Property Tax Independence Act: An Exercise in Ignorance & Futility
PA Lawmakers Move to Recreate a System of Inequities, Paralyze PA Public Schools, and Possibly Even Increase Your Taxes in the Process
This is long, but bear with me. . .
How do we fund Pennsylvania’s schools in a way that is fair and equitable to taxpayers, school districts, and the students they serve, and also provide all students in our Commonwealth with a 21st century, high-quality, competitive education?
Excellent question.
But PA lawmakers like Dave Argall and Mike Folmer still don’t have the answer.
Before we get into the thick of it, you should know a little bit about me for context…
A majority of states in the U.S. depend on property taxes to fund public schools.
If property taxes are eliminated, it doesn’t reduce the need to fund our schools. Senate Bill 76 (Property Tax Independence Act)proposes that the revenue generated from property taxes currently funding schools in the Commonwealth be replaced by an increase in personal sales tax and income tax, which will also expand the tax base to include citizens who do not currently own property.
On it’s face the proposal sounds like a good idea, but what’s the catch?
Real Talk on the Property Tax Independence Act
The impacts and consequences of Senate Bill 76 are not quite as rosy as Senators like Dave Argall and Mike Folmer would like you to believe.
Fair Funding Structure?
The funding structure is more fair and equalized as the tax base expands and, it would seem that with more citizens paying taxes we might be better off and, for the average property owner, taxes should be reduced.
A Regressive Tax Places a Greater Burden on Low Income Families
- First, this tax is what is known as a regressive tax. A regressive tax may at first appear to be a fair way of taxing citizens because everyone, regardless of income level, pays the same dollar amount. By taking a closer look, it is easy to see that such a tax causes lower-income people to pay a larger share of their income than wealthier people pay. So, as usual, there is a greater burden placed upon the poor, regardless of the fact that WIC items and clothing under $50.00 will be excluded.
- We know that it’s much costlier to feed a family fresh, healthy foods. This means that citizens with lower incomes will more often buy and eat the processed foods the Senators deem “lacking nutritional value,” which are subject to the sales tax, because these are the foods they can afford.
- Many people who classify as low income do not own property; therefore, they are not currently paying a tax.
- This tax will increase taxes for all renters, regardless of their income bracket.
Tax Reduction?
Your taxes may be reduced upon the passage of Senate Bill 76, BUT that will really depend upon where you live. Some taxpayers will likely face a tax increase.
Reducing the school property tax means that states must fill in the funding gap with additional personal income and sales tax revenue to the tune of
PA Public School Funding
Schools will still receive the funding they are receiving right now. This sounds like districts, in the very least, break even. But…
of our school districts will send more money to Harrisburg than they will receive in property tax relief
And, if all education funding comes from the state, districts will be subject to whatever changes in the funding formula that come down the line. There are no promises made in the bill. Senate Bill 76 will eliminate local control over when revenue comes in which, according to the Middletown School Board,
“…would place school districts fully at the mercy of a state government that often can’t get its own budget passed on time. Furthermore, the legislation would force school districts to cut spending on education in order to maintain facilities, would freeze in place the current system of inequity when it comes to the distribution of state money to local school districts, and would result in large amounts of the money from the newly increased personal income tax and sales tax going to six counties in Pennsylvania — those including and surrounding Philadelphia and Pittsburgh.”
Property taxes that are sometimes crippling to homeowners, especially to the elderly or those on a fixed income, will be eliminated. Citizens won’t have to worry about losing their homes because they can’t afford the increasing property taxes that fund schools. The key word here, however, is ELIMINATED.
If this legislation is passed, even after paying higher personal income and sales taxes . . .
of taxpayers living in 488 of the Commonwealth’s 500 school districts will continue to pay school property taxes on construction and other debt
Taxpayers in…
will continue to pay 20 percent or more of their current school property taxes
- Note* Only a small fraction of ONE school district with eliminated property taxes is located in Senator Argall’s legislative district (29th). Senator Mike Folmer’s legislative district (48th) missed the mark entirely.
