Pennsylvania voters' widespread rejection Tuesday of an income tax to replace a portion of their school property taxes has state leaders considering alternatives, including a statewide sales tax increase to reduce the property tax and controls on school spending.
After the resounding defeat of the Act 1 ballot questions in Tuesday's primary election, Gov. Rendell yesterday reiterated his proposal to increase the sales tax to reduce property taxes.
Senate Majority Leader Dominic Pileggi said voter rejection of the income tax proposals should signal an end to such efforts for now and a move instead toward controlling school spending to keep taxes down.
Voters almost universally rejected the opportunity to reduce their school property taxes by increasing income taxes, with only one of the 63 Philadelphia-area districts - Bristol Borough - approving the measure and only four voting yes statewide, according to a Pennsylvania Department of State compilation of returns.
The ballot question was approved in Bristol Borough by just one vote, according to unofficial returns; that count does not include absentee ballots and could change. In almost all the districts that voted no, it wasn't close; the ratio was typically better than 2-1. In some districts, the vote was 4-1 or more against; they included Bucks County's Bensalem and Centennial districts, Delaware County's Chichester, Penn-Delco, Rose Tree Media and Radnor districts, Chester County's Coatesville, Owen J. Roberts and Tredyffrin/Easttown districts, and Montgomery County's Upper Merion District. One exception was Bucks County's New Hope-Solebury district, where the question was turned down by 52 percent to 48 percent.
The tax relief votes were mandated by Act 1, the state property tax relief legislation passed last year. Other portions of the law, including sending gaming money to districts for property tax relief and requiring school budget questions in districts that want to raise taxes above a state-set inflation index, remain in place regardless of Tuesday's outcome.
Philadelphia, Pittsburgh and Scranton did not have the ballot question, and are to get wage tax relief.
It will take some time to figure out the next step toward property tax relief, other than what is already in place through Act 1, said Pileggi (R., Delaware). But one thing is immediately evident, he said: "It is a very clear signal that people do not want to shift from a locally imposed property tax to a locally imposed income tax. . . . People aren't happy about school property taxes, but compared to an earned income tax, they prefer it."
Pileggi added that lawmakers in Harrisburg should now look at why school districts typically increase spending and taxes more than the rate of inflation and what can be done to change that.
House Minority Leader Sam Smith (R., Jefferson) echoed that sentiment in a statement yesterday: "Voters across Pennsylvania rejected the idea of a local tax shift to fund what many consider only temporary property tax relief. People don't want taxes increased, period."
Smith added that the message meant to him that "Harrisburg must give schools more flexibility and less mandates" so that school spending can be reduced.
Rendell had a different take. He said in a statement yesterday that the votes confirmed his emphasis on the need for "statewide funding for local property tax relief," including his budget proposal to "modestly increase the sales tax and use these new revenue to lower property taxes this year."
In his budget address earlier this year, Rendell proposed a sales tax increase from 6 percent to 7 percent; half the new revenue, or $420 million, would be used to cut property taxes.
Some rank-and-file Republican legislators embrace that perspective but go even further. "I think the next approach will be to find a way to eliminate property taxes, at least for schools, by acting at the state level to institute an increase in the sales tax and perhaps some income tax increase," said State Rep. David Steil (R., Bucks), an Act 1 co-author who had supported the local tax-shift idea.
"As much as voters do not like property taxes, shifting partly to an income tax is not better, in their minds," Steil said yesterday. "If we could find a way to eliminate property taxes in favor of another tax, it might work, but a partial change is a no-go. People did not have enough confidence in the government to trust that their taxes really would be reduced; they regarded it as two taxes rather than a shift from one to another."
Steil's views mirrored those of several area taxpayer associations that stumped against the Act 1 ballot questions, helping ensure their defeat.
Jim Lentz, the president of the 1,825-member Coatesville Taxpayers Alliance, said yesterday that his organization was determined to make sure that legislators interpreted Tuesday's vote as a call to replace the property tax with statewide revenue to fund schools.
"The property tax as the major source of funding for schools is placing the burden on just one group of people - it's unfair and unworkable," he said. "Somewhere along the line, someone has to get that message, and if it comes with some of these officials being voted out of office, so be it."