27 November 2009
Dear Friends,
I hope that you had a very happy Thanksgiving!
This Update begins with a disclaimer that I will use for all future discussions of today’s topic.
In the five years since the PTCC was established I have always carefully avoided any partisan bias and always attempt to call the situation as I see it regardless of the politics involved. I firmly believe that the property tax crisis has been caused by the inaction of Republicans and Democrats alike and that it will require committed lawmakers from both parties to permanently solve the problem. Please keep this in mind as you read today’s Update.
The PTCC today is announcing its endorsement of State Representative Sam Rohrer for Governor of Pennsylvania.
For many years Representative Rohrer has worked tirelessly for the total elimination of school property taxes and a restructuring of Pennsylvania’s broken education finance system. Along the way he has been thwarted by shameful partisan politics, callous special interests, and the appalling cowardice of many self-serving lawmakers who do not have the political will to support such sweeping legislation.
On Tuesday, November 17, Representative Rohrer announced his candidacy for Governor of Pennsylvania. During his announcement address Sam emphasized that school property tax elimination will be one of the five main planks of his campaign platform and a priority of his administration.
From the standpoint of school property tax elimination we could not have received better news. As Governor, Sam Rohrer will be in a position to advance the education finance reform agenda in a manner that to this point has been impossible. His election as Governor would hugely increase the likelihood of school property tax elimination in a way that we previously could have only imagined.
Of the three Republicans and five Democrats who have announced their candidacy for Governor, Representative Rohrer has been the ONLY one to make this commitment. Five candidates have not mentioned the issue in any manner whatsoever, while the remaining two have used the tired, meaningless, nonspecific terms “property tax reform” and “cut property taxes” in their campaign.
Through his ongoing efforts, Representative Rohrer has proven that he truly understands the property tax crisis for what it is: A moral issue that must be resolved to free Pennsylvania homeowners from oppressive property taxes and not a cynical political ploy to be used to win elections.
Because of the PTCC’s singular focus on education finance reform, the only factors I will consider for this election are an unequivocal public commitment to eliminate school property taxes and a definitive plan to do so - that will be my litmus test for any candidate for Governor in 2010. Representative Rohrer has passed that test.
I believe that the time has come to forget labels like Democrat and Republican, red and blue, conservative and liberal, left and right. Self-centered politicians of all stripes have demonstrated their unwillingness to be responsive to their constituents’ desires, preferring instead to take the easy road and do what is politically expedient. It is time to end this charade by electing those people who are attuned to and sympathetic to our needs, regardless of party, if we are to regain control of the government that is rightfully ours. I hope that you feel as I do on this issue.
Representative Rohrer’s candidacy has not been sanctioned by those political party power brokers who choose our candidates for us and who are concerned only about amassing power and winning and losing. For Sam to succeed it will take a bottom-up grassroots groundswell of support to accomplish the task of electing a Governor whose primary concern is the will of the people who elect him to office. With our efforts – the power of the people - we can demonstrate to the uncaring political bosses that we will no longer be content with candidates who are forced upon us by those who have little interest in our well-being. We will, instead, show them that we will elect those who will truly work for the people and not for the party establishment.
During the years of effort I have spent advocating for education funding reform and school property tax elimination I have come to know Representative Rohrer very well and I respect him greatly. I feel privileged to have had the opportunity to work with him on this vital issue and sincerely believe that he is an honorable and principled man of tremendous integrity who will do whatever he promises for the citizens of Pennsylvania.
I am asking you today to please strongly consider supporting Representative Rohrer’s candidacy, regardless of your political preference, to help achieve our goal of school property tax elimination. This is a non-partisan request based entirely on advancing the cause we support and is not based in any manner on political philosophy or affiliation. During all of the years that we have been working toward this goal we have never had a better opportunity to reach our objective. Your help is urgently needed if we are to succeed.
You can read more about Representative Rohrer’s goals on his campaign website at www.samrohrer.org.
In future PTCC Updates I’ll have specific suggestions on what you can do to support Representative Rohrer and the battle for school property tax elimination.
