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Committee Approves
Plan to Provide
Largest Property Tax Reduction in PA
History
HARRISBURG -- A proposal that would
provide the largest property tax reduction in Pennsylvania
history was approved today by a special Senate committee.
The Senate Committee on
Legislation, part of the General Assembly's Special Session
on Property Tax Reform, overwhelmingly approved Senate Bill
30, setting up a possible vote by the full Senate next week.
Senate Bill 30, sponsored by Senator Ted
Erickson (R-26), Senator Joe Conti (R-10) and Senator David
J. Brightbill (R-48), would allow voters to decide in a
March 14, 2006, referendum whether to shift school funding
dollar-for-dollar from property taxes to sales and income
taxes.
"Unlike Act 72, which asked voters to
wait until some undetermined date for gaming revenues and
property tax relief, this plan will bring property tax
relief to taxpayers starting on July 1, 2006," said
Brightbill.
Voters will decide whether they want to
increase the state sales tax by 1 percent to a total of 7
percent (8 percent in Philadelphia and Allegheny counties)
and increase the Personal Income Tax by 0.43 percent to a
total of 3.5 percent. The resulting $2.6 billion in annual
revenue would be dedicated to the Property Tax Reduction and
Senior Citizen Tax Assistance Fund.
The fund would be used to reduce school
property taxes for all homeowners, freeze property taxes for
certain senior citizens, and expand the existing Property
Tax and Rent Rebate Program for senior citizens and disabled
persons.
When gaming revenue begins coming into
the Commonwealth, a portion will be used to lower the new
sales and income tax rates.
"This achieves two important
goals," said Erickson. "First, it replaces the regressive
real estate property tax as the primary source of funds for
the school districts. Second, it allows voters in each
school district to decide if they agree with the first goal. The taxpayers themselves will decide if this is the tax
formula they want to adopt."
"This is a balanced initiative -- balanced in the sense that the public
participates in two tax question referendums and will
continue to have the ability to vote on school budgets like
the referendum in Act 72," Senator Conti said. "It is
further balanced by offering a mix of a sales tax, personal
income tax and local earned income tax to shift away from
property taxes."
If approved by
voters, $1.8 billion of the new tax revenues would be sent
to school districts to be used to reduce school property
taxes dollar-for-dollar through homestead and farmstead
exemptions.
Remaining funds would be used to cover
the costs of two other bills approved by the Committee. Senate Bill 16, sponsored by Senator Stewart Greenleaf,
would expand the state's Senior Citizen Rebate and
Assistance Act income eligibility from $15,000 to $30,000
per household, and increase the maximum rebate from $500 to
$1,200.
Senate Bill 15,
also sponsored by Greenleaf, would freeze school property
taxes for all income-eligible seniors and compensate the
school district for the cost. This would provide additional
relief while other provisions of the plan are considered and
put to public referendum.
All school districts, regardless of the
outcome of the 2006 referendum, would have to live under tax
cost controls, commonly called backend referendum.
Brightbill
Wenger
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