Property Tax Independence Act

PA State Rep Warren Kampf’s Town Hall Meeting — Budget, Pension and Property Tax Reform, Liquor Privatization & the Legalizing of Marijuana

I attended State Rep Warren Kampf’s Town Hall meeting last night in Phoenixville.  Kampf opened the meeting with a 15-20 min. update on the budget, pension reform and status of legislation, liquor privatization, and property tax reform.  Following his presentation, the evening continued with Q & A from the audience members, with about 30 questions on a variety of topics.

In his discussion of the recently passed 2014-15 PA Budget, Kampf offered the following highlights:

  • The budget passed on time for the fourth straight year, with no tax increases to the residents.
  • Although there was a modest increase in the 2014-15 budget from the previous year, the budget increase remains well below the rate of inflation.
  • Pennsylvania received a $340 million cut in Medicaid Funds from the Federal government.
  • The budget includes an additional $250 Million to implement Affordable Care Act provisions;
  • The budget includes an additional $600 Million in increase in pension costs
  • The budget includes an additional $600 Million for Medicaid increase

There has been much discussion about Corbett cutting education spending but according to Kampf, the 2014-15 budget has education spending at an all-time high, and that the recently passed budget includes an additional $520 Million in educational spending.  This topic was one of much interest from the audience members.  We have all seen the campaign rhetoric with one side claiming cuts to education and the other side saying it is untrue

Kampf further clarified that Corbett’s budget includes $10.5 Billion on Pre K – 12 line items, stating it is the most ever committed.  The budget includes an additional $20 Million for Special Education.  The Pre-K Counts Program, which increases access to quality pre-kindergarten to PA children and their families with a priority in at-risk communities, received a $10 Million increase in the budget.

To help offset the cost of postsecondary education, the budget includes a new $5 Million ‘Ready to Succeed Scholarship’ that provides up to $2,000 to eligible students whose families earn up to $110K.

Pension costs and the need for reform continued to be a significant discussion point.  Kampf offered the example that the PSERS line item on the 2014-15 PA Budget increased from $375 million to $1.4 Billion this year!  As taxpayers, we know firsthand the effect that the skyrocketing pension costs have had on our own tax bill.  The pension costs have impacted the school districts statewide, forcing school boards to make difficult decisions and painful cuts.

Clearly, pension reform is needed sooner rather than later.  Kampf’s hybrid pension reform bill, HB 1353, which includes a traditional 401k type plan, was presented as a possible solution.  It was interesting to note that there continues to be confusion among some of the residents – the suggested pension reform bill, HB 1353 is for new hires; not those workers currently in the system.  Kampf believes that his plan would create $11 – $20 Billion in savings.

I was glad for a discussion on liquor privatization but it does not look like House Bill 790 is going anywhere anytime soon.  The House approved the bill 105-90 in March 2013 but according to Kampf, the Senate has not agreed to move the bill forward.   We hear the argument that the 600 states stores generate money and therefore the government should keep things status quo.  Pennsylvania loses millions annual to neighboring states because of the inconvenience of buying at states stores. What is it going to take to bring Pennsylvania into the 21st century – 48 other states enjoy convenience and choice, why can’t we?  Other than Utah and Pennsylvania, states don’t want to be in the business of selling alcohol.

On property tax reform, there were updates but little ‘new’ news. PA House Bill 76, the ‘Property Tax Independence Act’, remains in the House Finance Committee and has not moved forward for a vote. This legislation would eliminate school property taxes across the Commonwealth and replace those taxes with funding from a single state source.

Kampf voted yes on House Bill 1189, which would amend the Local Tax Enabling Act to provide school districts with the option to eliminate property taxes.  Although Kampf supports HB 1189, he added that the Senate has not taken action on this legislation.

Because the Town Hall meeting was held in Phoenixville, several audience questions were local to that area.  One question related to Phoenixville Area School District’s decision to acquire the Meadowbrook Golf Club via eminent domain and where did Kampf stand on the topic.  Kampf supported the legal right of the school district to take the property [using eminent domain] but suggested it should only be used when all other alternatives were exhausted.

On allowing illegal immigrant children in the US, Kampf deferred to the Federal government, stating that as a State Representative he was not in a position to cast a vote.

A couple of people asked Kampf for his personal opinion on legalizing marijuana in Pennsylvania.  Although he was not aware of any currently proposed legislation in the House on the subject, he said he could support the legalizing of medical marijuana. He was not going to commit himself beyond the use of marijuana for medical usage, preferring to take one step at a time.

