Politicians have promised to reform school property taxes on numerable occasions — it was a significant part of Governor Tom Wolf’s platform the first time he ran for governor — but so far, little has changed.
State Representative Frank Ryan (R-101) spoke to members of the Lebanon Valley Chamber of Commerce Monday morning, outlining his plan for change, House Bill 13, the School Property Tax Elimination Act.
Ryan first explained his qualifications, not only as a politician, but as a former professor at Franklin & Marshall College, as a CPA, and as a manager in economic warfare in the Armed Forces.
“My job for many years was to do ‘turn-arounds’ for financially strapped companies, to keep them from bankruptcy, and I’m really good at it,” Ryan told the 25 local business leaders and school officials in the Chamber’s meeting room.
Ryan stressed the need to do something now, as the system is at risk of financially imploding upon itself.
“I’m going to tell you this as clearly as I can,” Ryan said. “We have about 12 years, and if nothing is done in the next three to five years, we won’t have time to turn the ship around.”
Costs associated with the Pennsylvania School Employees Retirement System, charter schools, funding for special education, and medical costs are all rising.
Senior citizens in the state currently pay $3.4 billion in property taxes, Ryan said.
“Under my bill, Social Security recipients would pay zero property taxes; they would pay only an increased income tax…we’re trying to untangle 70 years of mismanagement,” Ryan said. “With property taxes, we are all one life event away from losing our homes.”
Currently, 44 other states already tax retirement income, Ryan said.
“With this bill, people in their 70s won’t have to continue working to survive,” Ryan said.
Points of Ryan’s House Bill 13 include: A retirement income tax of 4.92 percent, with 1.85 percent going locally and 3.07 percent to the state; a two percent local sales tax allocated to school districts; and no tax on Social Security income.
According to Ryan, senior citizens would save an average of 75 percent on tax money; property owners would of course benefit; renters would pay less rent since the owner would have no property taxes; and school districts would share the benefit of economic growth.
Currently, eight bills are being formulated that address the property tax situation, Ryan said.
“Pennsylvania is in dire straits right now,” Ryan said. “The constructs under which the system has been built are flawed.”
Puerto Rico went bankrupt, and Illinois is likely to go bankrupt next, Ryan said.
“Don’t believe that it can’t happen here,” Ryan said. “The trigger point will be the next recession and the first thing that’s going to go is senior care.”
Speaking locally, Ryan said Cedar Haven, previously the county-owned nursing home, had failed, and added that the county commissioners were right to sell it.
On the panel with Ryan were Curt Richards, business manager for the Lebanon School District; Margie Zelanak, executive director of the Pennsylvania Assisted Living Association; and Steve Goodhue, the Chamber’s government roundtable chairman.
“The dollars are shifting,” Richards said. “Realistically, it comes down to where are we going to get funds for education. Many of the things we’re forced to deal with are government mandates.”
Ryan said property taxes need to be eliminated for many reasons, including as a way to reverse job losses in the state and to reverse the loss of young workers leaving the state.
“Younger people are leaving this Commonwealth in droves,” Ryan said.
“Older people are moving to the Carolinas, to Florida, to Tennessee.”
Young workers no longer have defined pension plans in the Commonwealth, either, he said.
“Young people are struggling, working families are struggling,” Ryan said.
A full 65 percent of Pennsylvania’s college graduates find employment out of the state, Ryan said.
Pennsylvania has the third largest population of elderly in the nation, Ryan said, while the Commonwealth is also short 38,000 workers in the health care industry.
Right now, about 17 percent of Pennsylvania residents are retirees, but that number is expected to rise within a few years to 25 percent.
“That becomes the Medicare/Medicaid mix that will kill you financially,” Ryan said.
Richards said he agreed with much of Ryan’s proposed bill.
“Shifting away from property taxes – we’re for that,” Richards said. “I think we can accomplish that by shifting property tax to income tax.”
The system of property taxes in the Commonwealth is inherently broken, Ryan said.
“We have unbelievable disparities,” Ryan said. “A half-million-dollar house in Westmoreland County would cost $900 in property taxes, while the same house here would cost $7,000 in property taxes.”
Pennsylvania is also the tenth most expensive state in which to live, Ryan said.
“It’s a multi-faceted issue and we need to raise awareness of the seriousness,” Ryan said. “We are truly in trouble and we need to get real or we’re going to go bankrupt.”
Full Disclosure: The Lebanon Valley Chamber of Commerce is a sponsor of LebTown. LebTown does not make editorial decisions based on sponsorship status and sponsors do not receive special editorial treatment. Learn more about LebTown’s sponsorship program here.