel the Legislature to begin tackling the property tax issue and it offers no clue how the state would try to replace the tax, said Jay Himes, executive director of the Pennsylvania Association of School Business Officials.

The ballot question asks voters whether the Constitution should be amended to allow the homestead exemption from property taxes to be used to cover the entire property tax bill. Current law caps the exemption at 50 percent of the property tax bill.

The question appears to have little, if any opposition, largely because its scope is so limited.

“We’re telling people to hold their noses and vote for it,” said David Baldinger, who leads the Pennsylvania Taxpayers Cyber Coalition, a grassroots network of taxpayers groups lobbying to get rid of property taxes.

Baldinger’s group has been working to get the Legislature to pass a plan to replace school property taxes with increased income and sales taxes. That plan came within one vote of passing in the state Senate in 2015. After the Senate deadlocked 24-24 on the plan, Lt. Gov. Mike Stack cast the deciding vote against it.

While he doesn’t like the proposed Constitutional amendment, Baldinger’s afraid that if it fails it will provide lawmakers with ammunition to argue that there’s no broad public enthusiasm for property tax reform.

Baldinger said that he thinks the measure lays out a ill-conceived strategy for property tax relief by limiting the protections to residential homes. His group would prefer to see school property taxes completely eliminated, on both residential and commercial properties.

The groups representing school districts don’t oppose the Constitutional amendment.

The measure would “set the stage” for additional debate about how the local schools should be funded, said Himes, at the school business officials group.

“Voter approval of the proposed constitutional amendment by itself will not change anything with regard to what taxpayers, school districts or taxing bodies can or must do,” according to an analysis of the ballot measure provided by the Pennsylvania School Boards Association.

“We would expect that any tax plan considered in the General Assembly would have to include some way to replace the money to make up for the reduction,” said Steve Robinson, a spokesman for the Pennsylvania School Board Association. “You can’t just eliminate taxes from school districts without a way for them to get the money from somewhere else.”  Source

Sept 29, 2017
The Inquirer
Wish you didn’t have to pay taxes on your home? Pa. ballot question could lead to change

Pennsylvania homeowners, lawmakers, and elected officials have long bemoaned the state’s reliance on property taxes. This fall, voters could take a step toward changing it.

A November ballot question will ask voters whether local taxing authorities should be able to exempt residents from paying property taxes on their homes.

What it leaves up in the air, however, is how municipalities, counties, and school districts would make up for the lost revenue.

What would the ballot question do?

Nothing would change immediately if the ballot question passed in November. But school districts, counties, and municipalities would have the option to exempt taxpayers’ primary residences from property taxes.

Commercial and industrial properties would still be taxed if a local government or school district enacted the exemption. Although it’s unlikely that the exemption would be used anywhere until replacement revenue sources were found, advocates for property tax reform say the measure would be a significant step in implementing broader changes.

Currently, taxing authorities can choose to exempt taxpayers from paying up to 50 percent of the median assessed value of all homes. The proposed change would expand that exemption, making it possible for local governments to exempt all taxpayers from paying any property taxes on their primary residence.

The text of the question itself  asks voters: “Shall the Pennsylvania Constitution be amended to permit the General Assembly to enact legislation authorizing local taxing authorities to exclude from taxation up to 100 percent of the assessed value of each homestead property within a local taxing jurisdiction, rather than limit the exclusion to one-half of the median assessed value of all homestead property, which is the existing law?”

Why are lawmakers trying to change the tax system?

Rep. David Maloney (R., Berks), who sponsored the bill that created the ballot question, said he receives weekly — and sometimes daily — complaints about property taxes from his constituents, especially those who are retired and live on fixed incomes.

“I had an elderly lady walk into my office unexpected,” he said. “She pulls out her property tax bill out of her pocketbook and said, ‘Sir, I can no longer pay this. Do you know how to help me?’ ”

Other lawmakers in both parties, and even Gov. Wolf,  have called for property tax reform.

“You could say the devil’s in the details,” Maloney said.

How did we get here?

In Pennsylvania, systems in place for property assessments and distributing school funding have sparked additional complaints about the real estate tax system. Property owners pay tax rates set by their county, school, and municipal governments.

School taxes account for the largest share of property-tax bills, and Pennsylvania’s school-funding system has long been criticized. Wolf made the need to reduce property taxes part of his 2014 campaign, and the state Supreme Court ruled Thursday that a school-funding suit could proceed — but solutions have remained elusive.

How do Pa. property taxes compare with other states’?

Statewide, property tax collections account for about 30 percent of local and state tax revenue, according to a study by the Tax Foundation. And its tax rates are among the highest in the country; Pennsylvania homeowners pay, on average, 1.46 percent of their home value in taxes, according to another Tax Foundation report, which ranks the state 10th nationwide for the highest effective tax rate. New Jersey, by comparison, has the highest effective tax rate of any state, at 2.44 percent.

In school property taxes alone, Pennsylvanians pay about $14 billion a year.

Taxes also vary by location. The owner of a home in Upper Merion with a market value of $250,000  would pay $3,437.57 in total property taxes this year. An owner of a home with the same value in West Chester would pay $4,234.57, and $7,867.11 in Cheltenham.

Who is pushing for tax change?

In recent years, a number of grassroots groups have added to pressure to eliminate or reform property taxes. Ron Boltz, president of the Pennsylvania Liberty Alliance, said he got involved in fighting property taxes after the tax bill on his Schuylkill Township home tripled because the school district appealed his assessment.

The Pennsylvania Liberty Alliance and other groups have pushed for legislation known as the Property Tax Independence Act, which would eliminate school property taxes by raising income and sales taxes.

Boltz is also encouraging people to vote “yes” to the ballot question this fall.

“It isn’t the full deal,” he said, “but it’s certainly a sign that we are absolutely having an effect.”

Does anyone oppose it?

School officials are also watching the debate closely. Jay Himes, executive director of the Pennsylvania Association of School Business Officials, said his group thinks the option to eliminate property taxes for primary residences is a good idea — as long as a sound revenue replacement is found.

But Himes and his association strongly oppose the Property Tax Independence Act and efforts to eliminate the school property tax. Under that bill, school districts would continue charging for property taxes to cover their existing debt until it is paid off, and county and local property taxes would remain the same. That would lead to even more unequal payments for homeowners depending on their school district, Himes said, and would not be total elimination of the tax.

School officials also oppose the loss of local school board control over education funding under proposals to eliminate the school tax.

“We don’t have a perfect tax system in place for school districts and we haven’t had one for decades,” Himes said. “It, however, is an inordinately complex and difficult issue because otherwise we’d of had a solution by now.”

What comes next?

If the measure passes, state lawmakers would need to find alternative sources of revenue before taxing authorities could move forward with enacting property tax exemptions.

Advocates for the Property Tax Independence Act say that the referendum could help them achieve the elimination of school property taxes.

Sen. David Argall (R., Schuylkill) is the prime sponsor of that effort, which has attracted support from both Democrats and Republicans. It was defeated after Lt. Gov. Mike Stack broke a tie vote on it in 2015.

Argall said that he is open to amendments to his bill, which still lacks enough votes to pass. If the measure passes this fall, for example, he could amend his bill to eliminate school property taxes only for primary residences rather than all properties.

“It gives us more flexibility,” Argall said of the ballot question. “I believe it helps us to build some additional support for the concept across the state.”  Source

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