Apr 15, 2015 4 min read

The good news: The folks in Harrisburg want to cut your property taxes. The bad news: They want to raise the personal income and sales taxes to do it.

Both Gov. Tom Wolf and Republican leaders in the state House have offered plans to ease Pennsylvanians’ property tax burden. According to an Associated Press report, both proposals would boost the state income tax rate from 3.07 percent to 3.7 percent. The governor would raise the state sales tax from 6 percent to 6.6 percent while broadening the list of goods and services subject to the levy. House Republicans would keep the roster of taxable items the same but raise the rate to 7 percent.

How they would use the proceeds differs a bit. The House GOP wants to take the additional revenue from the income tax, pegged at $2.7 billion, to allow local school districts to cut their millage rates as they apply to homeowners and businesses. The extra money from the sales tax increase, about $1.6 billion, would go toward further property tax cuts through the “homestead” program.

Wolf’s plan, according to a story in the Pittsburgh Post-Gazette, would direct $3.8 billion in extra income tax proceeds and other funds toward property tax relief, but he would use a formula to give more money to poorer districts and those with the highest taxes. At present, his plan would not put the additional sales tax money toward reducing property tax burdens.

Rep. Stan Saylor, R-York, who introduced the House GOP plan Tuesday, said there’s a clear difference between the Republicans’ proposal and that of the Democratic governor.

“Every dollar goes back to the school districts,” said Saylor. “The governor’s plan, not every dollar goes back.”

The governor’s people point out that his proposal also would give $500 rebates to middle- and lower-income renters, and would impose greater controls on school districts’ ability to raise taxes. They say Wolf’s plan also would address the state’s hefty budget shortfall.

The two parties have expressed their desire to work together on the tax issues, but it all might be for naught unless Republicans who hold sway in the state Senate climb aboard, and that seems somewhat uncertain. According to the AP report, Senate Republicans are first focusing on reforming the state’s pension system and have not weighed in on changes in tax policy.

“Property tax reform is a complicated issue with many different proposals to consider,” caucus spokeswoman Jennifer Kocher told the AP. “Pensions do remain the top priority for the Senate.”

So, perhaps we should expect what we always get from our leaders in Harrisburg, plenty of talk but virtually no action for months, then a furious effort to cobble together a last-minute deal as the budget deadline looms. And as we saw the last time there was a Democrat in the governor’s office and Republicans in control of the Legislature, the constitutionally mandated date by which a budget must be approved is really meaningless, so this could drag well into the summer.

But when it comes to property taxes, our real concern is that state taxpayers will be left holding the bag in more ways than one.

Slashing property taxes is not the same as ending them. If some form of what House Republicans and the governor are proposing becomes law, it doesn’t take a Harvard economist to predict what will happen down the road. Sure, property taxes would be cut. But, eventually, school districts will need more money. Maybe state funding doesn’t keep up. Maybe there’s a new school to be built or a football stadium to be constructed. Maybe it will be rising personnel and pension costs. But when it happens – no matter what safeguards are put in place – a way will be found for those property taxes to start creeping up and up and up. Property owners will not only be paying much higher sales and income taxes. Their property taxes will start climbing again, too.

If this is the path our governor and lawmakers are going to take, they should abandon these half measures and do what is necessary to eliminate property taxes, once and for all.