Under proposal to eliminate Pa. property tax, you might have to vote on new textbooks

Sophomore Bella Zottola, 15, follows along as teacher Bryan Elder leads an English class at Fox Chapel Area High School on Tuesday, April 4, 2017. (Photo by Ryan Loew/PublicSource)

The Fox Chapel Area School District needs to replace its English Language Arts textbooks to align with Pennsylvania Core standards — a purchase that will cost the district nearly $1 million.

Superintendent Gene Freeman said he worries if a push to eliminate school property taxes proves to be successful that all large purchases, like the needed textbooks for student education, could become so challenging that students don’t get what they need in a timely fashion.

Currently, under the state’s Act 1, known as the 2006 Taxpayer Relief Act, districts are only allowed to raise property taxes to a state-set index rate based on average weekly wage increases, according to the Pennsylvania Department of Education. Each district’s market value and personal income aid ratio is also taken into account.

If districts wish to go above the rate, they can apply to the Department of Education for special exceptions that include pension, special education or construction costs, or seek voter approval for higher taxes through referendum.

Under the Property Tax Independence Act, or House Bill/Senate Bill 76, which Sen. David Argall said he plans to reintroduce to the state Senate within weeks, districts would receive the same funding through a shift in taxation that would eliminate school property taxes and increase the personal income tax rate and sales tax.

If districts need more money than they are receiving from the state, the plan would allow them to seek a referendum and have local taxpayers vote on an increase in personal income tax.

That ties the hands of school leaders, according to multiple superintendents and business managers from Western Pennsylvania. They said this legislation would mean losing local control and handing it over to the state.

“If this property tax (bill) came into effect, I’d have to go to a referendum to buy those books. What if the community didn’t want to buy the books?” Freeman said. Referendums take time to write so the public understands and then they must be filed based on the election cycle, not students’ needs. Then there’s all of the administrative work that needs to be done behind the scenes to make it happen, he said.

Under the proposal, the Fox Chapel Area School District would keep only about 1.3 percent of its property tax rate to pay for existing debt. Fox Chapel would have the second lowest school property tax rate in Allegheny County and the 18th lowest in Pennsylvania if the property tax elimination proposal were to pass, based on an analysis by the Pennsylvania Association of School Business Officials [PASBO]. The analysis showed that, overall, less affluent districts would maintain a higher property tax rate to pay off debt under the proposal.

So what if the voters don’t want to buy things like new textbooks or vote against fixing a leaking pipe?

Since 2006, when Act 1 went into effect, 18 school districts in Pennsylvania have sought voter approval to raise taxes above the state-issued index, said Jeff Ammerman, PASBO director of member assistance. Only two have passed, he said. Both were for building projects.

Yet, David Baldinger of the Pennsylvania Taxpayer Cyber Coalition, who helped draft the legislation to eliminate property taxes, said it puts the power right where it should be: in the voter’s hands.

“The only local control this sends away is the control of nine school board members to raise taxes at will. ... There’s no loss of local control, unless you want to count the ability to tax people out of their homes,” he said.

English teacher Bryan Elder leads a class at Fox Chapel Area High School on Tuesday, April 4, 2017. (Photo by Ryan Loew/PublicSource)

Steve Robinson, spokesman for the Pennsylvania School Boards Association, disagrees.

“It’s often asked, ‘Shouldn’t the voters have a say?’ They do have that. They elect nine people to the school board that align with their views. … We don’t have a referendum at the state level to make these kinds of decisions,” he said.

All of this could affect how schools operate.

School officials could have to wait months to find out if they’re going to get the green light from voters to increase personal income taxes so they can make purchases or other capital improvements, Freeman said. And what if it’s a situation they can’t control, like a special education student that requires half a million dollars in support, Freeman asked. How can he explain that to the voters, when he legally isn’t allowed to talk about the student?

Stable funding

The West Mifflin Area School District relies on the state for between $7 and $8 million in basic education funding a year, Superintendent Daniel Castagna said. If the legislation were to go through, the $34 million the district now receives in local taxes would be coming from the state.

School leaders across the region said they’re afraid to rely on the state for funding, citing multiple instances where they were left to fend for themselves or pick up the pieces after pension and budgetary issues at the state level.

