A few numbers…
• $24 Billion
• 6.25%
• 10 Years
• $44 Billion!
Another number…
30%
One final number…
10,000
Education Finance Reform:
An Overview
Myth #1:
Property taxes
are the problem.
What are the real problems?
• Antiquated taxation system not based on accepted
taxation principles
• Property taxes inherently arbitrary and unfair
• Inability to pay property tax bills, loss of homes
• Out-of-control spending
• Lack of effective education cost controls
• Education and taxation inequities
• Projected cost of education
What are the real problems?
Short answer:
An irreparably broken K-12 public
education finance system
Myth #2:
Property tax “relief” or
property tax “reform” is
the solution.
What’s wrong with tax relief?
• Act 50, Act 72, Act 1 local tax shifts
• Former HB 1600 tax shift
• Act 1 rebates
• “Relief” revenue quickly outstripped by relentlessly
rising school property taxes
• ANY property tax “relief” plan is doomed to failure if
the system is not restructured
The Three Rs
• NO “Relief”
• NO “Reform”
• NO “Reduction”
REPLACE!
(Thanks to Randy Bish of the Pittsburgh Tribune-Review)
Why NOW is the time for change
• Rising homeowner discontent
• Act 50, Act 72, Act 1 failures, especially the “relief” from
gambling revenues
• 2008 Quinnipiac Poll: 89% consider property tax reform
“urgent” - The #1 issue among Pennsylvania voters
• Allegheny County court ruling: Base year property tax
assessments unconstitutional
• Pressure from taxpayers’ groups and the media
• Diminishing opportunity to fund property tax replacement
from a state-level source
Why NOW is the time for change
• June 2011 American Legislative Exchange Council (ALEC)
“Rich States, Poor States” report for Pennsylvania:
 46th in economic performance
 43rd in economic competitiveness
 41st in outmigration
• Antony Davies, Duquesne University Economics Professor:
“Symptom of increasing property taxes.”
Why NOW is the time for change
• February 2012 Tax Foundation “Comparative Analysis of
State Tax Costs on Business” report for Pennsylvania:
 49th of 50 for new firms
 50th of 50 for mature, established firms
• Bottom line: Runaway property taxes are destroying
Pennsylvania’s economy, devastating job-producing small
businesses, and driving away its residents
The Solution:
Replace the school property
tax with a more broad-based,
equitable funding stream.
House Bill 76
Senate Bill 76
HB/SB 76 - Goals
• Total elimination of the school property tax
• Total elimination to be phased in over a two year period
• Total elimination of school board taxing ability with specific
exceptions
• Stabilization of school funding
• Establish realistic limits on increases in K-12 education
spending
HB/SB 76 - Revenue
• Elimination tax swap must be tax revenue neutral
• Moderate expansion of the Sales Tax (SUT) base to include
more items and services with exemptions for necessities
• Increase the sales tax rate to 7%
• Increase the state personal income tax rate to 4.34%
• Act 1 gambling revenue currently allocated to property
tax relief
• Small retained property tax for long-term debt
HB/SB 76 - Revenue
• All property tax replacement revenue to be placed in a
segregated lockbox account
• Any fund balance that accrues should not exceed 6% of the
total property tax replacement funding. If the accrual exceeds
the 6% maximum an appropriate reduction in the PIT rate will
be mandated
HB/SB 76 - School Funding
• All districts initially fully funded dollar-for-dollar for total
amount of local taxes eliminated
• Annual funding increases to all districts based on the
increase in the Consumer Price Index (CPI) or available
revenue, whichever is less, allocated to each district equally
on a percentage basis
HB/SB 76 - School Funding
• Supplemental school funding through local EIT or PIT
All supplemental EIT or PIT to be subject to noexception referendum

For specific projects, referendum must state the
purpose of the project, cost of the project, the tax
rate to be applied, and a sunset date for the tax

For general school district funding, mandatory
referendum every four years for renewal of the tax

HB/SB 76 - Scope
This legislation is to be implemented for replacement of
local school district taxes only and is not to be
integrated in any way with the current Basic Education
Subsidy (BES), that funding to continue in whatever
form is determined by the General Assembly
HB/SB 76 - Guarantee
Introduction of separate concurrent legislation
proposing a Constitutional Amendment to forever
abolish property taxes as a school funding source
HB/SB 76 – Certification
HB 1776 has been vetted against actual and estimated
revenue and expenditure figures supplied by the PA
House Appropriations Committee and the Governor’s
2012-2013 budget book to ensure financial viability.
The legislation is in full compliance with the financial
analysis conducted by the Pennsylvania Independent
Fiscal Office (IFO) that was released on September 25,
2012.
HB/SB 76 – IFO Analysis
The elimination of school property taxes increases the
disposable income of property taxpayers. The analysis
assumes that 70% of the property tax cut goes to
individuals. It further assumes that homeowners
spend 90% of the increase in disposable income.
(Pages 17-18)
The analysis indicates that HB 1776 will cause home
values to increase, on average, by more than 10%
statewide. (Page 23)
HB/SB 76 – IFO Analysis
Working age homeowners realize a tax cut. The
analysis finds that the increase in federal income tax
(through lower itemized deductions), state income tax,
and sales tax is more than offset by the reduction in
property taxes. (Page 21)
Retired homeowners realize a significant reduction in
taxes. The analysis finds that the property tax
reduction easily offsets any increase from the higher
sales tax. (Page 21)
HB/SB 76 – IFO Analysis
The elimination of property taxes would significantly
reduce the property tax share and would clearly
increase the attractiveness of the Commonwealth for
business location and expansion. (Page 25)
Benefits would also accrue to home builders, home
developers, and other land owners who convert
current land holdings into new housing plots.
Employment would increase in the construction sector
as well. (Page 23)
HB/SB 76 – IFO Analysis
(Regarding business entities) … the income flows
through to individuals as higher disposable income.
For pass through entities, the analysis assumes that
owners and shareholders spend 90 percent of the
increase and 70 percent is spent on taxable goods and
services, yielding another secondary effect of $34
million in increased sales taxes for FY 2013-14. (Page
18)
HB/SB 76 – The People’s Bill
The Property Tax Independence Act was crafted by
members of the General Assembly in full collaboration
with the 76 member groups of the nonpartisan
grassroots Pennsylvania Coalition of Taxpayer
Associations. This plan is unique in that it is OUR
legislation in a state that does not allow for citizen
initiatives. The PTIA has many lawmaker proponents
from both parties and enthusiastic grassroots
supporters from across the entire political spectrum.
We as taxpayer activists have accomplished what the
politicians in both Washington and Harrisburg have
been unable to do: work across party lines to reach a
sensible and effective solution to a critical problem.
A clean bill!
HB/SB 76 – Common Objections
• The numbers don’t work
• Loss of local control
• We shouldn’t tax clothing, books, flags, whatever…
• The plan shouldn’t eliminate for businesses
HB/SB 76 – Ten Reasons
1. Achieve true home ownership
2. Stabilize school funding
3. Help prevent foreclosures
4. Restore plummeting real estate values
5. Boost the sagging housing market
HB/SB 76 – Ten Reasons
6. Attract business to Pennsylvania
7. Generate jobs for Pennsylvanians
8. Create a massive stimulus for PA
9. Increase personal wealth
10. Stop costly reassessments
“I hope that ‘they’ will do
something about it.”
“Good luck. I hope that
you can do it.”
True education finance
reform CAN be achieved
with your help!
Thanks to Alan MacBain of the Pottstown Mercury
www.ptcc.us