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Another try at tax relief

September 23, 2005

Frustrated by a lack of buy-in on his proposal to substitute slot-machine revenue for property-tax cash, Pennsylvania Gov. Ed Rendell has called a special session of the state legislature for next Wednesday.

The governor's staff is not confirming that the special-session approach is designed to keep the proposal from getting tangled up in unrelated legislation. But if that's the idea, it makes sense to us.

The slots-for-property taxes legislation is known as Act 72 and would allow the state's 501 school districts to reduce their reliance on property taxes by giving them slot-machine revenues.

But one provision of the act allows school boards to decide whether or not they want to adopt it. Only 20 percent of the state's school districts have gone along, because Act 72 requires that future property tax increases over a certain percentage must go to referendum.

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There are a couple of possible solutions to this problem. The first would be to force local school boards to go along, an approach most lawmakers would probably find politically unpalatable. Alienating people who are involved in the community schools probably would spark a bitter debate about school funding and might inspire possible challengers.

Another approach would be to expand the state's sales tax, which now covers everything but food, clothing and services.

Rep. Rob Kauffman, R-Franklin/Cumberland, told The Herald-Mail that the present 6 percent tax would be cut to 5 percent, but would cover all merchandise and all services except those related to medical needs.

Look for the "services" part of this proposal to be modified, with attorneys arguing that unlike, for example, landscaping services, their clients often have no choice but to hire an attorney.

We will withhold judgment on the proposals until we see how they are fleshed out. We also want to know how much revenue is needed and how much money would be raised by altering the sales tax. We await the special session with great interest.

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