“If you asked me right now, ‘What is your number going to be in basic funding for the 2017-18 school year?’ I can’t tell you,” Castagna said. “Now I’m going to be waiting on a much larger number to see how the state is going to a) collect it and b) distribute it. Every decision we make will be delayed because we won’t know if we have the funding to support it.”

Fox Chapel Area High School sophomore Shannon Coleman, 16, looks over her work during English class on Tuesday, April 4, 2017. (Photo by Ryan Loew/PublicSource)

Argall and Baldinger both said districts will receive funding equal to what they are getting now from local property taxes. School officials from across Allegheny County said they worry that might not happen.

“When you give that local control to the state, now you’re at the whim of politics, you’re at the whim of favoritism, you’re at the whim of agendas,” Castagna said. “I think that’s where it makes a total mess of a lot of public money.

Castagna also wondered what would happen in the event of another months-long state budget stalemate similar to the one that occurred during Wolf’s first year in office. The stalemate prevented state education subsidies from being allocated to districts.

Baldinger said this is an unfounded concern, adding that the money will be kept in a separate fund that won’t be harmed by Harrisburg politics.

“They can’t mess with it. The money goes in, it comes right back out again,” he said.
But what if the economy tanks? What if people stop buying? Those concerns also linger for school leaders across the region.

From 2007 to 2009, sales tax and personal income tax revenues decreased between 6 and 9 percent due to the recession, Ammerman said.

Sophomore Magnus Loeffler, 15, takes textbooks off a cabinet during English class at Fox Chapel Area High School on Tuesday, April 4, 2017. (Photo by Ryan Loew/PublicSource)

While the legislation requires that districts receive at least the same funding as they had the previous year, Baldinger admits a recession could affect the annual adjustment for inflation in a “worst-case scenario.” If the state doesn’t collect enough in sales and personal income tax to pay districts what they received the previous year, it would be required to tap into the general fund to pay the school districts, Baldinger said.

The Education Stabilization Account would operate with a “small fund balance” to prepare for these types of situations, Baldinger said. The fund balance would not be greater than 8 percent of the $14 billion collected in sales and personal income taxes, he said.

The proposal replaces a stable funding source with a much less stable one, Ammerman said.

Ultimately, if the money doesn’t come in, school officials said, it could boil down to cuts in the classroom.

Elizabeth Klamut, a parent and president of the Fox Chapel Area District Forum, a parent and community group geared to support Fox Chapel Area students, said she worries the proposal will hurt all children across the state, not just those in her district.

The Fox Chapel Area District Forum hosted an “emergency meeting” in January, with more than 200 attendees, to discuss concerns about the planned legislation.

“Any program cuts would be a detriment to our student population,” Klamut said. This comes down to: “Would this hurt our funding? The answer is yes. Therefore, we have to oppose it.”

Stephanie Hacke is a freelance journalist in Pittsburgh. She can be reached at stephanie.hacke@gmail.com or on Twitter at @StephOnRecord.

  • skiortee

    SEEK THE TRUTH: For those of you that have a FB account please like “PTCC” on FB. This is an umbrella organization of over 13,000 members from 84+ grassroots organizations that support SB76. This FB page is a fantastic resource to get educated and ask questions. If you do not have a FB account http://www.ptcc.us is another great resource.

  • Mark Dodson

    Steve Robinson your statement is correct ” you elect nine people to the board on there views ” so why does it not work for the taxpayers.My School District Chartiers Valley just spend $94.2 Million for 2 new schools and they also decided to add on another $400 k for new turf.So don’t compare book purchases to this madness..

  • goviscorrupt

    This is a Hacke job alright! More misinformation.

  • WhatTheHeck

    If someone took an “unlimited amount” credit card away from a family I bet they would learn how to budget in a more efficient manner. Maybe some of these school districts should try to budget better rather than reaching into everyone else’s pockets when they feel the need to extort some cash. I am so sick of twisted statement ‘it could hurt the children’. Is the millions of debt to PSERS for the children? What about those families they are putting out on the streets with their demands for more money every year?

  • strainer

    THE DISTRIBUTION TO THE SCHOOLS

    The Property Tax Independence Act works to fully fund all Pennsylvania schools.