You can offer comments and discuss today’s update here on the PTCC blog or on the new PTCC Facebook page – simply search for “PTCC” when you’re logged on to Facebook and become a friend. We’d like to hear your thoughts.
Please forward this post to everyone you know to help spread the word and advance the cause.
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One more note for our friends in the Northeast: Representative Rohrer will be holding a town hall meeting on Thursday, December 10, at 6:30 PM at the Clarks Summit Volunteer Fire Department, 321 Bedford Street, Clarks Summit. Please be there to meet Sam, hear about his “Principles to Renew Pennsylvania”, and show your support! There will be more of these meetings in the future throughout the state and the PTCC will keep you up-to-date on locations and times.
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That’s it for today. My best wishes and my gratitude go out to all PTCC supporters and subscribers. Thank you very much for all of your help.
David Baldinger
PTCC Administrator
www.ptcc.us
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6 comments:
I have been following Mr. Rohrer’s drive to eliminate the property tax for a number of years. While I love the concept I have found that Mr. Rohrer’s concept for replacing the revenue appears inconsistent with his vision and his goals.
Vision statements from his web site include:
We believe that lowering taxes, restraining spending and removing old regulatory barriers is the proven formula for economic growth.
We believe that academic excellence thrives when parents have greater choice and control over the educational decisions of their children.
Goals from his web site include:
Stabilize School Funding & Eliminate School Property Taxes.
Improve Student Performance by Expanding Choice and Empowering Parents.
What is the problem I see?
As far as I know his proposal for property tax elimination is a revision to the State sales tax. This will take us from a “local tax” to a “state tax” thus vesting more control at the state level. Today one of the 500 plus local school districts can make a local decision to cut cost by reducing curriculum or sports or they can decide to raise local taxes to add teachers, expand their sports stadium etc. What will happen when the revenue is coming from the state in the form of a sales tax?
Is Mr. Rohrer like most politicians focused on the wrong problem. We do not have a revenue problem we have an expenditure problem. Mr. Rohrer should be thinking about cost control ---- like reducing the power of the teacher’s unions including allowing the district to fire and hire new teachers ----- or a “right to work” feature that would allow teachers to work without union representation. Why the focus on playing with when he should be focused on a voucher system that will give parents options and likely more cost effective options.
Maybe the PTCC has a better view of the situation than I. I’d like to hear PTCC explain how Sam is going to replace the revenue lost when he eliminates the property tax. Is he going to replace the funding district by district? If not how does he plan to force districts to consolidate into one state wide educational system with equal spending per student in each district. How will he avoid creating a state solution and yet allowing local control?
I’m not sure the other candidates are any wiser or better ---- but I’m not endorsing at this point.
Thank you for your comments. I’m pleased to respond although this should be unnecessary because all of your queries are answered on the PTCC website under the “SPTEA Explained”, “SPTEA Facts”, and “Why the SPTEA?” tabs.
Let’s start with your question about local control. With the many current federal and state mandates the concept of local control has been marginalized and, except for the ability of school boards to levy taxes, is a myth. That aside, the SPTEA is an alternate funding mechanism only – it does not intrude in any manner on local control nor does it impose any mandates on how funding is to be spent.
If a school district has a need for more funding such as the stadium that you mentioned, schools will be allowed to impose a local EIT or PIT to fund these projects but by a no-exception referendum only. The referendum question must indicate the purpose of the tax, the total amount of funding required, and the amount of the tax. Once approved by the voters, this new tax cannot be increased or altered in any way without further voter approval. Now there’s local control, but by the people who foot the bill – the taxpayers!
Before I address the issue of cost controls, let me assure you that Representative Rohrer is not focused on the wrong problem as you assert. There is no single problem – the entire education finance system is broken and, if properly restructured, will solve all problems simultaneously. But if you do want to focus on a single problem, how about the fact that more than ten thousand Pennsylvania homeowners lose their homes to tax sales each year because they can no longer keep up with out-of-control property tax increases? Controlling costs as a single solution may work in the long term but the urgency of the situation requires action be taken as quickly as possible.
