Pennsylvania took a first step toward a potential property tax overhaul Tuesday, as voters approved a constitutional amendment that could lead to change.
The ballot question, which asked whether taxing authorities should be able to exempt residents from paying property taxes on their primary residences, was poised to pass, with preliminary results showing the amendment winning approval with 93 percent of districts reporting results.
"I'm excited that the people of Pennsylvania got to speak, and I think they made it pretty clear," said Rep. David Maloney (R., Berks), who sponsored the bill that created the ballot question. "I think it's a significant step forward, and I think, in some respects, the legislature probably needed to see this."
The vote marked a concrete move toward changing or eliminating a levy that has been a long-standing source of complaint. Lawmakers and advocates say that the current reliance on property taxes — which account for about 30 percent of local and state revenue in Pennsylvania and are a primary source of school funding — is especially harmful to homeowners on fixed incomes. The issue has gained greater traction in recent years; Gov. Wolf has said he supports the elimination of property taxes.
But Tuesday's vote will not change anything immediately.
The referendum allows the legislature to pass a law that would permit taxing authorities to exempt residents from paying any tax on their primary residences.
Even if the legislature passes such a bill, individual taxing authorities — counties, municipalities, and school districts — would have to enact their own exemptions. They would apply only to primary residences; taxes would have to be paid on commercial and industrial properties and on second homes.
Taxing authorities would have to find replacement revenue sources, which likely would require more state legislation.
Some grassroots groups of Pennsylvania homeowners have pushed for a bill known as the Property Tax Independence Act, which would eliminate property taxes by raising sales and income taxes.
School districts have been watching the issue closely. Jay Himes, the executive director of the Pennsylvania Association of School Business Officials, told the Inquirer and Daily News that having an option to eliminate property taxes for primary residences is a good idea, provided replacement revenue is available. His group opposes the Property Tax Independence Act and other efforts to eliminate all school property taxes. Wolf has also said he sees problems with that bill.
Among the issues that school officials and other opponents have with the bill is its provision that residents would continue paying property taxes on their school districts' existing debt, making tax payments unequal and widely variable among the state's 501 districts. And school boards would cede some control over school funding.
But supporters of the bill, which include both Democratic and Republican lawmakers, say that the passage of the constitutional amendment Tuesday gives them more flexibility to deal with some of opponents' issues. For example, the bill could now be amended to only eliminate school property taxes for primary residences, instead of all property taxes.