    – All schools will initially be fully funded at their current levels.

    – Schools will receive their property tax replacement funding directly from the state. The Property Tax Independence Act will fully fund all districts by replacing the property tax dollar-for-dollar at each district’s current level. All students in Pennsylvania, regardless of their location or their area’s economic condition, will have the opportunity for a quality education.

    – Equity in schools is guaranteed because the state assumes the responsibility of school funding. Each school will receive the resources it needs regardless of the local ability to pay. This solves the funding problems faced by rural, urban and fast-growing districts.

    – The Property Tax Independence Act calls for a dedicated lockbox account for all property tax replacement revenues that is separate from the General Fund. All replacement funding for the schools will be disbursed from this account through the existing Department of Education funding mechanism, requiring no growth of the current infrastructure.

    In addition, The Property Tax Independence Act completely eliminates the taxing ability of local school boards. The only exception would be a possible local EIT or personal income tax for major projects such as new school construction, and that will be subject to a no-exception taxpayer referendum.

    It is important to note that The Property Tax Independence Act imposes NO mandates of any kind on Pennsylvania school districts. The plan provides replacement funding only and the funding provided by the plan may be used in any manner the school district deems necessary. The Property Tax Independence Act does not interfere in any manner with local school district decisions.
    http://www.ptcc.us/solution.htm

  • Susan Campbell Snyder

    So the school district with an 94 million dollar budget doesn’t have 1% in reserves for a purchase such as this? Maybe they should buy some books on budgeting, maybe tax reform will finally get the school district to budget properly. Why should they budget now when they just raise taxes every year faster than the cost of living or inflation. Their $13,474,001 payment to their PSERS 2016-2017 pension fund was made in full. But, it’s “for the children” . . . “what if we can’t buy books?” Give me a break.

  • David DeKok

    Will voters reject raising taxes even to keep schools open? The example of other states shows that in some cases, they will. Voting on large textbook purchases would be tailor-made for religious extremists to rally opposition to, say, textbooks that discuss evolution or treat human-induced climate change as real. In my home state of Michigan, I remember hears when we had no elementary art or music or even phys-ed teachers because our local district was on an ‘austerity’ budget as a result of a voter referendum being disapproved. It will happen here, too.

    • Susan Campbell Snyder

      Proponents of property tax elimination are not anti-education. The budgets of school districts are out of control and there is much wasteful spending. Shifting taxes from the minority of property owners to the majority of the population will spread out the burden and make school districts accountable for there spending to a larger group of people. Property owners have been a reasonably reliable easy target for school taxes for decades and the school districts have abused and taken advantage of that tax base. It’s their fault it has come to this in the first place and yet they continue to fight it.

      • David DeKok

        People pay property taxes whether they own or rent. If the latter, it is part of their rent. I suspect the loudest proponents of property tax elimination are corporations that want to escape their duty to help fund public schools. They would be the biggest beneficiaries. It is easy to cry “wasteful spending,” but what are specific examples of wasteful spending? Teachers deserve a salary commensurate with their education and responsibilities and a good, defined-benefit pension to keep them in their old age. No one should have to worry that their retirement income is at the mercy of Wall Street sharks.

        • Susan Campbell Snyder

          Surprisingly, I have not see any support from any major corporations concerning property tax reform. One would think Home Depot, Walmart, and Costco to name a few would have huge billboards up by now, or full page ads in their flyers. I know the Realtor’s organizations are in favor.

          I’m sure renters would like a rent reduction. Most landlords I have spoken with have said they will reduce rents, if they don’t, competition will take over and rent will drop. Mortgage payments will be more affordable so renters can become homeowners.

          Many school boards post their budget meetings on YouTube. If you want to see wasteful spending, watch a few. One recently (4-4-17) from Boyertown school district where there was discussion over 3 million dollars a year just in interest on projects that a few members were convinced were unnecessary. Read the papers on recent audits of some school districts.

          Yes, everyone deserves salary and benefits commensurate with their responsibilities, and educators won’t lose any of that with tax reform. But it might get watched a little closer. Since salaries and benefits are 80% or so of a school district budget, they should be scrutinized. PSERS has been the major reason for the recent tax increases, retirement funding, not programs for the kids, which is the way tax increases are often spun.