Reform, Not Repeal: Pennsylvania Can Provide Property Tax Relief and Protect Public Schools

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Property taxes are a hot topic in Pennsylvania, and property taxes are high in some Pennsylvania school districts. PBPC’s new report, "Reform, Not Repeal: Pennsylvania Can Provide Property Tax Relief and Protect Public Schools," may come as a surprise to many, but compared to the national average and neighboring states, school property taxes are moderate in most communities. High property taxes are the exception, not the norm; three of every four school districts have a tax burden, measured as a share of district income, that can be considered moderate.Rather than eliminate property taxes, as some have proposed, Pennsylvania can take steps to reform its assessment system, improve its property tax relief programs, and do a better job targeting school property tax relief to those particular communities – and individuals – for whom property taxes are a larger-than-average share of income.

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(Oct. 2, 2014) – Pennsylvania should better target its property tax relief and overhaul its assessment system rather than eliminate the local property taxes that fund our children’s schools and prepare our future workforce, a report released today by the Pennsylvania Budget and Policy Center concluded.

Property taxes are the most reliable and stable source of funding for schools, police and fire protection, jails and other basic public services.  They represent a reasonable share of income in most school districts across the commonwealth, and are comparable to those in neighboring states, according to the report Reform Not Repeal: Pennsylvania Can Provide Property Tax Relief and Protect Public Schools.

“Pennsylvania should address property tax reform with a scalpel rather than a chainsaw,” PBPC Director and report co-author Sharon Ward said. “Property taxes are high in a limited number of places and for some individuals. A targeted approach, rather than total elimination, can address those concerns without harming our public schools.” 
 
The report examined both total and school property taxes in Pennsylvania’s 67 counties and 500 school districts, looking at taxes based on housing prices and incomes of county and district residents.

Among the findings:

  • Total average property taxes in Pennsylvania are 3.07% of personal income, below the national average of 3.31%.  In 33 years, PA property taxes have not exceeded the national average.
  • Pennsylvania property taxes fall in the middle of neighboring states, lower than New York and New Jersey, on par with Ohio, but higher than the smaller states, West Virginia and Maryland.
  • Twenty-nine counties (43%) have not reassessed property in more than 20 years and only one-third of counties (22) have conducted reassessments within the last 10 years.
  • In 45 of the state’s 67 counties, average property taxes – including school, county and municipal  – total less than $2,000 a year, or $167 or less a month.

The report acknowledges that in a limited number of districts school property taxes are higher than average, but finds that in a larger number of districts property taxes are lower than average.

  • In only 30 of the state’s 500 school districts (6%) can property taxes be considered high, exceeding 4% of taxable personal income. 
  • Property taxes are moderate in two out of three school districts, and they are low as a share of income (under 1.9%) in one in four, or 129, school districts.

“Shifting from property taxes to higher income and sales taxes, as Senate Bill 76 proposes, would critically underfund local schools, and impose additional burdens on young families and renters, while absolving corporations of responsibility to fund public services in their communities,” noted PBPC Research Director and report co-author Michael Wood. “Property tax reform and relief, where needed, make more sense.”

The report recommends:

  • Increasing the base benefit for the Property Tax Rent Rebate Program, which hasn’t increased in 8 years, and letting it grow with inflation;
  • Mandating that counties reassess properties regularly and providing state funding to defray the cost;
  • Creating a new property tax relief program for working-aged individuals who have difficulty paying their property taxes;
  • Increasing state funding for public education to reduce reliance on property taxes;
  • Targeting additional education funding to the 30 school districts with high property taxes and considering local tax effort in a new school funding formula.

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AttachmentSize
Oct 2014 prop tax Append 1 county.pdf43.32 KB
Oct 2014 prop tax Append 2 SD.pdf77.45 KB
Oct 2014 prop tax Appendix 3 county med prop taxes as share of med inc.pdf116.99 KB
Oct 2014 prop tax Append 4 school prop taxes as share of pa income by SD.pdf75.88 KB
20140925_proptaxave.pdf363.61 KB
20140925_SDPropTaxMap.pdf510.7 KB
20140925_taxsharevalue.pdf362.63 KB
20140925MAP_county_reassess.pdf362.05 KB
20140930_medianincometaxMAP.pdf364.07 KB
20141002_PropTaxPaper.pdf1.6 MB
PBPC prop tax webinar Oct 2014.pdf2.7 MB
4pagerproptaxfinal.doc262.5 KB
4pagerproptaxfinal.pdf338.68 KB