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Senator Ray Musto |
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The purpose of Act 72 is to provide property tax relief for many of Pennsylvania’s citizens. The money used to reduce our property taxes would come from two sources: the revenue generated by expanded gaming, which is expected to ultimately generate up to $1 billion a year for tax relief, and a very small increase (0.1%) in the local earned income tax (EIT). With property taxes at an all-time high in Pennsylvania, I am happy to report that all of the Luzerne County school districts and most of the Carbon County districts voted to opt into Act 72.
The decisions of these school districts certainly make sense. The 14 Senatorial District has one of the largest elderly populations in the Commonwealth. A large number of our residents are on fixed incomes. Increased property taxes would be devastating to many families. So, while other school districts are not only raising taxes -- some as high as 50% -- and also refusing to opt into Act 72, our districts took advantage of the law, to give their taxpayers a well-deserved break.
Many believe that because the property tax reduction is funded through both state and local sources, there will be no tax reduction, just a tax shift. I am pleased that our school districts recognized that this is not the case. Look at the figures: The average household income in Luzerne County is approximately $39,000. That means each household will pay an additional $39 a year under the local earned income tax. At the same time, the average property tax reduction in Luzerne County will be $250. In other words, Luzerne County homeowners will see an average net tax reduction of $211 a year.
If your school district has opted in, the EIT increase will not take effect until state funding for the property tax reduction is available. What is more, Social Security, pensions, interest and dividends are exempt from the earned income tax. Those families currently exempted from paying the state income tax will also be exempted from the EIT. These and other provisions in the law were included to guarantee that those most in need receive the most relief.
Another benefit of Act 72 is that it limits future tax increases and gives taxpayers a say in extraordinary or immoderate school district spending. This protects the property tax reduction citizens receive. School districts will still be able to raise property taxes up to the rate of inflation without seeking voter approval. Districts would also be able to raise property taxes without a voter referendum in numerous circumstances where the need for increased school spending is beyond their control. No one wants to make it impossible for school districts to educate our children.
Act 72 was never intended as a cure for all of our public school funding problems. It is not a quick fix for the state funding shortfalls that occurred during prior administrations. Its intent is tax relief, for homeowners, farmers, for working men and women. Act 72 strikes a balance between tax relief for homeowners and the cost of a good education. It requires that school districts that opt in adopt some spending controls, but also provides flexibility to ensure that they can raise enough money to meet the educational needs of our children. It is good, although not by any means perfect, legislation, that will help the taxpayers of this District.
