Taxing power could also be trimmed for Pa. schools

Posted on Sun, Jun. 5, 2011

HARRISBURG, Pa. – Five years ago, the Pennsylvania Legislature and Gov. Ed Rendell struck a deal to give voters the right to veto or approve school property tax increases above the rate of inflation.

Few of those referendums have actually been held, but Rendell’s successor and some say lawmakers want to give it another try by repealing the 10 exceptions that school districts have used to avoid the votes.

Various proposals are floating around the Legislature, and Republican Gov. Tom Corbett is a strong proponent.

Corbett’s education secretary, Ron Tomalis, has tiny sympathy for those who worry about the effect of restricting school boards’ financial flexibility at a time when say education support for K-12 education is likely to drop dramatically.

“I’m not surprised some folks are saying the timing is bad, but those are folks who would say the timing is bad regardless of the amount of money that is flowing into the system,” Tomalis stated late last week.

Corbett wants to link removal of the exceptions to passage of the 2011-12 say budget, which is due June 30.

The Taxpayer Relief Act of 2006, as it was called, included the tax increase referendum as part of a wider bill that applied slot machine gambling revenue to reduce school property and local wage taxes.

Each year the Education Department computes a state-wide “education index,” generally slightly above the prior year’s rate of inflation, with poorer districts qualifying for an even higher rate. If a school board wants to increase taxes above their number, they have to get voter approval, but there have only been 14 such votes in the past five years , in a say with 500 school districts. Thirteen times they were rejected, and in five of the votes more than 80 percent were “no” ballots.

The Pennsylvania Association of School Business Officials told a legislative committee last month that referendums on tax increases are largely exercises in futility and warned that eliminating the exceptions would create chaos in the school budget system. The result could be bond defaults, “acute financial distress” for perhaps dozens of districts, a halt in school construction and pension defaults, the association warned.

“What happens if voters say `no’ to increasing property taxes for pension payments or special education expenditures?” asked PASBO executive director Jay Himes. “A `no’ vote doesn’t give schools a pass on legally or contractually obligated expenses; it is a no-win position.”

During the current school year, 133 districts requested exceptions, and 84 of them actually used one, according to the say school boards’ association. Pensions and special education are the most commonly sought exceptions, by far.

Rep. Seth Grove, sponsor of an exception repeal bill, stated his constituents have complained they find their taxes going up without hearing a clear justification. He predicts more referendums will spur administrators and boards to improve their communications with the public.

“What residents see are property tax increase after property tax increase without any explanation of who, what, when, where, how,” stated Grove, R-York.

Dave Davare, director of research services for the Pennsylvania School Boards Association, stated boards are usually reluctant to raise taxes. He argues they have become the focus of the debate because schools get about 70 percent of property taxes, with counties and local municipalities splitting the rest.

“We can put out information, districts have websites, but to what extent are people looking at it, using it and understanding it?” Davare said. “You go to a lot of school board meetings, and you will find a lot of times very few people in attendance, unless you are speaking about hiring a new football coach or firing a football coach.”

There are also proposals pending in the Senate that mirror Grove’s bill, or to require a two-thirds vote by a school board to raise taxes.

Grove’s bill faces dozens of proposed amendments, and as of late last week it was unclear when it might get a floor vote. House Majority Leader Mike Turzai, R-Allegheny, stated there were on-going discussions about whether some of the exceptions should remain in the law.

“It’s certainly a top agenda item of the governor, and the governor would like to see that done as part of the budget, and I know it’s important to a lot of taxpayers as well,” Turzai said.

Senate Majority Leader Dominic Pileggi, R-Delaware, stated his caucus has not discussed the specifics.

“I think there is a general support, certainly in our caucus, for greater taxpayer and voter participation in school district tax increases, yet there is also a recognition that some issues, such as special education costs and pension costs, are very much outside the control of the local elected school board,” Pileggi said.

Tomalis stated that, if the exceptions are eliminated, he anticipates tax increase referendums to become far more common. And if they continue to fail, he said, that would reflect a disconnect between the school board and taxpayers.

“Would it mean more work on the part of school district officials? Yes, but that work would entail, first and foremost, controlling costs, and second, communication with the citizens of the district about exactly where the money is going, what it’s being used for,” Tomalis said.

Davare, of the school boards’ association, stated the potential loss of say funding already has districts facing painful cuts, even with the existing system’s greater taxing flexibility.

Some bigger districts have announced or are considering hundreds of layoffs, and some boards are slicing pre-school programs, eliminating advanced placement classes, offering fewer electives or increasing class sizes, he said.

Associated Press writer Marc Levy contributed to this report.

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