Rendell’s Act 72 pitch awaited (Fast Eddy's bait and switch)

HARRISBURG – The lure of up to $1 billion in property-tax relief from gambling revenue has not been enough to convince most of the state’s 501 school boards to participate in the controversial Homeowner Tax Relief program.

As of mid-March, only four school districts, none of them local, had officially agreed opt in to the program, also known as Act 72.

Now, Gov. Ed Rendell plans to use the direct approach. Some might even call it the hard sell.

Rendell will reach out to the hundreds of elected school board directors across the state tomorrow by holding a live videoconference to answer questions and concerns raised about Act 72. The plan is to use Rendell’s personal touch to persuade school directors, many of whom have been hesitant about the law, to opt in.

But will Rendell’s powerful persona be enough to sway local school directors who have serious concerns about the financial implications of the tax-relief program?

“We’ve had looming concerns over this and scratched our heads for many, many months now, and we haven’t really gotten any answers,” said Dallas School Board President Russell Bigus. “For the governor to come out and personally support it, that could put me over the edge.”

Act 72 requires all school districts to opt in by May 30 or forever be locked out of the tax relief program.

In districts that opt in, homeowners are projected to see annual property tax cuts of $109 to $359. To opt in, districts must raise their earned income tax by 0.1 percent or hold a referendum asking voters if they want to further reduce property taxes by shifting to a local income tax. Even if voters reject the referendum, the district must then raise the earned income tax by 0.1 percent, and it is automatically locked into Act 72.

The state will then funnel gambling revenue to participating districts to make up for lost property-tax revenues.

The most troublesome provision for school boards is the “back-end referendum,” which would require districts to get voter approval any time officials want to raise taxes above the general rate of inflation.

“Part of that kind of scares me,” Bigus said. “Just do the math. You have ‘X’ amount of teachers at a high salary ... and now you’ve got health care costs that are skyrocketing. ... It’s a huge concern.”

Wyoming Valley West School Board President Raymond Lowery Jr. called the law a “mixed bag” that is too complex for school boards to tackle by May 30. He said he has urged local lawmakers and state officials to push back the deadline to Dec. 31.

He noted that the state likely will not begin to yield significant revenues from the planned slot machine parlors around the state until 2007 – a year later than had been originally projected.

Pittston Area School Board President William Balchune said he suspects his board will vote to opt in to Act 72, if for no other reason than the fact that it would help the district’s significant senior citizen population. In addition, he said, his district’s expenses are expected to stabilize within the coming year, making the back-end referendum a non-issue there.

Still, Balchune said he knows many other districts are not as fortunate as Pittston Area, and he understands their reluctancein opting in to Act 72. He said that is why Rendell needs to make his pitch today.

“I think a personal touch may help some of the districts that may be close to the edge on this,” he said. “If it weren’t for the elderly population in my district, I know I wouldn’t vote for it.”

I wasn't, but found this

'Commonwealth Caucus' has solution to state's property tax woes

by Lowman S. Henry, CEO, Lincoln Institute of Public Opinion Research

Property tax reform is the Holy Grail of efforts to restructure Pennsylvania’s antiquated and unfair system of securing revenue for school districts, counties, and municipalities. Despite the burden the current system places on a wide segment of our population – everyone from young families to senior citizens suffer – no meaningful reform has been forthcoming from Harrisburg.

Supporters of Governor Ed Rendell’s ill-conceived slots law will argue that property tax relief is in the works. They still believe tax revenue from expanded gambling will provide property owners with a meaningful drop in property taxes. But, the evidence is mounting that taxpayers will see little, if any relief from gambling tax revenues.

The state’s new gaming panel is already hard at work awarding itself high salaries and perks such as free cars. The Pennsylvania School Boards Association, a group you might think would be on the side of taxpayers, is headed to court in an effort to gut provisions of the new law, officially known as Act 72, that would limit tax increases and require major tax hikes be submitted to voter approval via referendum.

Add to that the fact school districts are free to raise taxes to whatever level they deem necessary between now and the time Act 72 limitations takes effect, and, well the whole exercise pretty much leaves taxpayers again holding the bag. Even Rendell is saying it will be 2007 at the earliest before any gambling tax revenue will flow to school districts. By then most districts will have raised taxes more than the cuts to be funded by gambling proceeds. And none of this addresses tax reform for counties and municipalities.

But all is not lost. An intrepid group of legislators known collectively as the Commonwealth Caucus have been working for several years on an innovative plan that would totally eliminate all property taxes. Lead by State Representative Sam Rohrer (R-Berks), these legislators have been fine-tuning their plan by reaching out to a wide array of stakeholder groups and employing the numbers crunchers needed to make sure the plan will work.

Recently reintroduced as the “Plan for Pennsylvania’s Future,” the Commonwealth Caucus tax reform measure truly unshackles taxpayers from the current system with real and meaningful change. Simply put, school property taxes are eliminated. Further, the state’s 6% sales tax is reduced to 5%. The revenue lost by these cuts would be made up by expanding the sales tax to cover goods and services not currently taxed. Food, clothing, and professional services such as legal and architectural fees that are now exempt would fall into the latter category. This would generate an additional $16-$17 billion each year.

The result would be a simplified system that would be more fair and equitable. Sales taxes are largely imposed on discretionary spending, whereas property taxes are levied against our homes not only at the time of purchase, but for as long as we own them.

While any tax reform proposal is ultimately a tax shifting proposal, through sheer persistence and the willingness to put aside the typical legislative proclivity to act incrementally rather than in bold strokes, Representative Rohrer and the Commonwealth Caucus have hit upon a workable, politically viable solution to the state’s property tax dilemma. The question now is whether legislative leaders and the governor are ready to give the Holy Grail a chance.

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