School funding lies at the heart of Pennsylvania’s archaic
property tax system, state Rep. Martin Causer, R-Turtlepoint, said
Wednesday after a special session of the Legislature was convened
to deal with the issue.

“School funding is a huge part of the state budget,” Causer
said. “It really boils down to how do we want to fund our school
districts. It’s clear that property taxes are an outdated way to do
it.”

As it stands, school districts – which rely heavily on local
property taxes – don’t have a ceiling for tax hikes. However, that
could soon change under Act 72, a plan by Gov. Ed Rendell which
uses slot machine revenue for $1 billion a year in property tax
relief in school taxes for the state’s residents.

Numerous proposals also entail placing more control in local
taxpayers’ hands. Rendell wants to mandate the Act 72 plan, but has
indicated allowing local voters to decide on their district’s fate
could be counterproductive, leaving some districts with more of a
revenue share.

The Act 72 legislation was resoundly defeated by school
districts statewide.

“Property tax reform essentially comes down to either tax
shifting or creating new revenue,” Causer said. “What works for one
part of the state doesn’t always work in the other. That makes it
hard to reach a consensus.”

House Majority Leader Sam Smith, R-Punxsutawney, said
“Pennsylvania is just too diverse for a cookie cutter plan,
especially given that residents want to keep local controls in
place.”

Officials said the earliest the slots revenue would begin
flowing is 2007, with the Rendell administration claiming the
average household statewide would receive an annual tax cut of $330
– if the $1 billion threshold is reached. The Rendell plan also
eliminates the requirement for districts to raise the earned income
tax by 0.1 percent.

“High property taxes are hurting our seniors, and preventing our
young working families from being able to purchase a home,” House
Minority Leader Bill DeWeese said. “We took major steps toward
providing tax relief with slot gaming and the passage of Act 72,
but too many school districts were reluctant to accept tax cuts of
$330 for the average homeowner.

“We can now address those districts’ concerns and also discuss
other plans that shift the burden of funding schools away from
homeowners. I am confident we can deliver those cuts while still
guaranteeing flexibility to our school districts …”

According to Causer, most people use the 50 percent ratio to
describe how much each district receives in funding from the state,
but “we have school districts getting well over that figure.”

“I don’t think that’s a good way to look at it, in percentages,”
Causer said. “I understand their (school districts) budgeting
process would be moved up earlier in the year (under Act 72). But,
it’s like doing a budget like everybody else. You look at what you
did the year before and make the best estimates you can.”

Also on the table is a change to the state’s sales tax, which
could soon be applied to food and clothing. Any change could impact
McKean County, which captures some of the traffic from New York
state residents looking to avoid paying the tariff while
shopping.

“It may cause them to stay home depending on what the rate would
be,” Causer said, adding there are also proposals floating around
to lower the sales tax. The state sales tax currently stands at 6
percent.

“I’m optimistic something can be accomplished in this special
session,” Causer said. “We expect to look at numerous proposals
before arriving at a solution that will hopefully last.”

The lawmaker said any constituent who has an opinion on the
property tax issue should contact his legislative offices.