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Proposed laws take aim at property tax increases

By GARY WECKSELBLATT Staff Writer

When Pennsylvania Gov. Tom Corbett gave his budget address in March, he proposed subjecting all property tax hikes above the rate of inflation to a voter referendum.

Now, legislation drawn up in the General Assembly would do just that, essentially eliminating the Act 1 exceptions that school districts have relied on to increase taxes at a greater rate.

The Senate has two bills that would tighten controls on property tax increases.

Senate Bill 911 would not allow for any exceptions, while Senate Bill 537 would require a two-thirds vote by school boards to raise property taxes.

In the House, H.B. 1326 would demand a referendum for any tax hike above the rate of inflation.

"We have disenfranchised the taxpayer," said state Sen. Bob Mensch, R-24, a co-sponsor of both Senate proposals.

Mensch said the idea behind Act 1, the 2006 law that limited tax increases to the rate of inflation but allowed districts to go over by applying for exceptions, was to give taxpayers control over education costs.

"But it had no teeth," he said. "We've got to tighten up some of the rules we're playing by. I've spoken to a number of (district) business managers and they've told me they ask for exceptions even though they may not use them, just to have them in the bag."

Mensch said the bills he supports would require school boards to communicate the need for increased spending directly to taxpayers, giving citizens more input into tax decisions, and therefore, greater involvement in deciding how tax dollars are spent.

Since Act 1 was instituted, 1,345 exceptions or waivers have been granted by the Pennsylvania Department of Education, according to the Commonwealth Foundation, which tracks the numbers.

In that time, 12 districts have held referendums, with only one passing, their website stated.

"Exceptions are supposed to be used for extreme hardships," said state Rep. John Galloway, D-140. "They're not meant to be used the way they're being used now."

Under Act 1, districts may apply for a tax exception in 10 categories, including special education, pension obligations and some school construction. Doing so would allow them to raise taxes above the index, which is 1.4 percent this year.

While Galloway, along with state Reps. Todd Stephens, R-151, and Kathy Watson, R-144, co-sponsored H.B. 1326, he is against much of the GOP agenda which he described as "gutting education" and "pitting taxpayers against teachers unions."

"There are some things Republicans are doing that should be done., like limiting exceptions, sticking to the intent of Act 1, having referendums go to voters," he said.

But he cringes when he thinks about cuts of more than $600 million to education that coincide with the GOP refusal to tax Marcellus Shale, cigars and smokeless tobacco.

"It's not compassionate, it doesn't have a conscience and there's no compromise," Galloway said. "We have to find compromise, middle ground, admit that the opposition has a good point once in a while, and do it while preserving our principles."

Geri McMullin, a school board member in Central Bucks for nearly three decades, sees the legislation, along with budget cuts that shrink Harrisburg's contribution to schools, as ominous signs.

"It's not going to get better in the future," she said. "We're cutting around the edges this year, next year we'll cut into the heart of programs."

Bob Riegel, Quakertown schools business manager, said the axing of waivers will remove some flexibility districts have "to make the numbers work. With the lack of revenue growth the only other solution is to make cuts in future years.

"If you have increasing obligation for retirement and you have a school in dire need of repair and you're only allowed to increase (taxes) 1 percent. + It's going to be very hard to do," he said.

It is not a good time to be a school board member, said Ron Cowell, executive director of the Education Policy and Leadership Center.

"The challenge for school districts is that at the same time the governor and Legislature are considering severe cuts in state support for school districts, the same state officials want to make it even more difficult for school districts to raise the necessary funds at the local level + Yet demand for student performance is more so than ever before. It's a terrible dilemma about how to fulfill obligations when you're strapped for resources."

McMullin, who worked the polls during the recent primary, said voters are in no mood for tax hikes.

"People are cranky," she said. "People are worried about their wallets and we have had control of their wallets for some time now. We've been building schools because of an influx of people and now they're saying 'enough.' "