Beth Ann Rosica\u2019s writings are a blend of news, opinion, and analysis.\u00a0 \u00a0<\/p>\n
Pennsylvania\u2019s elected school boards may soon lose their authority to levy property taxes. Senate Bill 962<\/a>, introduced by Senator Dawn Keefer (R-York\/Cumberland), would eliminate school property taxes and replace them with higher state income and sales taxes to fund public education.\u00a0<\/p>\n School Boards are often criticized for annual property tax increases, especially as student enrollment shrinks<\/a>. Commonwealth Auditor General Tim DeFoor issued an audit report<\/a> in 2023 alleging that districts across the region regularly engage in a \u201cshell game\u201d in order to justify increased school taxes.<\/p>\n The report details<\/a> how districts raised \u201ctaxes while holding millions of dollars in their General Fund accounts.\u201d While there were no findings of illegal activity, the report concluded that the districts were \u201cadhering to the letter of the law and not the intent of the law,\u201d when raising taxes.\u00a0<\/p>\n Keefer\u2019s proposed legislation, the School Property Elimination Act, would terminate school boards\u2019 authority to raise taxes and instead increase sales tax by two percent and personal income tax by 1.88 percent.<\/p>\n According to the senator, 80 percent of Pennsylvania residents will fare better under the new system. In an interview with Broad + Liberty, she said the bill will lower mortgage escrow payments, boosting housing affordability and increasing economic growth and job creation.<\/p>\n Senator Keefer said, \u201cproperty tax is the number one issue for my constituents.\u201d Annual increases disproportionately burden seniors and homeowners on a fixed income. The legislation is designed to combat rising taxes and at the same time address the school funding shortfall, particularly in lower socioeconomic districts.\u00a0<\/p>\n For example, under the proposed model, the School District of Philadelphia would receive $300 million in new funding in the first year. Additionally, the bill provides more funding for educators than the proposed cost of living adjustments.<\/p>\n There is also a strong accountability function for school districts incorporated into the bill. Each district is required to balance their budget annually, and if they fail to do so, they have one year under an advisor to get back on track with a balanced budget. If they are unable to balance the budget after a year, the district is dissolved and merged into another district. This would prevent districts with declining enrollment from hiring unnecessary staff and administrators.<\/p>\n The proposed changes \u2014 increased sales tax by two percent and income tax by 1.88 percent\u00a0 \u2014 were derived from the current annual $17.7 billion dollar local share of education. According to Keefer, they \u201cbacked into\u201d the revised rates by analyzing the local funding provided by property taxes and then calculated how to shift those dollars to other tax sources.<\/p>\n Education funding in Pennsylvania is a controversial topic, particularly since the landmark lawsuit in 2023 declaring the current system unconstitutional<\/a>. However, very little has changed to address the funding system; instead additional dollars are thrown at the problem with limited to no positive results in academic performance for students. Keefer said, \u201cthe bill will force the issue of inequity.\u201d\u00a0<\/p>\n Proponents of the bill argue that school property taxes are regressive because they are based on property value rather than a taxpayer\u2019s ability to pay. Under this proposal, school funding shifts taxes tied more closely to consumption and income. While 80 percent of residents will pay less under the proposed change, some will pay more. Those who make more money \u2014 the top 20 percent of earners \u2014 will pay more in taxes and those who spend more on taxable items will also pay more.<\/p>\n