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Pennsy lawmakers need a new idea on state tax plan

December 23, 2005

Pennsylvania's top political leaders this week admitted that they won't be able to agree on how to reduce property taxes before Jan. 1. What's needed is some new ideas to bring the two sides together.

Gov. Ed Rendell had originally proposed reducing property taxes that support local schools and replacing them with a combination of gambling revenue and increases in income taxes.

The proposal promised to help elderly Pennsylvanians on fixed incomes stay in their homes, while shifting the burden to younger citizens in their peak earning years.

But the bill to make all of this legal required local school boards that wanted new money to agree to limits on their taxing authority. Increases over a certain level would have to be approved in a referendum.

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Many local school boards decided that the new arrangement was too uncertain and might leave them without the funds to deal with enrollment increases.

Now the state House and Senate are divided on how to resolve the issue.

This week the House voted to fund education through state taxes, as opposed to local property levies. The Senate disagrees and its version would requires school boards to hold referendums on the idea of shifting schools' dependence on property taxes to a reliance on local income taxes.

Rendell had hoped to begin 2006 with an agreement on the issue, but is now resigned to trying again in January.

That's when the House will begin holding hearings on extending the state sales tax to goods and services that are now exempt.

According to The Associated Press, however, senators are reluctant to raise taxes two years after an increase in the state income tax was approved.

We suggest that both sides look at something new that would make the change more palatable to local school boards.

Why not give the boards some triggers that would allow them to raise taxes without a referendum? It could be enrollment increases over a certain percentage or boosts in the cost of essential materials such as fuel oil.

Children must be educated and kept warm during the process. If the two sides can agree on a system that will guarantee that both happen, that should go a long way toward a permanent solution.

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