Lawmakers Tread Water on Property Tax Reform
A state House committee is expected to file a report on property tax relief measures by Nov. 30, examining municipal and school property tax rates and their cost drivers.
By Melissa Daniels | PA Independent
HARRISBURG — State Rep. Nick Micozzie, R-Montgomery, served on a property tax committee around 12 years ago, he said. The committee also crafted a report to reform school property taxes. And then it failed to secure the votes on any legislation.
He said he doesn’t see that changing this time either.
“I think we’re going to spin our wheels a lot of times, like I have done over the years,” he said.
Micozzie joined 12 other members of the House Select Committee on Property Tax Reform last week and heard the same arguments for property tax reform lawmakers made this past session, treading water until a new fiscal analysis comes out in the fall.
The committee heard testimony on three property tax reform proposals from the bills’ sponsors:
- The Property Tax Independence Act, which would swap school property taxes with higher personal income and sales taxes, as well as expand the tax base to include certain goods and services, like clothing purchases over $50;
- A bill that would give municipal governments the power to levy new taxes for school funding per voter referendum in exchange for lower property tax rates;
- A measure that would seek a constitutional amendment relating to homestead property.
Among the issues discussed Monday were:
- Should the state take control away from the school districts, which collect and set the property taxes?
- Is the tax shift conceptually fair, or revenue neutral?
- How many taxpayers would pay more than they already are?
Estimates on the Property Tax Independence Act, or House Bill 1776 and Senate Bill 1400, from the state Department of Revenue suggest the tax shift would generate around $9.1 billion, while school property taxes bring in around $12.5 billion annually. That disparity was a main reason why HB 1776 stalled in committee earlier this year.
But, SB1400 sponsor state Sen. David Argall, R-Berks, said the Independent Fiscal Office, a state legislative version of the federal Congressional Budget Office, will provide a new analysis on revenue streams. The committee will hear those in September.
Argall said he’s “frustrated” nothing has moved on the issue of property tax relief and is willing to discuss potential changes to the tax shift to get something passed.
State Rep. Madeline Dean, D-Montgomery, said the committee will need to look at new information, and the context of what lawmakers have tried to do in the past, to reach a consensus. A final plan should not leave the committee, falling on partisan lines, with seven Republicans and six Democrats, she said.
“If we leave like that in November, I think we’ve risked wasting each others’ time,” she said.
Committee chairman state Rep. Tom Quigley, R-Montgomery, said the IFO analysis combined with past research could yield new plans. He said the goal is to get legislation in front of the new session of the General Assembly come January.
He said he’s not concerned about the short timeline.
Allan Bach
9:11 am on Thursday, August 23, 2012
The State received over $3 billion in revenue from casinos. I think that would make a huge dent in property taxes. Oh, wait,- taxpayers were promised this before the casinos were built. Our elected officials must have forgotten. They're so busy serving those who elected them to office that these trivial matters get lost in the maze of spending and tax increases.
Wayne Schissler
9:10 am on Sunday, August 26, 2012
There's a bus to Harrisburg willing to take you there to deliver that message:
http://ccnasd.org/
Allan Bach
1:24 pm on Sunday, August 26, 2012
Wayne, I wish this was not a weekday, but I understand the reason for it being one.
Wayne Schissler
1:58 pm on Sunday, August 26, 2012
Allan, I have the same problem, it's a workday. But that's when the reps are in Harrisburg. I've been trying to help them get as many as they can on the bus.
Everyone who can go should seriously consider it. They (the person organizing this) needs to know this week. Lawmakers need to know how serious this matter is to their constituents. Sadly often nothing gets done when we sit back and expect them to do the right thing.
Mary Anne Looby
10:29 am on Sunday, August 26, 2012
Wayne thanks for the information. I hope the Property Tax Act can get passed. By doing so, everyone gets to pay through personal income tax and sales tax. Right now people who rent pay nothing and an awful lot of them have kids in school. Our property taxes are so high that we will not be able to live a comfortable lifestyle in our retirement if we have to continue to pay them. It seems very unfair to have to continnue to pay for schools well into your retirement..
