'Holy Grail' eludes Pennsylvania politicians

Property tax reform — the Holy Grail of Pennsylvania politics — eluded the Pennsylvania Legislature once again in 2007.

Polls show property tax relief remains the No. 1 issue Pennsylvania voters want elected officials to address, but the Legislature and the governor finished 2007 much the way they began it — unable to pull the trigger on a variety of tax reform measures.

The best lawmakers could do last year was pass legislation that came to be known as Act 1, a tax-shift plan that gave voters the option of raising income taxes while lowering property taxes for qualified residents, primarily senior citizens.

After convening a special session of the Legislature to address property taxes, Gov. Ed Rendell and a majority in the Legislature attempted to sell Act 1 as property tax relief, but Pennsylvania voters weren't buying.

Voters in more than 90 percent of the state's 501 school districts rejected Act 1 referendums on the May 15 primary election ballot. In Berks County, voters in 17 of 18 school districts rejected Act 1. Voters in every school district in Chester and Montgomery counties defeated Act 1 referendums.

Although Act 1 passed the Legislature by a wide margin (137-61 in the Democratic-controlled House and 40-9 in the Republican-controlled Senate), some lawmakers predicted the plan would fail.

"I knew from the beginning it was going to be a joke," said state Rep. Tom Quigley, a Republican who represents the 146th House District in Montgomery County. "I voted against it in the House. To me, it was another attempt by the Legislature to punt the property tax issue to the voters."

Voters, including many of the seniors who were supposed to benefit most from Act 1, wanted no part of the tax-shift scheme.

"The message voters sent was 'enough with partial or Band-Aid solutions.' We need a comprehensive approach to solving the property tax problem. We have to eliminate property taxes period, and we have to find a better way to fund public education," Quigley said.

Here's what Gov. Ed Rendell said on June 27, 2006, the day he signed Act 1 into law: "This day is a major victory for Pennsylvanians who have fought for decades to have their property taxes cut. Every homeowner in Pennsylvania will not only get significant reduction, but they will finally get a say in future tax increases. This bill represents a victory of the possible over politics-as-usual."

The governor couldn't have been more wrong.

Not only was Act 1 rejected by voters in more than 490 school districts, but those same voters never had the chance to "get a say in future tax increases." More than 200 school districts that proposed tax increases higher than a state-imposed cap applied for exemption to obtain voter approval for the tax hikes. Gov. Rendell's Education Department granted exemptions to every school district that applied.

Rendell attempted to distance himself from Act 1 after voters overwhelmingly rejected it and did not back any other tax reform measure in 2007 despite promises during his 2006 re-election campaign that he would continue to make tax reform a priority.

Rendell asked Pennsylvania homeowners to be patient and wait for casino revenues to accumulate so property tax cuts can be triggered in either 2008 or 2009. Rendell signed the bill bringing slot machines to Pennsylvania in July 2004 and won support for gambling by tying it to property tax relief.

The earliest anyone will see tax cuts — an average of $150 to $200 — would be in the 2008-09 school year, according to Rendell administration officials. In the meantime, most Pennsylvania homeowners will end up paying twice that much in additional school taxes because school districts can raise property taxes beyond the rate of inflation if they receive state approval.

Several bills promising tax relief were introduced in the Legislature in 2007, but none were allowed on the floor for a vote under the leadership of House Majority Leader Bill DeWeese.

The plan that has received the most support — House Bill 1275, or the School Property Tax Elimination Act of 2007, may see the light of day when the Legislature returns in mid-January from its 30-day holiday recess.

So far HB 1275 has 44 co-sponsors, mostly Republicans, but Quigley said there have been ongoing negotiations with the House Democratic leadership. DeWeese has promised to allow "a menu" of property tax relief bills on the House floor for possible votes, Quigley said.

"There's a window of opportunity when the Legislature comes back in session on Jan. 14 but before the governor introduces his budget in February," Quigley said. "The best we can hope for is an actual up or down vote on HB 1275. That forces legislators to go on record on where they stand on property tax relief."

HB 1275, introduced by state Rep. Sam Rohrer (R-Berks), would expand the state sales tax to include additional products and services in return for eliminating school property taxes. The bill has been endorsed by the Pennsylvania Taxpayers Cyber Coalition, which represents about two dozen taxpayer groups across the state.

Another measure, House Bill 1600, backed largely by Democrats, has been panned across the state when lawmakers invited public comment last summer. An Aug. 29 hearing in Oley drew about 250 people and nearly all of them criticized the bill as another tax-shift scheme that would not eliminate property taxes or place any control over school district spending.