On June 27, the Senate Law and Justice Committee unanimously voted in support of the bipartisan Senate Bill 1182, known as the Compassionate Use of Medical Cannabis Act, to ease the suffering of people with epilepsy or other ailments. Twenty-three states and the District of Columbia have approved medical cannabis programs, could Pennsylvania be next?

I give credit to any elected official who holds a Town Hall Meeting with no pre-screening of questions.  Last night numbers were distributed and the questions asked in numerical order; everyone with a question was given an opportunity to ask it. Nothing was off limits – only requesting that questions be asked by residents of Kampf’s legislative district.  As a registered Independent,  I am pleased to report that the evening contained no political party bashing by audience members or by Kampf.  Would love to see a similar forum in Tredyffrin Township.  Or how about a PA-157 State Representative debate between incumbent Warren Kampf and his challenger Marian Moskowitz?


Abolish School Property Taxes in Pennsylvania by Increasing State Sales Tax to 7%?

Are you tired of paying school property taxes in Pennsylvania?

Would you support legislation that would abolish your school property tax bill by raising the state sales tax to 7 percent? If so, State Rep Jim Cox (R-Berks) has a solution that would replace school property tax funding with new state revenues — House Bill 1776, Property Tax Independence Act.

The proposed Property Tax Independence Act would still provide the same level of funding to the school districts but would eliminate school property taxes by using state revenues.  Cox proposes funding the new state revenues using three sources.  First, he suggests raising the state’s personal income tax to 4 percent (from the current 3.07 percent).  Secondly, Cox has specific sales tax loopholes that would close and finally, HB 1776 increase state sales tax from 6 percent to 7 percent.

Loopholes in the state’s sales tax include currently exempt personal services such as dry cleaning, funeral expenses, and amusement parks and professional services such as legal, architectural and accounting. HB 1776 would also close sales loopholes that exempt newspapers, magazines, flags, gum, candy plus clothing and footwear (items $50 and higher). I had no idea that newspapers and magazines were sales tax exempt – you pay sales tax on books, so I don’t see why there isn’t sales tax on newspapers and magazines!  Flags – exempt? Yes, US Flags and Commonwealth flags are exempt from sales tax.

The Pennsylvania Taxpayers Cyber Coalition, which states that they are ‘dedicated to equitable tax funding of Pennsylvania schools’ believes that “… Runaway property taxes are destroying Pennsylvania’s economy, driving away its residents, and are discouraging entrepreneurs from starting new businesses that would create jobs for Pennsylvanians.”  The group has created the following list of ten reasons why property tax should be eliminated in Pennsylvania:

  1. Achieve True Home Ownership
  2. Stabilize school funding
  3. Help prevent foreclosures
  4. Restore plummeting real estate values
  5. Boost the sagging housing market
  6. Attract business to Pennsylvania
  7. Generate jobs for Pennsylvanians
  8. Create a massive stimulus for Pennsylvania
  9. Increase personal wealth
  10. Stop costly reassessments

Looking over this list of reasons to get rid of property taxes, I’m struggling to see the downside to this proposed legislation?  Most of the items on the list would be very helpful to the school districts as they struggle to meet the demands of their budgets.  Wouldn’t we like to ‘stabilize school funding’ and not worry about ‘costly reassessments’ from commercial and residential homeowners affecting school district budgets?

Eliminating property tax escrow payment would certainly help all homeowners and I would think could encourage new home ownership.  Tredyffrin Easttown School District residents have been fortunate for the most part, as property values (although not increasing) have not declined as many other areas in Pennsylvania.  But realistically, how much longer will TESD residents enjoy that situation?  If TESD is forced to continue to make cuts to meet the demands of the budget, our property values may suffer as a result.

It looks to me like the proposed Property Tax Independence Act could be a win-win for school districts and taxpayers.  It would eliminate the need for school property taxes but on the other hand would stabilize funding for school districts through the use of a broader revenue system by utilizing sales and use tax. HB 1776 provides for a predictable revenue stream which would allow school districts to focus on education and the performance of their students instead of the continuing budget crisis.

If the Property Tax Independence Act were to make it through the legislative approval process, it would immediately freeze school property taxes at its current levels and begin reducing school property tax bill with the next tax bill. Clearly, I must be missing the real ‘negative’ in the school finance reform as proposed by HB 1776 because you know the saying, “if it looks too good to be true, it probably is”! Here’s hoping that someone gives me a reason why HB 1776 isn’t a good idea.

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