With the June 30 end of the fiscal year looming, legislators must craft the new state budget’s education piece in light of a Commonwealth Court decision that the government’s distribution of education funding is unfair to the point of being unconstitutional.
That, in turn, points to another perennial problem — the Legislature’s failure to increase the state government’s share of public education funding from only about 35% of the total, leaving 500 local school districts to raise more than $17 billion, and climbing, mostly from local property taxes.
Annual proposals in the Legislature range from modestly modifying the property tax to eliminating it. Lawmakers have increased state contributions significantly over the past eight years but not to the point of diminishing local property taxes.
They could maintain the current system while providing property tax relief to those who most need it, by borrowing from programs in other states or from a program that they already have approved.
The New York State Tax Relief Program, STAR, provides a range of property tax relief based on property owners’ incomes rather than property values. It has several components. Owner-occupants of taxed property are eligible for a state tax rebate of at least 45% if they are older than 65 and their incomes are $60,000 or less. Those whose incomes exceed that are eligible for smaller rebates. Other property owners who earn up to $250,000 are eligible for percentage reductions in their property’s assessed value. The average benefit is about $800 a year. It costs the state government $3 billion but would be less expensive in Pennsylvania.
Philadelphia has a program applicable to all property taxes known as LOOP, for Longtime Owner Occupant Program, and Pittsburgh’s state representatives have introduced a bill to allow that city to emulate it. It particularly suits dynamic urban areas, where longtime homeowners sometimes suddenly face much higher property taxes because of new high-end developments around them. LOOP effectively zeroes out the new development in determining longtime residents’ assessments.
The Legislature should approve not just Pittsburgh’s plan but apply it statewide. Local markets will determine where it makes sense.
If lawmakers don’t directly reform property taxes, they at least should work around the edges to make them less onerous for people who can least afford them.
— Republican & Herald, Pottsville
