By SHAWN PIATEK
While Gov. Ed Rendell trumpeted the passage of a property tax relief bill as a major victory for the state, on Thursday a number of local representatives called it a failure.
The House worked overtime on Wednesday to pass Special Session House Bill 39. The bill is said to deliver the most significant property tax cut in the state’s history, boasting $1 billion in relief for the state’s homeowners.
Rendell is expected to sign the bill in the coming days.
Of the four representatives representing Cambria and Somerset counties, only Ed Wojnaroski, D-Johnstown, supported the bill. Reps. Tom Yewcic, D-Jackson Township, Gary Haluska, D-Patton, and Bob Bastian, R-Somerset, all voted no.
On Thursday, Yewcic, Haluska and Bastian were outspoken – each saying the bill stopped short of providing any real, lasting property tax reforms.
“It’s basically a zero for Somerset County,” Bastian said. “A few people will be helped, but we could have done a lot better.”
Haluska said the bill falls short of addressing any of the core problems. He said the bill is only a stopgap measure that will not provide lasting or widespread property tax relief.
“It’s not a good bill because it just enhances the property tax rebate program,” Haluska said. “This is not property tax reform.”
The bill will provide some immediate property tax relief for senior citizens with an initial expansion of the state’s property-tax rebate program. The initial $250 million will be provided by state Lottery surpluses and the final $750 million will be raised once the state’s 14 slots casinos are fully operational.
Wojnaroski said providing some immediate relief for his constituents motivated his vote.
“More than a quarter of my district is going to be eligible for this expanded rebate,” Wojnaroski said. “They say this isn’t enough, but I can’t imagine any homeowner in the state is opposed to any kind of rebate.”
Once the state’s casinos begin generating tax revenue, relief will be afforded to all homeowners. It is expected to amount to an average reduction of about $150 to $200 annually for middle-class homeowners. Money could begin to flow in the 2008-09 school year.
Furthermore, next spring each homeowner will be able to vote for greater property-tax relief by voting to shift property taxes on to increased local income taxes.
Such a decision, Wojnaroski said, would offer more help to those living on fixed incomes by placing a greater tax burden on those still in the workforce. But Haluska said the clause is flawed because it will harm working middle-class families.
“Take a middle-class couple that are both working and they could get property tax relief in the $100-to-$200 range and end up paying twice that much in earned income tax,” Haluska said. “That is totally ridiculous.”
Another part of the bill that had local representatives crying foul was a provision made for senior citizens living in Pittsburgh, Philadelphia and Scranton.
Because those cities have such high wage taxes, shifting property taxes on to increased income taxes is not a possibility. Therefore, seniors living there making up to $30,000 a year will have their property tax rebate increased an additional 50 percent.
“It’s really unfair,” Yewcic said. “People should be treated the same across the board.”
Putting controls on school district spending and the levels at which they can raise taxes also fell well short, according to the dissenters.
Tax-hike loopholes
Language was put in place – called a back-end referendum – that disallows school boards from raising taxes higher than the level of inflation without a referendum vote or court action. But Bastian noted that referendum exceptions were added that provide “gaping loopholes.”
“The back-end referendum on the bill has big enough loopholes that you could drive a truck through them,” Bastian said. “It will probably never be used because of the exceptions. Any school solicitor will be able to find a way around the referendum.”
Attempts were made to draft a bill that would eliminate school property taxes through a higher state sales tax. Both 1 percent and 0.5 percent increases were proposed and failed.
Haluska said funding the education system through a use tariff like sales tax would have provided true reform. He said it would have shifted part of the burden onto visitors to the state as well as its residents.
“Basically, all this did was give a distribution source for the gaming money,” Haluska said. “It doesn’t address the core issue of shifting the school-funding burden off the backs of property owners.”
All three of the dissenting representatives said the bill would not have passed in a nonelection year. Rendell will face Republican nominee Lynn Swann in November’s gubernatorial election.
“The momentum for meaningful relief was going forward,” Yewcic said. “We had an opportunity to deal with real property tax problems and school finance reform.
“But the political will was not there. People in this election year were not willing to address the real problems. I think they’re underestimating the public. The public wants a real impact and we just didn’t have the votes to go in that direction.”
Bastian’s criticism was even stronger. He noted that property tax reform has been one of Rendell’s pet issues since he was elected four years ago.
“I think the governor has a lot of people’s hands up behind their back pretty high,” Bastian said. “He made a lot of promises about property tax reform, and I’m sure he went to the leaders and said he wanted it and needed it now.”
On Thursday, Swann weighed in on the bill, saying political pressure obstructed the Legislature’s ability to deliver meaningful reforms.
“Unfortunately, it seems that our state legislators have also abandoned their goal to pass real property tax reform for every Pennsylvanian,” Swann said in a prepared statement. “Despite the vocal criticisms of House leaders last month that this bill did not go far enough, election-year politics have once again overshadowed the best interests of the people.
“Property tax relief for senior citizens is a laudable goal, but I believe that every homeowner in Pennsylvania deserves tax relief. This legislation fails to address the fundamental flaws of our property tax system, and it does little to protect these very seniors from higher taxes in the years to come.”
Swann’s more radical approach has failed to win support among Republican legislators.
