A COMMON-SENSE ALTERNATIVE TO THE LIBERAL-DOMINATED MEDIA
Here are some facts that were not covered by the article:The financial report on HB 1776/SB 1400 that was done by the Independent Fiscal Office is available here as a PDF file: http://goo.gl/Y6v9c. It is a well-researched, comprehensive report that can be of great help to the property tax elimination movement.Briefly, it says that HB 1776/SB 1400 has a $1.5 billion shortfall. However, if you look at page 36 of the report you’ll see that telecommunications was erroneously exempted from the sales tax, adding about $341 million to the shortfall. With this line item restored that actual shortfall is about $1.15 billion. After some discussion by key HB 1776/SB 1400 sponsors it was decided to forego any further changes in the sales tax and to eliminate the shortfall through the State Personal Income Tax. This would require an approximate additional increase in the PIT rate of 0.33% from the original estimate, taking the current rate of 3.07% to 4.34%. We’ve always known that some adjustment in the PIT rate might be necessary to make the plan balance; supporters have indicated that this is not a problem for them as long as the school property tax is completely eliminated.HB 1776/SB 1400's finances were calculated in February of this year and were based on 2011 property tax collections. New property tax bills sent in July included increases from the 2011 bills; the annual increases likely caused at least a part of the shortfall from the legislation's original calculations. This serves to emphasize that elimination must be accomplished NOW, before property taxes rise to an amount that cannot realistically be replaced by state-level funding.There are two notable items in the report:On page 4 in the “School District Impact” section, the report indicates the projected savings in the future cost of education that the legislation provides. The “Property Tax Baseline” projects the five year increase in property taxes under the current system. The bottom line – the negative numbers – indicates the projected growth in the replacement funding under the provisions of HB 1776/SB 1400. Note that in 2017-2018 the plan is projected to reduce the growth of the replacement funding relative to the equivalent property taxes by $1.152 billion, with incremental improvements until that date. These numbers are for equivalent property tax revenues ONLY and have no bearing on the Basic Education Funding Formula.There are opponents who undoubtedly will complain that the plan short-funds education by those amounts but this is totally untrue. The bottom line numbers indicate only the reduction in the annual rate of increase and DO NOT indicate a reduction in overall education spending. This should end the opposition to the bill from those who complain that the legislation does nothing to control costs.Pages 22-23 analyze the effect of elimination on homeowner equity, home prices, and rental rates. I won’t try to go into detail here but if you read it you’ll find that elimination will have a profound effect on home values, restoring much of the equity that homeowners lost during the housing downturn of 2008. This is very good news for homeowners and Pennsylvania’s economy and real estate market. The analysis also indicates that the legislation will likely cause a reduction in rental rates, although it may take several years to manifest itself.The greatest advantage of this report is that it finally gives us a definitive fiscal analysis that will put to rest all of the outlandish numbers that have been tossed about by the legislation’s opponents. Supporters now have a solid baseline on which to build and can be almost certain that we will hear no further complaints that “the numbers don’t work.”The report will be officially presented by the IFO to a joint meeting of the House and Senate Finance Committees on Monday at 10 AM. The link to a live web stream of the proceedings will be available at http://www.repjimcox.com/.
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