The first challenge of the next Governor will be to lower property taxes and provide a fairer way to fund PA schools. For the last eight years, Republicans have increased funding for basic public education by almost $2 billion. Despite this massive increase, the local cost of education funding has driven property taxes higher and higher.
Perhaps no single group in the Commonwealth feels the burden imposed by rising local property taxes more acutely than the elderly, many of whom rely on Social Security and fixed income pensions as their sole sources of income. Property taxes have risen precipitously over the last three decades to meet the funding needs of our schools as the state’s share of education funding dwindled.
Although older Pennsylvanians are willing to contribute towards the education of the next generation, the simple fact that they own the most homes in the state that are taxed by school districts, requires them to bear a disproportionate share of the education cost. For many older Pennsylvanians, their home is not only their single largest financial asset, but it is where they hope to spend their remaining years. They should not be driven out by taxes.
Mike Fisher’s first priority as Governor will be to reform the PA school funding system and lower property taxes by finding an alternative fair way to fund the PA public education system. Fishers says he will act the very first day he takes office and provide the needed leadership to finally enact real reform that reduces property taxes and provides a fair way to fund education.
According to Fisher’s plan, his first act as Governor will be to call a Special Session of the General Assembly to deal with our school-funding crisis. Fisher will charge the General Assembly to consider all options, but he is opposed to any increases in the state income tax or state business taxes, which would lower Pennsylvania’s ability to compete for jobs and improve our economy. Fisher will offer a plan to the General Assembly that ensures local control, protects taxpayers, controls spending and focuses on lowering property tax for homeowners first.
Under Fisher, school districts would be required to place a mandatory referendum on the ballot in May 2003 (Mandatory Act 50) that will empower voters to choose between staying with the current property tax system or reducing their property taxes with a shift to an earned income tax. This will enable school districts to enact up to a 1.5 percent earned income tax in exchange for a dollar-for-dollar reduction of property taxes from the revenue generated. Under a ‘front-end’ referendum, voters would choose whether their local school district should adopt the new tax system.
As part of the reforms under the Act 50 referendum, taxpayers would have the right to vote on any future tax increases that are equal to or greater than the statewide average weekly wage for those school districts that opt into the new tax system. If there is a need to raise taxes above any increase in the average weekly wage, voters would have the final say. This will help control costs at the local level.
Fisher states he will use the homestead exemption to the extent permitted by Pennsylvania constitution, which would be used as a tool to provide immediate relief to homeowners who need it most. Each school district would be required to provide a dollar-for-dollar reduction in local residential real estate taxes in the amount equal to the amount of new revenue generated from the earned income tax.
Fisher will work with the General Assembly to allow school districts in Southeastern Pennsylvania to receive a credit from the City of Philadelphia wage tax for residents who work in Philadelphia.
Fisher will create an Education Finance Commission to evaluate school funding disparities and identify cost saving measures for local school districts. This Commission will work with each district to conduct a comprehensive study of revenue needs and a detailed report on ways that they can reduce cost by at least 10 percent over a five-year period so that monies are spent smarter in the classrooms. In addition, the Commission will offer concrete steps to provide a more equitable formula to distribute state revenue for basic education. The Commission will be charged to complete their report by September 2003.
As Governor, Fisher will work with the General Assembly to protect taxpayers by ensuring that property assessment and local levies are not a source of windfalls for county governments, school districts and municipalities. He does not believe reassessments should be a way to ‘hide’ tax increases. These protections will require revenue-neutral property taxes on the county level and anti-windfall taxpayer protections in collections by local taxing authorities.
Fisher will seek to establish an enforcement mechanism to ensure that counties, municipalities and school districts comply with anti-windfall protections and will enable the Attorney General to bring suit based on information brought to the Office of Attorney General by the Auditor General or individual taxpayers.
As a former member of the Pennsylvania General Assembly, Fisher knows that any meaningful solution must come from a bipartisan effort between the General Assembly and the Governor. The Governor must lead and set priorities, and above are the principles of Fisher’s plan that he will present to the General Assembly if elected Governor.
To help reduce the burden property taxes impose, as Governor, Ed Rendell will begin reforming the state’s education funding system to shift from an over reliance on property taxes to broader sources of revenues. Elderly homeowners would be among the greatest beneficiaries of Rendell’s plan for tax reform.
As Governor, Rendell will uncouple the property tax from education funding by providing substantial additional funding for local school districts. Pennsylvania’s schools have become over-reliant on the property tax because state government’s contribution to the costs of education has dropped to 35 percent, down from 54 percent for the 1970-71 school year. This system has left one-third of PA school districts facing a deficit in 2000 and forced local districts to make education decisions based on finances and not sound policy.
Rendell will begin uncoupling education funding from the property tax by dramatically increasing the funding the state provides local schools. This funding increase will allow communities to cut and cap for every homeowner the portion of local property taxes used in finance schools. This new funding will be generated from restructuring state government to ferret out waste and inefficiencies.
In any large bureaucracy, there are significant cost savings to be found by streamlining and improving its operations. Rendell feels the Commonwealth of Pennsylvania is no exception. As detailed by Governor Ridge’s 1996 IMPACCT task force study there were and still are government reform efforts that could save the state almost $7.6 billion over five years. While the Administration made some progress, there remains much to accomplish.
As Governor, Rendell will continue the work begun by the Ridge Administration and scour the state government to eliminate fraud, waste and duplication and streamline and improve operations. All rescued funds will be allocated to education.
As Philadelphia’s Mayor, Rendell launched a similar government reform program to close the city’s budget gap without raising taxes. By making tough decisions, Rendell was able to close a $250 million budget gap – 11 percent of the $2.3 billion city budget – without raising taxes.
If elected, Rendell will place slot machines at Pennsylvania’s racetracks. A study at Penn State University determined that $283 million of revenues would be created in PA if 1500 slot machines were permitted at each of the State’s existing four racetracks. If, however, the number were increased to 2500 machines per racetrack as in neighboring states West Virginia and Delaware, state and local revenues could reach $469 million.
Substantial additional revenues could be added if slots are also placed at a potential racetrack in Erie, where there is currently a dormant license. As Governor, Rendell will pursue legislation to legalize slot machines at Pennsylvania racetracks and dedicate 100 percent of additional state and local revenues to fund education, thus dramatically reducing the property tax burden on older Pennsylvanians.
As Governor, Rendell will redirect a significant portion of the additional revenues generated from the recent increase in the State’s excise tax on cigarettes to the costs of public education.
Rendell has stated that nobody who has worked hard all of their life, raised their children and paid their mortgage should be forced out of their home because they can’t afford to pay their property taxes.
Rendell’s plan to reduce property taxes is only a plan until he is elected Governor, which then he can enact. As with Fisher, who likewise has a plan and is willing to do something to assist in this dilemma.