Consider, too, that the property tax is inherently inequitable. Assessments are subjective and generally outdated before the ink is dry on the assessment notice. But worst of all, the property tax does not, in any way, account for a person’s ability to pay, a fundamental principal for any method of equitable taxation. The property tax is antiquated and is insufficient to fund a modern education system. It must be eliminated NOW.
But let’s get back on point. Regarding cost controls, the SPTEA controls costs by limiting annual funding increases (and, therefore, expenditures) to available revenue, the same concept used by all of us in our personal finances. What a concept! School districts cannot keep increasing expenditures and taxes at twice the rate of inflation for much longer before the entire system becomes unaffordable. Tying spending increases directly to revenue growth assures that the funding stream will remain stable into the future.
In addition, the SPTEA provides Data Driven Decision Making (D3M) technology to all schools to help them identify which programs are effective and which are not, allowing better use of available resources and eliminating waste. All savings generated by this system are retained by the individual districts to use as they please. This technology is already in use by some Pennsylvania school systems with great effectiveness.
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Finally, the SPTEA proposes two systemic changes that potentially can save more than one billion dollars per year on the total cost of education.
First, the SPTEA will bring all school personnel – teachers, administration, and support staff – under a single statewide health care contract as opposed to the many individual district-by-district plans currently in effect. Total savings: $500 million annually.
Second, the plan proposes to roll all high rate school district debt into a single state bond issue. More than 20% of Pennsylvania school districts are considered financially distressed and, because of their distressed condition, are paying interest rates on their debt that are far greater than the best available rates. This high rate debt, when consolidated into a single bond issue at the state’s preferred rate, will garner another $500 million in annual cost savings statewide. Note that this will only apply to high rate debt; any district with preferred rates will not be included in the consolidation but will continue to receive the funding to service that debt locally. Those districts that are included in the consolidation will see their funding reduced by the amount they are currently paying in debt service.
In your last paragraph you ask “Is he going to replace the funding district by district?” Essentially, yes.
All districts will initially be funded at their current levels with sufficient revenue to meet all obligations. After the initial four year phase-in period, districts will be evaluated annually for changes in student enrollment and funding will be adjusted upward or downward on a per-pupil cost basis to account for these changes after a certain percentage enrollment change trigger point. This is one of the major problems with the current 1991 school funding formula. All school districts currently receive the same relative funding that they received in 1991 without regard for changes in enrollment over time. Some districts with declining enrollment are awash in money, with the local tax effort as low as 20% of total costs, while those with increasing enrollment struggle to fund their schools and have a local tax effort of better than 90%. Adjusting funding to account for changing enrollment is only common sense and saves money in the long run.
Contrary to your assumption of equal spending per student statewide, the SPTEA does no such thing because cost variations across the state would make this impossible. All schools will remain funded at their current per-pupil level and not at a single cost per pupil statewide. The plan does, however, guarantee minimum per pupil funding to those districts that are currently underfunded. Any district that does not meet the minimum per pupil funding levels defined in the 2006 costing out study will receive additional funding supplied by the gambling revenues that currently are used for property tax “relief”. The gambling revenues are not included in the basic SPTEA funding mechanism and are reserved exclusively for this purpose.
While rather long, I hope that this information has answered your questions. If you still have concerns, please take the time to read the SPTEA material on the PTCC website that I’ve mentioned above. If you have more questions after reading, please send an email to pataxpayers@gmail.com and I’ll answer them as quickly as possible.
David Baldinger
What is HB 1965 all about? I recieved a newsletter from David Kessler last week stating he is backing a HB that will eliminate school property tax on primary homes by expanding sales tax to items not being taxed. Sounds very similar to HB1275 which the PTCC supports. What are the differences? Why does Kessler continue to change his position on HB1275? Here is a link to his newsletter: http://www.pahouse.com/PR/130112409.pdf
Thank you for your question.