Lower Saucon Guy
10:48 am on Sunday, August 26, 2012
Renters do pay taxes. It's included in the rent. The property owner pays taxes on his property. You couldn't make up the amount of money needed with personal income tax and sales tax increases. People already buy a lot of things online to avoid sales tax. By increasing sales tax, it would just give more people the incentive to buy online. I don't know what the answer is, and I do sympathize with property owner and the tax burden they have to carry through retirement. I'll have to pay rent the rest of my life unless I choose to buy another home. I guess everybody has t pay somebody. No free rides unless you homestead in Alaska, LOL !!
David Baldinger
4:46 pm on Sunday, August 26, 2012
LSG, the property taxes certainly CAN be eliminated and replaced by increases in the sales and income taxes. Please learn the facts! The details are at www.ptcc.us.
Andrew Wilt
12:58 pm on Sunday, August 26, 2012
There is likely nothing wrong with the property tax status quo except for one very big thing, it's the elephant in the room: Although Pennsylvania is very particular about how property assessments are to be done, Pennsylvania does not require that they ever be done. That's why some counties take decades to reassess.
The problem with not reassessing frequently is that after a while, statistically, by virtue of how the formulas that work with the assessment data were created, the more expensive properties tend to be assessed at a lower percentage of their actual fair market value while the least expensive properties tend to be assessed at a higher proportionate value.
About 10 years ago I spent literally hundreds of hours copying data off the county web site - http://www.ncpub.org/Main/Home.aspx . Iput that data into spreadsheets to compare how expensive properties were assessed in comparison to inexpensive properties. One particular property included a large stone home on about 8 acres next to the Saucon Valley Country Club. It had sold prior to the 1995 county reassessment for $1,750,000 yet the county only placed a value of $217,000 on it. Many of the pricey properties in that area, and indeed throughout the township, have assessments that are very low in comparison to their actual fair market value. THAT is where some considerable revenue is being lost and those property owners have the means to pay.
Wayne Schissler
7:37 pm on Monday, August 27, 2012
Property taxes are a hold-over from the 19th century, aren't they? Starting as a tax on the rich, now we all get to be the "Lord of the Manor" and support the shire with our filthy lucre.
I'm amazed to see that an excuse for the status quo is that we have to make sure the rich pay their "fair share". My, don't we hear enough of that from our federal candidates? The value or assessment of a house is no indicator of what a person's income is or how much of a tax bill he can afford after paying the ever increasing heating, utility, and repair bills. Income and sales tax are a much better indicator of that.
People retired from the old textile and blouse mills don't have much more than Social Security to live on. They thought their house was paid off and then the tax bill came...
Andrew Wilt
9:01 am on Tuesday, September 4, 2012
Wayne Schissler - I spent years working through the data, the pricey properties are not assessed proportionately to the median and lower valued properties. The rich, just like everyone else, should pay their fair share. In the case of Pennsylvania property assessments, they don't. Your assertion that the value of the property is not an indicator of the owner's income is ludicrous.
Wayne Schissler
6:41 pm on Tuesday, September 4, 2012
Andrew said,"Your assertion that the value of the property is not an indicator of the owner's income is ludicrous."
Then let me introduce you to the world were elderly people have to take in borders or rent their garages out to make ends meet. Where people can no longer manage and must consider a reverse mortgage. Where you inherit the home you grew up in but realize you would never be able to afford the taxes and must sell it in a depressed market. Does the outside of the house tell you that?
Do your public records tell you how many snowmobiles and ski-doos are in that modest house's garage and how much they spend on recreation? Do they tell you who goes on cruises and who never goes farther than the Jersey Shore? Do you just assume the house tells you that?
Have you ever seen the inside of a McMansion that is barely furnished and cold in the winter? If homes are an indicator of wealth then I guess nobody bought a house that was beyond their means.
Since we're talking about schooling..., when the lower middle class and poor who maintain a decent home in a good area but scrimp and save to send their child to a quality private school - do the public records tell you how much they save they district while still paying the full amount of taxes? While the rich guy you loathe brags that he sends his kids to the public school with the "common folk".
When you have your eyes fixated on the large lot with the stone house you just might miss the rest of the world around you...