Yet, Senator Mike Folmer made this statement in May, 2017 on Senate Bill 76:
“SB 76 is the only plan to totally eliminate school property taxes — not partial reduction, not elimination for some but not all taxpayers, and not a new program to lessen tax burdens. SB 76 eliminates school property taxes.”
Senator Folmer goes on to say:
“Some critics focus on another proposal to protect schools: retaining some property taxation to repay outstanding debt. Such claims are misleading as once debts are repaid, all school property taxes are eliminated under SB 76.”
I’d argue that what’s misleading, Senator, is telling your constituents that this bill will completely eliminate property taxes when it clearly does not — at least not in the short term. Do your constituents know that every single one of them will continue to pay at least 20% of their current school property taxes, in addition to elevated personal income taxes and sales taxes? And would they champion your bill if they did?
But What About Businesses?
Not all businesses pay personal income taxes, but they will get the same property tax break that individual property owners do. That means that individual taxpayers will pay higher personal income and sales taxes to cover the cost of school property tax relief for businesses.
And For Small Businesses That Don’t Get Tax Breaks…
“The Pennsylvania Chamber of Commerce has released position statements opposing SB 76 over the last few years, arguing that some business owners who lease their property could face rising tax burdens as the result of such a shift.
A sales tax increase would also boost the cost of products overall, potentially hurting small businesses’ profit margins, according to the chamber. And sales tax revenues might not be a dependable replacement for the property tax because they can fluctuate significantly relative to the strength of the state economy, the chamber said.
But Sen. Argall and others continue to press for a change.”
And Federal Taxes?
Taxpayers will lose a federal tax deduction for property taxes, meaning taxpayers in…
will pay more in state and federal taxes than they pay now in school property taxes.
ALL of the experts in education are speaking out against this bill. ALL OF THEM…
TOGETHER… which is extremely unusual. And…
The Tele-Town Hall
On the evening of July 11, I received a phone call that informed me I had been selected to participate in a Tele-Town Hall hosted jointly by Senators Argall and Folmer. I had a long day, but I decided to stay on the line to participate in the discussion. (Spoiler Alert: I was never afforded the opportunity to speak)
Shackled by technology and without a voice, I was little more than a voyeur in this conversation and, at the end of an hour, I felt what I can only describe as a white-hot rage — not so much about the content of the bill in itself, but with the willingness of both Senators to allow constituents to remain ignorant to very real issues in education because they saw it was in the interest of their bill to do so.
I wasn’t shocked by the public beliefs about schools and teachers across Schuylkill and Lebanon counties. This is nothing new to me as I’ve spent my life living and working along side people who share these ideas.
What was abhorrent was the willingness of both Senators, presumably educated men, to allow false or incomplete narratives — almost exclusively to the detriment of public schools and teachers — to remain and perpetuate and, at times, their willingness to chime in and build upon these same false and incomplete narratives.
On PA Public Schools that “Beat the System” & their “Out of Control” Budgets
Many participants had a perception that public school budgets are “out of control” and “wasteful” and that schools have found a way to “beat the system” when it comes to collecting taxes to support operational budgets.
I’ve had more than my fair share of conversations about school budgets. School districts within the legislative districts represented by Senators Argall and Folmer do not have an overabundance of funds at their discretion. Even in the most fortunate of these school districts, budgets are tight and tough decisions must be made. Teacher salaries are somewhere between low and downright embarrassing when compared to other professionals with equal or lesser education. Benefits are cut back every time contracts are negotiated and the legislature levels a series of continuous, relentless attacks on teacher pensions.
I’ve witnessed a teacher cry tears of joy when she received white printer paper at a teacher convening in the city of Philadelphia because her school is so underfunded paper is a precious resource. I’m still in awe that a teacher could be so overwhelmed with joy by two reams of cheap, white paper. I sent her home with my paper, too, that day.
