Trade one tax for another?

May 09, 2006

After Republicans in the Pennsylvania House decided last week they wouldn't vote on a bill to cut school property taxes - despite the House leadership's approval - the prospect of resolving this issue any time soon went up in smoke.

And, just as is the case when the smoke clears from a house fire, something worse became visible. Some in the House now want to cut school property taxes by increasing the state sales tax.

No, they're not kidding, but the GOP-controlled Pennsylvania Senate is not likely to go along. We urge all concerned not to go back to the beginning on this issue, because as property values continue to increase faster than wages, Pennsylvania residents need relief, not more rhetoric.

Shortly after he took office, Gov. Ed Rendell proposed cutting the amount of school property taxes paid by increasing the state's income tax from 2.8 percent to 3.75 percent.

At the time, the governor said such a hike was needed because in the last 10 years local property taxes had gone up by 55 percent, straining the finances of homeowners on fixed incomes.

But the tax-for-tax switch didn't fly. Slots then became an alternative source of funding for Rendell, who had originally proposed legalizing them because his predecessor had taken $500 million from the state's Rainy Day Fund to avoid an election-year tax hike.

As we noted two years ago, the failure of the governor and the legislature to agree not only postponed property tax relief, but also put local districts in financial jeopardy when the dispute delayed payment of state school aid.

To make things worse, some school boards, fearing that a new bill would restrict their ability to increase taxes, went ahead and raised them in a pre-emptive bid for new revenues!

Rendell has not done a great job of selling the public on a plan that is complicated, but he has shown a willingness to compromise, to the point of saying he would reluctantly accept the sales tax increase.

He probably won't get the chance, but those in the House who said "no" to a compromise agreement must now bring something worthwhile out of the ashes - unless they want to face the charge that they really don't want to cut taxes.

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