South Eastern Tax Reform Coalition

The School Property Tax Elimination Act of 2007
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Please share this with every Pennsylvania homeowner that you know!

Representative Sam Rohrer has formally announced legislation to be introduced this Fall to ELIMINATE school property taxes and completely redefine education funding to bring it into the twenty-first century. This is the information for which we've been waiting.

 

The new legislation is officially named "The School Property Tax Elimination Act of 2007" (SPTEA) but is still known as the Plan for Pennsylvania's Future.  While it is similar in most respects to the plan released last year, there have been a few substantial changes that make it more acceptable to both parties and increase greatly the chance of its enactment.

 

Briefly, here are the details of the primary legislation:

  • The SPTEA will ABOLISH the school property tax on all homestead/farmsteads as well as eliminate all local school nuisance taxes, local school EIT, and other ACT 511 taxes imposed by school districts.
  • School property tax elimination will be accomplished via a four year phase out of school property taxes at a rate of 25% per year
  • The SPTEA utilizes our current sales tax mechanism to fund schools, restoring the original intent of the tax. Unlike the governor’s sales tax increase plan or House Biill 1600, the School Property Tax Elimination Act of 2007 does not increase the rate but maintains the current rate of six percent.
  • The sales tax provides a predictable and stable funding source that is tied to economic growth. This is in clear contrast to the school property tax which was not based on economic growth and was subject to much variation.

The SPTEA’s revenue sources are twofold:

  • Broadens the base of the state sales tax to include more services and purchases at the current rate, but does not raise the rate above six percent. Core taxpayer items exempt from the tax are all food and clothing, all residential utilities (gas, electric, water, heating fuels), health services (doctors, dentists, hospitals), all prescription drugs, all public transportation.  In addition, exemptions for businesses include core business to business services – accounting, engineering, research, computer and legal services; sale for resale; advertising; trucking; manufacturing wholesale purchases.
  • Eliminates the local 0.5% EIT and nuisance taxes and increases the state income tax by 0.85%, from 3.07% to 3.92%. Because of the elimination of the local 0.5% EIT, the effective net increase in the state income tax is 0.35%.

THE DISTRIBUTION TO THE SCHOOLS

The School Property Tax Elimination Act is historic in that, for the first time, Pennsylvania schools will be fully funded.

  • All schools will be held harmless, providing financing at current levels.
  • The legislation establishes an exclusively dedicated Education Operating Fund (EOF) separate from the General Fund into which all sales tax revenue would be deposited and from which schools would be funded.
  • 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.
  • In addition, the first 50 percent of gaming revenue is dedicated to enhancing the addressing of the equity issue in rural, urban and fast-growing districts.
  • Eliminates unfunded mandates

SPENDING CONTROLS

Current school spending regularly exceeds tax revenue and the School Property Tax Elimination Act of 2007 addresses it head on.

  • The problem is not about simply providing the schools with more money. A need for more cash is not the problem.
  • Under the first phase of the SPTEA (Years 1-4), all districts will begin held harmless in that they will initially receive 100% funding sufficient to meet all financial obligations and will be established at a per student expenditure level per district. Initial funding will receive quarterly adjustments for changes in enrollment as well as yearly base increases indexed to the rate of inflation.
  • Under the second phase of the SPTEA, all districts will integrate locally-driven, state of the art performance and evaluation methods to improve spending efficiency and academic performance. The savings that accrue as a result of this data-driven decision making (D3M) technology belong to the school district to use as desired. This is first time that Pennsylvania schools will be given the tools to conduct regular, ongoing performance analyses.
  • If a district desires additional revenue, they can present a ballot referendum to the voters of their district to raise additional revenue by either an earned income tax or a personal income tax. However, property taxes will not be able to be re-instituted to raise revenue.

CONSTITUTIONAL AMENDMENT

There is a companion bill that calls for a constitutional amendment that will forever ABOLISH school property taxes on primary residences and allow for taxation on commercial properties at 50% of their original rate.

Those are the highlights of the Plan.  The South Eastern Tax Reform Coalition is a member of the PA Taxpayers Cyber Coalition (PTCC). If you'd like more details on the Plan, they're available on the PTCC website at http://mysite.verizon.net/drbsr/PTCCWeb/solution.htm.

 

A comprehensive Excel calculator has been developed by Rick Ritter of the Coatesville Taxpayers Alliance that will show you how you will be affected by this legislation.   Since the cost of education is spread over a much broader base with the School Property Tax Elimination Act of 2007, almost all homeowners will realize substantial savings from this plan.   The calculator is available here.  Please give it a test drive!

 

Because the School Property Tax Elimination Act of 2007 was written with input from both parties, it has received broad support on both sides of the aisle.  

 

This legislation is ready to go NOW!  What we need to do is show overwhelming support to leave no doubt in the lawmakers' minds that this plan is what is wanted and needed by Pennsylvania taxpayers.  We need everyone's help to do this.

 

Please write to Representative Stan Saylor (ssaylor@pahousegop.com) to let him know that you strongly support passage of the School Property Tax Elimination Act of 2007, that you want it passed NOW, and that any plan that is only a temporary fix and does not eliminate school property taxes is unacceptable. 

 

If you share this information with homeowners in other areas of the State, ask them to write their representative to let him or her know the above and to ask them to co-sponsor this legislation and let them know that you will hold them accountable during the 2008 elections if they do not support this initiative.

 

It would also be a huge help if you would be willing to contact House leadership as well.  Here's the information:

 

Majority Leader:

 

Hon. H. William DeWeese
110 Main Capitol Building
PO Box 202050
Harrisburg, PA 17120-2050
(717) 783-3797
Fax: (717) 772-3605

wdeweese@pahouse.net

 

Majority Whip:

 

Hon. Keith R. McCall
121 Main Capitol Building
PO Box 202122
Harrisburg, PA 17120-2122
(717) 783-1375
Fax: (717) 772-1231

kmccall@pahouse.net

 

Minority Leader:

 

Hon. Sam H. Smith
423 Main Capitol Building
PO Box 202066
Harrisburg, PA 17120-2066
(717) 787-3845
Fax: (717) 787-6564

ssmith@pahousegop.com

 

Minority Whip:

 

Hon. David G. Argall
428 Main Capitol Building
PO Box 202124
Harrisburg, PA 17120-2124
(717) 787-9024
Fax: (717) 783-8657

dargall@pahousegop.com

 

 

We are currently experiencing a "perfect storm" of circumstances that favor major changes in education funding.   In a Quinnipiac University poll that was released on May 30, fully 89% of the respondents said that property tax reform is very or somewhat important.  Act 1 has been proven a fiasco by the failure of three of its four major provisions, including the May tax shift referendum that was defeated in 98% of Pennsylvania school districts.  Taxpayer discontent over the Legislature's and the Governor's handling of this issue has never been greater, and the politicians know that they will face big trouble in the 2008 elections if they fail to solve this problem.

 

All that is needed to push this measure over the top is the catalyst of voter opinion.  The time to act is NOW!   Please help by writing the House leaders and Stan Saykor and by spreading this message to everyone you know.

 

LET'S ALL WORK TOGETHER TO GET THIS DONE!