Let’s not even begin to discuss the children who do not have proper books or access to working technology in schools across the Commonwealth due to geography — which we know also opens the floor to conversations about class and race.
Districts are moving to four-day work weeks in the summer, shortening the hours teachers are allowed to be in the building working with or without students, tightening rules on temperature and use of lights, reducing the quality of food available in the cafeteria, reducing needed programs for students, reducing supplies and resources for teachers and students, and more — making adjustments everywhere to save money. This somehow goes unrecognized. But our Senators would allow this narrative of waste and overspending to continue because it serves a political agenda.
While we’re on the topic of waste, you may want to take a look at how lawmakers are spending your tax dollars.
While Senator Folmer came in, to his surprise, as one of the most frugal, the same is not true of Senator Argall.
As you read, keep in mind . . .
- Teacher base salaries in PA range between $53,000 and $59,000, and as high as $65,ooo in the Philadelphia Metro Area. Legislator base salaries are $84,012.
- Teachers spend between $500.00 and $1000.00 PLUS — Every year — out of their own pockets to buy supplies for their classrooms, while they face salary freeze after salary freeze due to poor decisions on the part of the legislature and school districts, together.
- Teachers are not reimbursed for mileage, rent, condolence or congratulatory gifts, independent professional development, meals, hotel expenses, supplies, postage, dues or fees for professional associations, office supplies, tolls, parking, snacks, bottled water, stationary, or supplies. Teachers are reimbursed — in part — for selective educational pursuits, which are limited, documented, and vetted.
- Legislators are granted an expense budget of $51,600 (Almost equalling a PA teacher’s entire salary) AND dip into the budget of the Chief Clerk’s office to cover additional expenses. Further, if a legislator “needs” more money for expenses, he or she may petition leadership and be granted funds in excess of their annual allowance. This is in addition to the legislator’s annual salary.
Me: Maybe I should run for office?
On Nostalgia, Waste, & Overspending in PA Public Schools
Citing turf fields as an example of the rampant overspending of schools on unnecessary items, one participant waxed nostalgic for a simpler time when he and his peers were grateful just to have a grass field on which to play. Another caller added to the overspending narrative by citing the lighting in and around the school buildings as an example of waste.
Ahhh. Nostalgia. It really is the enemy of the teacher. I love the way Ann Byrd of the Center for Teaching Quality writes about this problem in a recent blog post on the power of story: “We face an audience of former students who must revise their own stories to hear ours. An audience that must be open to un-learning what they “think” teaching is like, and to understanding what goes on beyond what they observed, experienced, and selectively remember.”
I’m no great advocate of turf fields, but I am an advocate for education, students, and teachers. Times have changed and expectations have increased exponentially. And the nuances of a teacher’s job cannot be seen trough mere observation. There is so much going on behind the scenes that the public does not know or understand.
It sure would be nice if our legislators would — instead of allowing their constituents to yearn for the simpler days of pencil and paper and playground games of kick the can — help their constituents understand the complexities of 21st century education, as well as the costs, not withstanding legislative mandates.
On Paying Taxes to Support PA Public Schools When You Don’t Have Children
Another participant questioned the notion of property taxes altogether and wanted to know why he is expected to pay taxes to support schools when he does not have children.
We do not pay taxes because our children attend the school in our community. We pay taxes because we believe it is beneficial to live among educated, productive human beings. An educated citizenry is good for social order and to the benefit of democracy, which is why a quality education is a right that should be afforded to EVERY CHILD, without regard for their geographic circumstances. It’s not about you or your individual children, it’s about all of us — as a society, together.
You benefit from public education because your community stands to be full of vibrant, intelligent, creative, innovative young people who are starting businesses, solving pressing social problems, engaging in the policy-making process with integrity, and who will regularly make your life easier and better. They are the people who will make your community thrive when it’s your turn to step back and pass the torch.
