Editorial: Property Tax Hikes are Harsh Reality

EDITORIAL CARTOONYour local school districts have recently completed their annual task of putting together a spending plan. Guess what? That’s right, taxes are going up.

There are 60 school districts in the suburbs of Delaware, Montgomery, Chester and Bucks counties. In 53 of them, their recently completed budgets for the 2019-20 fiscal year call for a tax hike, according to a recent review performed by the Philadelphia Inquirer.

In the vaunted Wallingford-Swarthmore School District here in Delaware County, the average annual school tax tab for home owners now tops $8,000. Next year’s bill includes a tax hike of $261.

This is not a new scenario. It stems from an old problem. Pennsylvania relies on local property taxes for the bulk of public education funding. Add into that years of the state failing woefully to meet its mandate of providing a 50 percent share of education funding, and you are on your way to a sea of red ink.

Limited in where they can turn for savings, and under heat from residents not to cut programming or staff, local school boards routinely turn to their bread and butter, hiking taxes on home owners.

Add in the recent spikes in mandates costs related to public school pension plans, charters school costs, and special education outlays, and you have the makings of an accountant’s nightmare.

Exacerbating the problem is an outdated method Pennsylvania uses to allocate education funding. It hasn’t been updated in decades, and as a result is wildly out of kilter with reality. The effect is a system that continues to reward many wealthy and well-to-do districts with funding based on outdated enrollment figures and other data, to the detriment of less wealthy districts.

Those schools in poorer areas, often with deteriorating or depressed economies, are caught in a wicked circle in which their tax increases do not raise the revenue of similar levies in nearby more well-to-do districts.

The result is an unven, blatantly unfair system that too often penalizes students for no reason other than their zip codes.

A Fair Funding Formula, created by the Legislature several years ago, was supposed to fix these inequities in the distribution of state funding. But it contains a tragic flaw. It relies only to new education outlays, not the existing basic subsidies.

It’s gotten so bad that several families, including one from William Penn here in Delaware County, have taken the state to court challenging the formula. They are expected to have their day in court next year.

In the meantime, harried local school board members continue this perilous dance with the public’s money.

And they inevitably point to a familiar villain: A state that has failed to pay its share of the tab, coupled with mandates that have become an albatross around the necks of home owners.

Any number of attempts to remove the property tax as the main building block of education funding have gone nowhere.

Gov. Tom Wolf, who rode to the Governor’s Mansion five years ago on a pledge to roll back the education funding cuts that that hit during the administration of Republican Gov. Tom Corbett, actually suggested a combination of increases in both the state personal and income taxes. Anti-tax Republicans in the Legislature almost laughed themselves silly.

Among those most heavily burdened by property taxes are the state’s senior citizens. But they are less than thrilled with a current proposal to replace the property tax. Rep. Frank Ryan, R-Lebanon, is sponsoring legislation that would tax retirement income, as well as food and clothes.

As you can imagine, a lot of seniors see this as trading one evil – the property tax – for another.

The problem with years of proposals to replace the hated property tax – and the same sad dirge of senior citizens, who no longer have children in the system, literally being taxed out of their homes – remains the same. It’s very hard to make the numbers add up. Property taxes raise $15 billion for public education every year.

Yeah, that’s a nice chunk of change. Most ideas – such as replacing property taxes with increases in the sales and personal income taxes, come up short on the math.

Ryan suggests slapping what amounts to a tax on retirement plan withdrawals, 4.92 percnet, with 3.07 percent going to the state and 1.85 percent to the local school district. Social Security benefits would be excluded.

Ryan also would enact a 2 percent increase in the state sales tax, and expand it to include levies on food and clothing that are currently exempt.

Even with property tax increases that are growing at a rate of $500 million a year, a new study suggests more than half the state’s 501 school districts could find themselves in financial crisis within five years.

Ryan suggests the state’s senior citizens, who currently are on the hook for $3.4 billion in property taxes, would pay $1.5 billion under his plan, saving $2 billion in the process.

Too many of the state’s public school districts are inching perilously close to the breaking point.

This year’s round of tax hikes pushes that boulder closer to the top, and hurtling down the other side, a potential catastrophic collapse of public education in the state.

School districts need answers – and quickly. They can start by making the Fair Funding Formula applicable to all education funding.

And then consider every possibility after that.

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