The Pennsylvania House voted on legislation this week that has important implications for public school funding.
In a bit of welcome news, lawmakers voted 59-138 Tuesday to reject an amendment eliminating school property taxes, the most significant source of funding for 1.8 million public school students. That vote was followed by today's 149-46 vote to approve the underlying legislation, House Bill 1189, sending the bill to the Senate where it faces an uncertain future. That bill allows school boards to replace local property taxes with new earned income and business privilege taxes.
The property tax elimination amendment mirrored House Bill 76, which shifts the local funding of education to state income and sales taxpayers. It eliminates school property taxes without replacing all of the lost revenue and would severely limit new state funding for education in the future. Recent cuts in state school funding would get locked in, and tremendous inequities in funding across districts would continue. The result is a school funding gap that leaves Pennsylvania’s students permanently behind. The House made the right call in voting against this proposal.
HB 1189 is essentially a local tax shift bill. It allows school boards to enact new business privilege taxes or raise earned income taxes and use all the new funds for property tax reduction. Current law requires voters to approve a local earned income tax and outright bans business privilege taxes.
The bill states that every dollar of new business taxes must be matched with a dollar of new earned income tax. Which may make the bill unworkable in many school districts, as more than half of them (282 of 500 in 2011) already levy an earned income tax.
Pennsylvania relies more heavily on local taxpayers to fund public education than most other states. This has fueled the funding disparities across school districts and made property taxes burdensome for some. The funding mechanism in HB 1189, if enacted, will continue Pennsylvania's school funding inequities. Restoring the state’s commitment to fund 50% of the cost of public schools is a much better approach to reducing funding inequities and lessening Pennsylvania’s heavy reliance on property taxes to pay for education.
Property tax relief must not come at the expense of Pennsylvania’s children or future. A well-educated workforce is critical to the state’s long-term economic growth — and that begins with a high-quality public education system.