The alternative is an underfunded, sub-par education, which leads to broken communities. Our youth will leave to make a better life elsewhere — in a place where they don’t have to drive up to 45 minutes to go to the mall, see a movie, shop at a decent retail store, or eat a good meal. They will go to a place where they can ensure their children will receive a solid education because they want better. It’s already happening — maybe you’re not paying attention?
On the Teacher “Pension Problem”
Betty was my favorite participant. She began her few minutes in a spotlight with a loud, strong, indignant statement about how she has paid into her own retirement savings and that teachers should be expected to pay for their own retirement as well. She shouldn’t be expected to pay for the retirement benefits of teachers through ever increasing property taxes. The Senators acknowledged the “Pension Problem” with sounds of affirmation and noted the fact that is has, indeed, contributed to the rising property taxes.
There is a “Pension Problem” in the Commonwealth; however, what the Senators fail to mention when they discuss it is that the Pennsylvania General Assembly created the “Pension Problem” through a very poor legislative move during an economic boom that allowed school districts — NOT TEACHERS — to delay their matching payments into the PSERS system.
See, like many business establishments, school districts match a percentage of a teacher’s salary that the teacher pays into the PSERS system out of every paycheck. So, while teachers have been paying their own retirement contributions, without fail, the entire time — Repeat: Teachers have been paying for their retirement the entire time — districts have shirked their responsibilities, with the expressed permission of the legislators.
Now the economy is not as great and the time has come to pay the pension bill, but the districts don’t have the funding to make good on their contracts with their employees. Yet, the Senators are perfectly willing to perpetuate the myth that teachers do not pay for their own retirement and that this is the “Pension Problem” in a nutshell. Is it acceptable for our elected officials to run with a false narrative that vilifies public school teachers for political gain?
On Inequalities Inherent in PA Public School Funding
A few participants asked about whether schools would be properly funded by the shift in the taxing scheme proposed by the bill. The Senators offered that the schools would be funded in the exact same amounts they are currently funded — with very small annual increases in line with cost of living and other economic considerations, so no school would lose funding as a result of the shift.
Senate Bill 76 proposes to replicate the systemic inequalities inherent in our current property tax based system for funding public schools. When property taxes pay for schools, schools in wealthy districts inevitably end up with more money than those in poor districts. Considering the revenue raised from property taxes at the State level accounts for approximately 90% of school funding nationwide, and because the federal money designated to bridge the funding gap never quite does the trick, the wealthiest districts often spend as much as twice per capita as the poorest ones. According to the Philadelphia Inquirer, Pennsylvania has the “single most inequitable system of allocating education dollars in the nation.” Isn’t this problem one that should be rightly addressed if we are going to radically redesign our system for school funding? Why isn’t this an issue for constituents? Do they know their children are receiving less than others in the Commonwealth and their Senators plan to do absolutely nothing to address it?
When PA Public Schools Need More Money
When asked about what would happen if schools did not have enough money to operate under the proposed shift, the Senators offered that school districts would have the option to go to the public with a referendum proposal to increase the Personal Income Tax or Earned Income Tax to generate needed funds. If the public voted no, there would be no increase to a school’s resources. Senator Argall offered a boiler as an example — if a school’s boiler breaks and needs to be replaced and they do not have the funding required to do so, the district will be required to bring the request to the taxpayers for a vote.
As I’ve established, there is an overwhelmingly negative, and largely false, narrative about public schools and teachers that has been allowed to exist in our Commonwealth — and across the nation. If a majority of the public believe the narrative, how will schools be able to go to the community to ask for money in the event of an emergency?
In general, people do not like to pay taxes — it isn’t a pleasant experience. In a situation where sales tax and personal income tax is already climbing to pay for schools, why would a voter agree to give more to the character in this narrative cast as the villain?
