HARRISBURG - Rep. Frank Ryan (R-Lebanon), a leading advocate for property tax elimination, hosted a public hearing of the House Majority Policy Committee at the Lebanon Valley Expo Center today to examine the complexities of property tax elimination in Pennsylvania and gain a better understanding of what is needed for such a plan to be successful.
The hearing featured testimony from proponents and opponents of property tax elimination in Pennsylvania.
“As someone who has sponsored or co-sponsored legislation to eliminate property taxes in Pennsylvania, I can say that this is by far the toughest issue I have dealt with since taking office,” said Ryan. “Everyone wants to eliminate property taxes as long as someone else is paying for it.”
Last session, Ryan sponsored House Bill 13, which would have eliminated property taxes for everyone, but he acknowledged that his plan and any plan to eliminate property taxes would shift the burden elsewhere. Examples include higher Sales and Use Taxes, a tax on items not currently taxed such as food and clothing, an increase in the Personal Income Tax or taxing retirement income.
Matt Knittel, director of the Pennsylvania Independent Fiscal Office, said property tax collections are projected to increase by about 18% in the next five years and replacing Pennsylvania’s property tax revenue would likely require a combination of all those options.
John Callahan, chief advocacy officer for the Pennsylvania School Boards Association, is open to any funding scenario as long as it is stable and reliable. He also said actions must be taken to control the cost drivers of public education, including special education, pensions and charter school tuition obligations. In addition to providing school districts some relief from these mandates, he said attention must also be paid to property tax assessments, which he said are being applied inequitably.
Other presenters testified about inequities in the current system that unfairly impact seniors, low- income families and renters. “No tax is more unfair, inequitable or unjust as the property tax,” said Jim Rodkey, founder of the PA Property Rights Association.
“The reason this issue is so complicated is because our current system of taxation and funding schools is so fundamentally flawed,” said Ryan. “Even minor fixes to peripheral elements of the system could have significant unintended consequences.”
Ryan blames the education funding formula and the “hold harmless” provision for making the elimination of school property taxes nearly impossible. The hold harmless clause guarantees that a school district will receive no less funding than it received the prior year. Thus, each year allocations rise despite declining enrollments and other variables that might otherwise impact disbursements.
“The hold harmless provision essentially means that well over half of the state gets more than it should in property tax relief and the other half gets far less,” said Ryan. “This disparity creates utter chaos when trying to get rid of school property taxes because those benefitting from the current system do not want it to change.
“I cannot emphasize enough how severe the problem is with school property taxes. It is critical that everyone understand that if we do not resolve this problem together, the probability of surviving the next economic downturn is limited.
“The financial rescue plan that I proposed when I was first elected four years ago identifies what must be done to correct Pennsylvania’s finances. We are well on our way to enacting these bills and property tax elimination is a major component of it. We cannot afford to get this wrong,” Ryan said.
For more information on Ryan’s financial rescue plan and strategies for eliminating property taxes, visit RepFrankRyan.com
Representative Frank Ryan
101st Legislative District
Pennsylvania House of Representatives
Media Contact: Donna Pinkham