HARRISBURG -- Legislation to allow school districts to replace part or all of their property tax through levies on earned income and business receipts cleared the Pennsylvania House on Wednesday.
The bill passed, 149-46, with broad support from Democrats and Republicans but faces an uncertain future in the Senate. There, Majority Leader Dominic Pileggi, R-Delaware, has a proposal, signed onto by more than half the Senate, to freeze property taxes for senior citizens.
Property taxes, which provide much of the funding for local schools, have been the target of repeated attempts at overhauling revenue sources. The General Assembly in 2006 limited with exceptions how rapidly school districts can increase their tax rates, but attempts to replace the property tax with statewide increases in sales or income taxes have been unsuccessful.
Collection of real estates taxes reached $11.48 billion in 2011-12, according to the state Department of Education.
The House bill, put forward by Rep. Seth Grove, R-York, would allow school districts to implement an additional earned income tax, mercantile tax or business privilege tax and use the new revenues to reduce school property taxes. School districts would remain bound by the limits of the 2006 law, Mr. Grove said.
House Republicans celebrated passage of the bill, which they said would provide local communities greater flexibility in how they pay for education.
"The beauty of this bill is its flexibility and the fact it's relatively simplistic," said Finance Committee chairman Kerry Benninghoff, R-Centre. "The citizens who elect us are the same ones who elect school boards. They should be encouraging their school boards if they want that change."
Lawmakers on Tuesday defeated an effort to replace the proposal by Mr. Grove with a measure that would eliminate school property taxes statewide by raising the state personal income tax and sales tax rates while applying the sales tax to products that are currently exempt.
The chairman of the Senate Finance Committee, Sen. Mike Brubaker, R-Lancaster, said his panel will hold a hearing Oct. 15 on a report by the state Independent Fiscal Office on the property tax elimination proposal, which has also been introduced in the Senate.
The analysis found the bills would lead to a funding shortfall.
A spokesman for Gov. Tom Corbett said the administration supports reducing the burden of property taxes but has yet to analyze changes made to Mr. Grove's proposal.
Karen Langley: firstname.lastname@example.org or 717-787-2141.