I return to Senator Argall’s boiler example: Senator, what if a school’s boiler is inoperable and the community votes “no” on a tax increase? What then? The boiler supplies heat to the school and Pennsylvania is cold — too cold to have school without heat. Without heat the pipes will freeze and burst and school cannot be in session without running water. What then, Senator? What happens next? Have you thought this through? Perhaps a boiler was a poor example to use in your tele-town hall.
On Unfunded Mandates
Senators also clarified that from this point forward there would be no unfunded mandates dictated by the Commonwealth, forcing the legislature to think long and hard about what they ask school districts to do because if they make the ask, they will also be required to provide the necessary funding.
This was, indeed, a bright spot. It’s about time the legislature was more thoughtful and intentional about the mandates placed upon the school districts within the Commonwealth. It’s a shame they can only be compelled to do so by the almighty dollar.
On PA Public School Debt
School districts often carry considerable debt from year to year due to financing building and technology projects. The Senators explained that Senate Bill 76 will not allow for a district to acquire debt.
This is clearly an effort by the legislators to make good on EVENTUALLY eliminating school property taxes; however, I wonder how the legislature will handle the problems that begin to emerge when class sizes skyrocket and schools are either bursting at the seams or falling down around our children… How will schools pay for major construction projects when they are forbidden from taking on any debt? Further, how will our schools acquire the funding to invest in large scale technology initiatives to keep our schools future-ready and educate our kids for college and career in a world that is largely dominated by technology?
I would wager that even the most fortunate school districts rarely have enough cash on hand to acquire new technology or complete a new building project or renovation without borrowing. And monies allotted by the Commonwealth every decade or so are simply not enough capital to get the job done. This is unrealistic and dangerous.
There are clearly some substantive problems with the implications and potential fallout from Senate Bill 76 that these Senators either can’t see or intentionally disregard.
If this massive shift in school funding were simple, ask yourself why it didn’t happen years ago. Ask yourself why other states, although they do use referenda for approval of taxes in some cases, are not championing similar plans?
I do agree with the Senators on this point, no citizen should be left homeless or impoverished by a tax. I also believe the Commonwealth’s education funding scheme is inequitable.
I never did have the opportunity to share my thoughts with the Senators during the Tele-Town Hall. And I thought it quite the coincidence that only Republicans, likely to support this bill, were given the floor. I realize that there was a limited amount of time for discussion and the Senators couldn’t be expected to educate their constituents on every one of these points, but it’s curious, nonetheless, that they failed to educate constituents on a single issue I’ve mentioned.
Not. Even. One.
I did leave a message at the end of the allotted time, but never received a return call from Senator Folmer’s office.
To critics of Senate Bill 76, Senator Mike Folmer says:
“If you don’t like the proposed mixture of taxes to eliminate school property taxes, offer an alternative. If you don’t like the proposed Sales Tax expansion, offer an alternative. If you don’t like allowing schools to continue to levy a property tax to cover debts, offer an alternative.
If you’re not going to offer alternatives, please, don’t offer plans that don’t provide for the complete elimination of school property taxes.”
Senator Folmer, I don’t have the answer to this problem, but I’m willing to work with you and Senator Argall to help you find a fair and equitable solution to inequitable school property taxes AND to shift the negative narrative around public education in the Commonwealth. I’m certain other opponents of this bill are willing to do the same. But until that time comes, I’ll remind you that YOU were elected to devise policy solutions. This is YOUR call, YOUR job, and YOUR duty. Not mine and not any other citizens’ that you challenge with your retort.
You said “We’ve got to bring how we fund our schools into the 21st century,” but I’m wondering if you have some innovative ideas for doing that, which are BOTH pro-education AND pro-taxpayer instead of bringing the same flawed bill to the floor each session.
THIS is what I anxiously await, Senators.
Credit to…
for “Just The Facts on the Property Tax Independence Act”
Thank you for reading. If you liked my take on Senate Bill 76, give this post a little love and pass it around!
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