House Finance Committee Probes Grove Property Tax Elimination Proposal
3/12/2012
HARRISBURG – The House Finance Committee today held a public hearing to analyze Rep. Seth Grove’s (R-York) House Bill 2230, which would offer local taxing authorities options to eliminate dependence on property taxes.

“The unique aspect of my legislation is that it allows for local choice,” said Grove. “We have tried again and again to eliminate property taxes at the state level, and as much as I would love to see it happen, there is simply too much opposition from areas of the state where property taxes are stable and the only reliable source of funding. My plan will allow regions, like York County, to move toward a funding source based on an individual’s ability to pay, while allowing other areas to continue to rely on property taxes.”

To view a video of Grove unveiling the legislation, visit
http://www.youtube.com/watch?v=21fJmpyflsA&list=UUzYa1OdOinCWiuRkiO8PD3g&index=2&feature=plcp

House Bill 2230 would allow all counties except Philadelphia, through voter referendum, to enact a 1 percent county-level sales tax to reduce school property tax millage rates. The 1 percent county sales tax could only be used for tax reductions, even if a school district were to eliminate its property taxes. Reductions would be based on school district population.

The legislation also would allow local taxing authorities to levy a local income tax, with the option of a Personal Income Tax (PIT) or an Earned Income Tax (EIT). The revenue collected would offset a reduction in property taxes by a maximum of 100 percent, or complete elimination, to a minimum of 30 percent.

If a local taxing authority authorizes an income tax shift and does not eliminate property taxes, the property tax millage rates would be permanently frozen at the reduced level to ensure it continues advancing toward elimination.

The local taxing authorities would be permitted to raise the new income tax rates, but only to an index based on inflation. Public school districts would still be held to Act 1 property tax increase restrictions.

The committee, chaired by Rep. Kerry Benninghoff (R-Centre), heard testimony from Dr. Dave Davare, director of research services for the Pennsylvania School Boards Association; David Baldinger of the Pennsylvania Coalition of Taxpayer Associations; Lisa Schaefer, government relations manager for the County Commissioners Association of Pennsylvania; Elam Herr with the Pennsylvania State Association of Township Supervisors; and Kevin Shivers with the National Federation of Independent Business.

Davare spoke about the need for school districts to have tax diversification options, but cautioned against shifting entirely away from property taxes to fund education. He raised concerns about language in the bill that would cap millage rates for school districts.

“If a school district would implement or increase an income tax under the bill, the school district would, in effect, be foregoing its ability to increase the property tax rate under Act 1 and to apply for the exceptions to the voter referendum requirement,” said Davare.

Schaefer and Herr addressed similar concerns regarding caps to tax increases for local governments included in the legislation.

Grove noted that as well as offering tax options, the goal of his legislation is to encourage local taxing authorities to control spending. The potential tax shift should not be used as a way to grab new money. Taxes collected above what are required should be returned to the taxpayer.

Members questioned Baldinger regarding his assertion that the only solution to Pennsylvania’s property tax issue is complete statewide elimination.

Rep. Scott Boyd (R-Lancaster) pointed out that disparities in per pupil costs by school district would make it difficult for members in some areas of the state to support a plan that would send citizen tax dollars to more expensive school districts.

“Until we address the funding formula issues, I could not support legislation that could potentially harm the taxpayers in my district,” said Boyd during the meeting.

Shivers testified regarding Pennsylvania’s complex tax laws, which are among the most complicated in the nation. He and the local government testifiers also mentioned the need for mandate relief, emphasizing prevailing wage as a cost driver impacting the expense of public education and local government projects.

“I have said from the beginning that this legislation is only a starting point, and today’s hearing was very helpful in gauging potential concerns about the language,” said Grove. “I will certainly take into consideration the points raised by the participants in today’s hearing, as well as the input of the citizens I represent and my colleagues. I am looking forward to getting a version of this bill to the House floor in the near future, and I thank Chairman Benninghoff for holding this hearing to examine my legislation.”

House Bill 2230 is awaiting a vote of the House Finance Committee.

More information about Grove and his legislative priorities is available at RepGrove.com or Facebook.com/RepSethGrove.

State Representative Seth Grove
196th District, Pennsylvania House of Representatives
Media Contact: Nicole Wamsley
nwamsley@pahousegop.com
717.783.8063
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