Shall the Pennsylvania Constitution be amended to permit the General Assembly to enact legislation authorizing local taxing authorities to exclude from taxation up to 100 percent of the assessed value of each homestead property within a local taxing jurisdiction, rather than limit the exclusion to one-half of the median assessed value of all homestead property, which is the existing law?
Note: If approved, future legislation would be required before any change occurs. Legislation will also determine the validity of the following arguments.
The Radnor League of Women Voters hosted a panel with experts from across the state to discuss the referendum. Check it out below!
A brief outline of the arguments is below:
Proponents Say Opponents Say
Meets needs of those retired and/or on other fixed incomes (TAX RELIEF)
Shifts burdens to income tax and/or other new sources (i.e. tax clothes) or increases in existing taxes (i.e. sales tax) (TAX SHIFT)
Provides momentum for Property Tax Independence Bill HB/SB 76 (under which property tax continues to pay existing debt)
Promotes loss of local control of school funding source
Provides greater flexibility for funding schools with many options (yet to be determined)
Does not address existing inequities in funding or the fact that our current formula only applies to new education funds
First step in reforming school funding
Does not address unfunded mandates of the Commonwealth and could make it more difficult to fund schools.
Where we agree: School funding needs to be reformed.
What we don’t know:
What revenue sources will replace the property tax?
How stable are these revenue sources?
How susceptible are these revenue sources to legislative action or inaction?
To what extent will local taxing authorities implement these provisions?
Background: The homestead exemption (on primary residence only) was enacted as part of Act 1 of 2006 that was designed to limit increases in school taxes without referendum approval. Under a property tax exclusion, the assessed value is reduced by the same amount before the property tax is computed. However, homeowners are not guaranteed a homestead or farmstead exclusion unless and until an additional income tax for purposes of granting a homestead or farmstead exclusion is approved by voter referendum or sufficient funds have been collected to permit property tax reduction allocations to be made by the Commonwealth. Since enactment, this exemption has not approached 50% limit. Commercial and industrial properties are still subject to local taxing authority.
In 2012, PA school districts received 81% of total local revenue from the property tax. The state funded 36.1% of elementary and secondary education costs while 55.8% came from local taxpayers. The national average for state funding for education is 45.5%. The decline in state aid translates into about 14 billion dollars in school funding being generated at the local level. This has a crippling impact on some school districts and widens the gap between poor and affluent ones. The recently adopted funding formula only applies to new money.
The League of Women Voters of Pennsylvania supports
A realistic minimum level of expenditures for all districts, set by the state. Uniform expenditures across the state should not be required, and local districts should maintain control of spending by determining local priorities with citizen input.
A combination of state and local funds to finance the public elementary and secondary schools of the Commonwealth, with the Commonwealth’s share being the greater.
Allocation of state funds based on a specific dollar amount per pupil. Additional funding should be provided based on an evaluation of special conditions in a district, including density, adequacy of the tax base, and the number of students eligible for specific programs.
Allocation of state funds for special education based on the actual number of students with mental or physical disabilities, the nature of the disability, and the costs of appropriate instructional programs and support services. Where We Stand Education Position (updated 2015)
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