Unfortunately, Representative Kessler is a pure politician who tends to follow the orders of his party’s leadership chapter and verse. The property tax problem can be forever eliminated with the passage of the SPTEA but Rep. Kessler has refused to co-sponsor the bill even though he voted for the bill last session. He prefers instead to co-sponsor HB 1965, a bill that is more in keeping with his party’s ambitions.
The PTCC and the Pennsylvania Coalition of Taxpayer Associations (PCTA) have carefully studied HB 1965 and its companion legislation, HB 1966, and cannot support this bill.
It is interesting to note that the prime sponsor of HB 1965, Representative Tim Seip, has also co-sponsored the SPTEA. We applaud Rep. Seip for supporting the SPTEA even though he has his own bill concerning property taxes. I know it’s rhetorical, but if Rep. Seip can do this, why can’t Rep. Kessler do the same?
The analysis of HB 1965 is below.
HB 1965 Analysis:
This bill’s prime sponsor is Representative Tim Seip. (D-125, Berks/Schuylkill)
In short, this bill is nothing more than a tax increase in disguise.
HB 1965 uses the current homestead exclusion method to bring property tax "relief". You cannot use the homestead exclusion to guarantee complete elimination of property taxes because it is a rebate and not an elimination mechanism. The homestead exclusion is the same rebate plan that is now used to distribute gambling relief and is totally dependent on available revenue. The exclusion currently calls for a reduction of UP TO 50% of the median assessed value of properties in each taxing body. I'm certain that a revised exclusion for 100% of value as Representative Tim Seip proposes would have the same "up to" provision included, which means if sufficient revenue is unavailable the reduction will be less than 100%. Since revenue increases in good times average 3%-4% annually while education costs increase about 6.25%, without cost controls there is a very high probability that increasing property taxes would quickly outstrip available revenue and we'd be paying the property tax again. Again, the bill does not eliminate property taxes - the property tax remains and homeowners essentially will receive a rebate.
The bill's expanded sales tax (SUT) base also excludes more items from the SUT than the SPTEA and generates less revenue; the bill's expanded SUT base generates only about $5.1 billion while the total needed to eliminate is about $7 billion. For FY 12-13 Rep. Seip estimates $8.7 billion but this depends on $3 billion from the property tax relief reserve which is basically one-time money. A release by Representative Rep. Seip shows the funding generated for FY 13-14 as $5.7 billion, not nearly enough for the $7+ billion needed for total elimination for homestead/farmstead properties. At that point the property tax WILL resume.
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If this bill passes and the proposed constitutional amendment (HB 1966) to take the homestead exclusion to 100% does not, the general fund will reap a windfall from the expanded SUT base, the politicians will undoubtedly go on a spending spree, and we'll never see the money used for property tax elimination. Further, even though HB 1966 (Rep. Tom Houghton's sponsored constitutional amendment) calls for a ban on school property taxes, it cannot use the homestead mechanism in HB 1965 to accomplish this. We will not be able to build on this legislation if it passes because the homestead exclusion mechanism does not work in any way for total elimination - the two are mutually exclusive and if HB 1966 passes a completely new way to eliminate will have to be found.
HB 1965 also calls for "loaning" $1 billion/year to the general fund for the first three years after enactment and gives $100 million/year to the city of Philadelphia. Can anyone really believe that once the politicians get their hands on the $1 billion from an expanded SUT base that flows into the general fund they'll ever be willing to give up that money? We have always been adamantly opposed to expansion of the SUT base for ANY reason other than property tax elimination. The SUT was enacted in 1953 for the expressed purpose of funding education and should not be used for funding anything else.
Worst of all, HB 1965 does nothing to correct the flawed education finance system. Underfunded districts will remain underfunded, the 1991 funding formula continues, guaranteeing district-to-district inequities, there are no cost controls, and the problems with education finance will continue to worsen.
Finally, if this bill passes true education finance reform is dead. The politicians will tell us that they have given us our "relief" and will not pursue the issue further. This is a very dangerous piece of legislation and we're fortunate that it appears to have little chance of passage.
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