New Pa. law gives greater control to property owners

HARRISBURG — Voters will soon have greater control of school property taxes through a bill passed in the state Legislature Thursday night.

The bill signed Thursday night by Gov. Tom Corbett requires school boards to submit to voters property tax increases above inflation.

It provides exemptions for schools that need the extra revenue to pay off grandfathered debt, or fulfill special education or pension obligations.

The legislation modifies a similar 2006 law, Act 1, that had 13 exemptions. Some of the exemptions eliminated include school construction, maintenance and health care costs.

Corbett and other critics maintained that, because of the exemptions, Act 1 did not provide residents enough protection from school property tax increases above inflation.

It was a priority for Corbett, who threatened not to sign the 2011-12 budget unless he got the referendum legislation.

According to Department of Education data, school property taxes statewide have increased an average of 6.2 percent, or $324 million per year, since the 1981-82 school year. In the available four years of data since Act 1 was implemented, the average increase has been $311 million per year.

James Broussard, chairman of Citizens Against Higher Taxes, said in the "original Act 1 there were so many exemptions ... all a school board had to do is say, 'Please let us ignore this referendum,' and they (the Department of Education or courts) said yes."

Since 2006, there have been 14 referendums. All but one failed. In comparison, the Department of Education approved 168 exemptions since the 2008-09 school year.

Philadelphia Democratic analyst Larry Ceisler described the new legislation as "artificial ceilings on school district spending" since "no school board wants to go through a referendum."

Senate leaders argued the bill places too many restrictions on districts that may need to build schools.

Senate Minority leader Jay Costa, D-Forest Hills, said it was not "appropriate at this point" to force school districts through the referendum process to engage in "new construction projects that are warranted and ... ultimately save money for the school districts."

Broussard, of Lebanon, who supports the new law but hopes all exemptions are eventually removed, said one of the "real drivers" of increased property taxes is "Taj Mahal school building projects."

Warning of possible negative effects, Thomas Baldino, political science professor at Wilkes University, said the new law could be "very troubling for school boards because the tendency will be for the public to vote down most tax increases so school boards will struggle to tax increases at the rate of inflation."

To combat this, Baldino predicts that school boards will increase property taxes, every year, at the rate of inflation to combat unexpected costs that would otherwise require them to go to referendum.