PROPERTY TAX REFORM BILL PASSES SENATE

 HARRISBURG, DEC. 15 – State Sen. Connie Williams today voted to begin the process of moving Commonwealth school districts away from their reliance on property taxes, which in turn would provide tax relief for Pennsylvania homeowners.

 “I am not going to call today’s vote a magic elixir that is going to do-away with property taxes,” Williams said. “It is a step forward in the process. And it represents an effort by the General Assembly to follow the will of the people they represent.”

 The legislative proposal, dubbed the Pennsylvania Taxpayer Relief Act, would repeal Act 72 of 2004. It represents a compromise of Senate Democrats and Republicans. The plan is designed to provide property tax reductions in 2006 if voters approve local referenda to increase school district earned income taxes.

 “This plan would provide immediate help for seniors in need, while at the same time making sure that school districts have the funds they need to provide the constitutionally-mandated thorough and efficient system of public education for every young Pennsylvanian,” Williams said. “It would speed tax relief from gaming and allow tax decisions to be made locally. It would address the reality that one solution is not going to fit every school district and every taxpayer, and it would shift the tax burden to a system based on ability to pay.”

 The bill would:

• Double the number of senior citizens eligible for the Property Tax and Rent Rebate Program by raising the income limit from $15,000 to $25,000; increase payments to $500 for eligible applicants that earn less than $18,000 and $250 for those who earn between $18,000 and $25,000.

• Require school districts (except in Philadelphia, Pittsburgh and Scranton) during the 2006 primary election to propose a referendum question asking voters to authorize an increase in EIT in order to provide property tax reductions of at least 35 percent of the maximum homestead exclusion. However, a school district would not be required to increase the rate by more than 1 percent.

• Give taxpayers more spending controls by requiring school districts to seek voter approval for proposed tax rate increases that exceed an annual inflationary percentage (unless the school district qualifies for any of the exceptions).

• Give school districts the opportunity to propose (in 2007) a referendum question asking voters to authorize an increase in the EIT to convert the EIT to personal income tax in order to provide property tax reductions through the homestead exclusion.

• Give school districts the ability to adopt a resolution to opt-out of gaming revenues, when revenues become available. Voters may reverse the school district’s decision to opt-out by approving a referendum question at the next general or municipal election.

• Base district gaming revenue funds on a school district’s tax capacity, tax effort and tax burden.

• Create a property tax reserve fund at 25 percent of the amount of property tax reduction payments for that year up to a maximum of $150 million. (Under Act 72 of 2004, it was set at $400 million).

 “As I’ve been saying since debate began in earnest on property tax reform a couple years ago, and Act 72 of 2004 was adopted, this is an effort to return control to the taxpayers and to empower them to make decisions about their property taxes,” Williams said. “It is just the start of the process, but if we are going to change our system of public school funding we must start somewhere. There are more challenges ahead and I ask that my constituents – whether they are working adults, elected leaders, or retired older adults – give this new plan a chance and continue to make property tax reform a top priority.”

 The legislation, which passed the Senate today, goes to the House for consideration.