Nine things to know about Rep. Stan Saylor’s plan to cut property taxes
(Harrisburg) — State Rep. Stan Saylor wants to cut school property taxes and pay for it by raising the sales and income taxes.
Democratic Gov. Tom Wolf has proposed something similar, although with some key differences when it comes to how much of a tax break property owners in individual districts would get.
The Wolf administration estimates that, under the governor’s plan, property owners in the York City School District would have their school property taxes nearly eliminated.
Saylor, R-Windsor Township, said the governor’s plan would send too much money to city districts.
Saylor said York City School District homeowners would still get more of a tax break than people in many other districts under his plan, but less than what Wolf is proposing.
Saylor said homeowners would see an about 70 percent reduction in the York City School District, based on preliminary estimates. The reduction for businesses there would be less.
“To me, it’s about being fair across the board, to every taxpayer in the state of Pennsylvania,” Saylor, House Education Committee chairman, said Tuesday.
Here are nine things to know about Saylor’s proposal, House Bill 860, which was the subject of a House Finance Committee hearing Tuesday.
1. WHERE SAYLOR GETS THE MONEY >> Saylor’s plan would raise the state personal income tax rate from 3.07 percent to 3.7 percent and raise the state sales and use tax from 6 percent to 7 percent. Under the plan, revenue from the personal income tax increase would go to reduce school district millage rates for all property owners, including businesses. Revenue from the state sales and use tax increase would go directly to homeowners through a benefit, known as homestead and farmstead exclusions.
Saylor said that, with existing gaming revenue, he expects the plan would generate about $4.9 billion for statewide tax relief, which would result in 40 percent to 60 percent cuts in school property taxes for most homeowners. Saylor said all new revenue would be used for property tax reduction and not used for other state spending.
2. HOW THAT’S DIFFERENT FROM WOLF’S PLAN >> The Wolf administration says the governor’s plan would generate $3.8 billion for property tax relief and cut property taxes by more than half for the average homeowner.
Wolf wants to raise the personal income tax rate from 3.07 percent to 3.7 percent — the same increase as Saylor is proposing. Wolf wants to raise the state sales and use tax from 6 percent to 6.6 percent — which is less of an increase than what Saylor is proposing.
But Wolf’s plan also expands what would be subject to the sales and use tax, which Saylor’s plan doesn’t call for. Wolf’s plan would keep sales tax exemptions for some things, such as grocery store food and most clothing and footwear. But new things would be subject to the tax, including child care, waste collection, and candy and gum.
Wolf’s plan targets a greater share of funding to districts with high poverty and tax rates. Revenue would first go directly to property tax reduction for homeowners through the homestead and farmstead exclusions. Millage rate reduction would kick in once a constitutional limit is reached in each district.
One result of the differences is that the share of property tax reduction for businesses would be higher under Saylor’s plan than under Wolf’s plan.
Wolf’s plan calls for a $500 rebate for renters in households earning less than $50,000.
3. HOW WOLF AND SAYLOR SAY THEY’D KEEP PROPERTY TAXES DOWN >> Under Wolf’s plan, the amount that school districts could have in an unassigned fund balance and still raise taxes would decrease from between 8 percent and 12 percent of a district’s budget to 4 percent.
Saylor’s plan doesn’t have that requirement. Instead, as more revenue is generated from the personal income tax increase, more money would go to school districts for more property tax reduction.
Current law limits how much school districts can raise real estate taxes without certain exceptions or getting approval through a voter referendum.
4. WHAT HAPPENS IF SALES AND PERSONAL INCOME TAX REVENUE DECLINES >> If there is a recession that causes revenue to decline, Saylor said money from the sales and use tax would be used to make up for losses in the personal income tax. In that situation, a district’s millage rate wouldn’t increase, but the direct tax relief for homeowners could get reduced, he said.
5. WHAT THE WOLF ADMINISTRATION SAID ABOUT SAYLOR’S PLAN >> Wolf spokesman Jeff Sheridan said the governor was encouraged that House Republicans share the “goal of reducing property taxes on seniors and hardworking families.”
“He looks forward to working with them to achieve tax relief for everyday Pennsylvanians, but he is committed to his plan,” Sheridan said in an email.
6. WHO IS BACKING SAYLOR’S PLAN >> Saylor said he developed the proposal as part of a group of lawmakers. His bill has 25 other co-sponsors, including all of his fellow Republican representatives from York County. House Majority Leader Dave Reed, R-Indiana County, is another co-sponsor. There was one Democratic co-sponsor, Jaret Gibbons from western Pennsylvania, as of Tuesday.
Saylor said he personally supports eliminating school property taxes entirely, but he doesn’t think there are the votes there for it.
7. WHAT PEOPLE SAID AT TUESDAY’S HEARING >> Some Democrats expressed concern over how Saylor’s plan distributes funding and suggested it wouldn’t provide enough support for education. State Rep. Jake Wheatley Jr., Democratic chairman on the committee, said he wouldn’t support Saylor’s current legislation, but he called it a great first start.
“I’m glad to see that the Republicans are willing to put taxes on the table,” Wheatley said.
8. WHAT’S NEXT >> Saylor provided info on York City School District as an example, and he said he expects statewide details about the impact on individual school districts will be released next week.
Saylor said he hopes the House Finance Committee will vote on his legislation next week, at which point the full House could take it up.
9. WHAT THE SENATE GOP SAYS >> Senate Republicans have a majority in that chamber, and their caucus hasn’t taken a position on Saylor’s bill, said caucus spokeswoman Jenn Kocher.
“Property tax reform is a complicated issue with many different proposals to consider. We look forward to discussing all of the possibilities to develop the best plan for property owners,” Kocher said in an email.
Who is sponsoring the legislation with Saylor? This map gives you a look.
Blue=The Democratic co-sponsor.
Red=The Republican co-sponsors, along with Saylor, the bill’s prime sponsor
Gray=House members who aren’t a co-sponsor
Information as of April 14
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