Property tax reform heads back to state lawmakers after ballot question approval

HARRISBURG, Pa. - After voters narrowly approved a ballot question on Tuesday that directs the General Assembly to pass a law to make changes to a property tax exclusion, there is hope that property tax reform is on the horizon after decades of discussion.

Voters approved the ballot question by a 54 percent to 46 percent margin that clears the way for lawmakers to amend the homestead exclusion. Currently, up to 50 percent of the value of the median property in any given community can be excluded. The ballot question clears the way for that to be changed to 100 percent of the property value.

It is believed that the reduction of property taxes would impact school districts across the state, but there is still a long way to go before any changes happen.

"There's nothing that says they have to do anything, actually," said Steve Robinson of the Pennsylvania School Boards Association. "It just authorizes them to create legislation. So we don't know exactly what this would mean for districts until legislation is on the table."

Few municipalities take part in the 50 percent exclusion.

"In order for a district to take advantage of that, they need to have some revenue that would replace the loss of that property tax, so right now there are very few districts that actually take up to the 50 percent exclusion for their residents because there's no revenue replacement," Robinson said.

Now that the issue heads back to state lawmakers, it is entirely possible some will want to have a renewed conversation about spending.

"It doesn't solve the problem of overspending, and that's what school districts are facing and that's why the property taxes have gone up so much over the last several decades," said Nathan Benefield of the Commonwealth Foundation.

Some potential revenue streams discussed in the past include higher sales and income taxes at the state level or giving municipalities the power to increase them at the local level to make up for an anticipated reduction in property tax revenue.

"It's certainly been talked about for a long time, but when it comes to the shifting part of it, that's where they get the opposition and the hangups," said Benefield.