Amend Wun
5:45 pm on Sunday, August 26, 2012
I'm not sure how the school districts could establish a stable budget based on sales and income tax when such things can deviate drastically from year to year, as was seen when the economy tanked in 2008. If assessments remain steady then the districts revenue should remain steady. I'm not sure what the answer is either, but shifting the burden to create a new funding paradigm seems risky at best.
Lower Saucon Guy
6:00 pm on Sunday, August 26, 2012
After looking at David's link, I have to agree with Amend. That won't work.
David Baldinger
9:39 pm on Sunday, August 26, 2012
Amend and LSG, HB 1776/SB 1400 guarantees at least level funding year-over year with annual increases tied to the increase in the CPI; no school district will ever see a decrease in funding. Contrast that with this from my testimony before the Senate Finance Committee:
On April 17 a school district business manager from Montgomery County wrote to me saying, “Our district is the poster child for property owner initiated tax assessment appeals. We have lost $94 million in assessed value in the past year alone. This translates into $1.7 million in revenue lost just since last year. We have over 50 cases pending in the court system as well.”
And they, by far, are not alone with this problem. If you'd care to lean more, please read my entire testimony - it clearly states the problem: http://www.ptcc.us/pdf/sb1400testimony072312.pdf
mike schlicher
12:52 am on Tuesday, August 28, 2012
LSG you said it rite your landlord pays the tax you just pay the rent therefor the privleges of owning a home really dont apply so really you dont pay your fair share My school taxes go up all the time I dont have any children and dont feel it right to have to pay for some freeloader to have kids dont pay the school tax for them .everybody pays the same sales tax makes sense giving homeowners a tax break so they can put the money back into the revenue stream by doing needed repairs and other things that the realestate taxe breakwould give them.It would make more jobs and then as a renter you too could go back out and buy the home you want because it is a win win for everybody.the area where I live at is full of homes that are being either forclosed on or just flat out being sold because of already too high R/E taxes.and what was a nice family neighborhood is turning into a rental property haven for the rich NYers who dont care a darn about this state not all are bad but the slumlords here are now a MAJORITY out of staters.THANKS for letting me vent
Lower Saucon Guy
9:33 am on Tuesday, September 4, 2012
@Mike. I really don't see what the difference is as to who pays the taxes. The property owner has taxes figured into his rental price. He makes a profit after all expenses including tax are deducted. I've owned a few homes already and choose not o own one now at this stage in my life. This has been a common complaint since I was a youngster. Why do the property owners have to pay for school kids, when they don't have any kids in school. I used to bitch about it all the time. I'm way too old to have kids in school anymore, it's more like my grandkids now. I guess in this country, if you want to own property, you have to continually pay. They may have even gotten the homesteaders in Alaska by now.
Joseph Gimaro
10:47 pm on Monday, September 3, 2012
Andrew, I live in one of those homes in that area and township. I bought it 13 years ago, 1999, for $338K. It was assessed at $374K then and has been til the latest assessment several months ago. My 2011 property tax bill was 11.5K. I got my new assessment 60 days or so ago, how does $640K sound or a 71% increase in assessed value. My home is 4860 sqft on 5.5 acres built 1988. Sure I appealed it, but at the end of the day the new assessed value still stands and my taxes went up another couple hundred. I would gladly take 1% sales and income tax increases instead. I fully support 1776 and 1400 and would like to go on the bus mentioned earlier. PS I pay another $125K annually in commercial property tax and my 5 children go to Parochial School.
Andrew Wilt
9:57 am on Tuesday, September 4, 2012
Joseph Gimaro - It seems you should be all the more concerned about the properties in your municipality being properly assessed. However, you say you got a new assessment 60 days or so ago. Why did you get a new assessment?
Joseph Gimaro
6:20 pm on Tuesday, September 4, 2012
My new assessment is a result of the Lehigh County-wide reassessment, approximately 60 days ago I received the final determination of my frivolous appeal. If we would adopt the sales and income tax increase approach, all the concerns of my neighbors being properly assessed, which seems to be a discussion that will never have mutual satisfaction, would be a mute point.