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July 1, 2011 | By | Posted in Legislature

Property tax reform final piece of state budget

Corbett signs it on time, barely
 
By Eric Boehm | PA Independent
 
HARRISBURG — With about 15 minutes remaining in the fiscal year, Gov. Tom Corbett signed a new state budget with no broad-based tax increases and a last-minute property-tax reform measure.
 
“This evening, I’m signing the first on-time budget in eight years,” Corbett said. “It spends no more than we have, and it doesn’t pretend that we have more than we budgeted.”
 
For the first time in more than 40 years, the state budget will decrease from the previous fiscal year to the new one.
 
Corbett worked with Republican majorities in the state House and Senate to bring the budget together in the final days before the June 30 constitutional deadline, but Corbett demanded an additional feature that had lawmakers scrambling until the final hours of Thursday night. That bill —  a series of changes to a 2006 property-tax reform law — will give Pennsylvania taxpayers greater control over local property tax increases through the referendum process.
 
The state House made changes to the bill late Wednesday night, but due to legislative rules had to wait until after 10:30 p.m. Thursday to pass the bill to the Senate, which immediately concurred and rushed the bill to the rotunda for an eleventh-hour signature from Corbett.
 
The law makes changes to Act 1 of 2006, which restricted school districts from raising property taxes above an index determined by the state Department of Education. If a district wants to exceed the index, voters must approve the tax increase.
 
However, the current law gives school districts 13 exceptions — including building projects, debt, pension payments, court settlements and special education costs — that they can use to increase taxes above the index.
 
Because of the exceptions, property-tax increases rarely go to a referendum. Since 2006, school districts have pushed to exceed the state index more than 1,300 times. Only 12 of those requests have ended with a voter referendum, and only five of those referendums were approved.
 
Since Act 1 was put in place in 2006, 56 percent of exception requests from school districts have been for pensions, construction debt and special education, according to the state Department of Education.
 
In the bill signed by the governor Thursday night, only two exceptions — special education and pension liabilities — will remain in place. 
 
Corbett said Pennsylvanians should be able to weigh in, when local property taxes are rising faster than the cost of living.
 
“I believe we need to give the citizens of Pennsylvania in the school districts the ability to voice their opinion in more than just the election of school board directors,” Corbett said.
 
But Democrats argued that the reduced state funding combined with preventing local tax increases was a one-two punch that would damage public education in Pennsylvania severely.
 
State Sen. John Wozniak, D-Cambria, said the new restrictions would put incredible pressure on school districts’ finances.
 
“It seems the new philosophy on how to reduce government is to starve it, regardless of the legitimacy of the programs,” Wozniak said. “We’re preventing them from raising taxes locally, and we’re cutting them from the top. That’s a double play in a very difficult year.”
 
During debate on the bill, state Rep. James Roebuck, D-Philadelphia, chairman of the House Education Committee, said the proposal would cost school districts $165 million in additional budget cuts in the 2011-12 school year.
 
Senate Republicans wanted further exceptions left in the law, including construction debt and court-ordered settlements, but ultimately agreed to the version of the bill sent by the state House at 10:45 p.m. Majority Leader Dominic Pileggi, R-Chester, promised to revisit the issue during the fall session since the law will not go into effect until next year.
 
As for getting the budget done on time, Speaker of the House Sam Smith, R-Jefferson, said the people of state expected it to happen, not only this year but in the future.
 
“We’re happy, because we did something that we’re supposed to do,” Smith said. “But we don’t expect that the people of Pennsylvania are going to throw parades.”
 
The budget was introduced by Corbett on March 8 and passed by the state House for the first time on May 25, but it still came down to the wire. Democrats, in the minority in both chambers of the General Assembly, kept up their calls for additional spending of the state’s unanticipated revenue — which climbed above $700 million on the final days of the fiscal year — to restore some of the budget’s $3 billion cuts, including an $800 million reduction in basic education funding.
 
The Legislature is out of session until September.
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