Education Funding

Pennsylvania Takes Second Shot at Cutting Property Taxes

By Catherine Gewertz — July 11, 2006 3 min read
  • Save to favorites
  • Print

Pennsylvania has enacted a law that trims property taxes by imposing new limits on school districts’ budgeting freedom, and shifts more of the burden of education funding from local to state shoulders.

The law, signed by Gov. Edward G. Rendell on June 27, represents the Democratic leader’s second attempt to reduce the property taxes on which schools in the Keystone State depend so heavily. Reducing those local taxes while also reducing the schools’ reliance on them has been a cornerstone of Mr. Rendell’s tenure and figures heavily in his current bid for re-election.

The governor pushed successfully for a 2004 law, Act 72, that allowed districts to use future slot-machine proceeds to reduce property taxes in exchange for limits on how much they could increase their budgets. An increase in the earned-income tax would have replaced the property-tax money.

But that law left it up to the state’s 501 school districts to “opt in” to that calculus, and only 20 percent did so, despite pressure from Gov. Rendell for full participation. Unsatisfied, he called the legislature into a spring special session to design a new law. (“Majority of Pa. Districts Snub Rendell Tax-Relief Plan,” June 15, 2005.)

The new law repeals Act 72, but duplicates some of its provisions. School boards must still seek voters’ permission to increase their budgets above an inflation-pegged cap. But some decisions are no longer up to school boards, such as whether gaming proceeds will be used to lower property taxes. Under the law, all residents who sign up for lower bills will benefit.

The question of whether to raise the local earned-income tax in exchange for getting gaming revenues and further lowering property taxes also has been taken from school boards’ hands; they must put that question to voters in a 2007 referendum.

The biggest benefit of the package goes to senior citizens, who stand to pay lower property taxes without being subject to a higher earned-income tax. Low-income seniors also benefit from an addition to the law that expands Pennsylvania’s existing program of property-tax and rent rebates. It borrows $200 million from the state lottery fund to grant the rebates of $250 to $650.

Slot-machine revenue will be used to perpetuate that program once those funds begin appearing, not before late 2007.

Shifting the Burden

Gov. Rendell contends the new law will reduce property taxes by 17 percent, and hails it as the biggest property-tax cut in state history. The issue is guaranteed to stay high on the political radar as the governor campaigns for a second term this fall: His Republican opponent, former Pittsburgh Steelers football star Lynn Swann, argues that the entire property-tax-assessment system must be overhauled.

Education groups and school boards still oppose provisions such as the law’s budget limitations. They say that districts will likely have to cut their budgets to manage rising, mandated costs in areas such as pensions and special education.

“When costs bump up against spending caps, programs will be cut,” said Scott K. Shewell, the spokesman for the Pennsylvania School Boards Association.

Some groups maintain that the law’s budget limitations are meaningless because of a list of exceptions built into the legislation. For instance, school boards don’t have to ask voters’ permission for budget increases driven by construction, debt service, or health-care costs. Mr. Shewell noted that districts must ask the courts or the state department of education for permission to use such exceptions.

According to Gov. Rendell’s office, the new law will raise the state’s share of K-12 education funding from 36 percent to 42 percent. Shifting a greater share of education spending from local to state sources has been a key aim of the governor, who took office in 2003. But some contend he hasn’t done enough yet.

Ronald R. Cowell, a former state lawmaker who is now the president of the Education Policy and Research Center in Harrisburg, said Pennsylvania still must overhaul the way it pays for schools by further reducing education’s dependency on property taxes, pegging education spending to its actual costs, and reducing spending inequities between districts.

A version of this article appeared in the July 12, 2006 edition of Education Week as Pennsylvania Takes Second Shot at Cutting Property Taxes


Classroom Technology Webinar How Pandemic Tech Is (and Is Not) Transforming K-12 Schools
The COVID-19 pandemic—and the resulting rise in virtual learning and big investments in digital learning tools— helped educators propel their technology skills to the next level. Teachers have become more adept at using learning management
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Student Well-Being Webinar
Building Teacher Capacity for Social-Emotional Learning
Set goals that support adult well-being and social-emotional learning: register today!

Content provided by Panorama
Jobs October 2021 Virtual Career Fair for Teachers and K-12 Staff
Find teaching jobs and other jobs in K-12 education at the EdWeek Top School Jobs virtual career fair.

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Funding U.S. Senators Tee Up Big Boost in School Funding for Next Year
The fiscal 2022 bill would increase aid for disadvantaged students, mental-health professionals, research, and state academic assessments.
3 min read
Image shows lots of cash. Rolls of dollars lay flat on a light blue background.
iStock/Getty Images Plus
Education Funding Opinion Don’t Plan on That Federal Education Spending Spree
A Democratic spending spree once depicted as inevitable is shrinking before our eyes, meaning big implications for education.
4 min read
Image shows a multi-tailed arrow hitting the bullseye of a target.
DigitalVision Vectors/Getty
Education Funding Feds Pump $1.5 Billion Extra Toward Schools to Address Cafeteria Food Shortage
The U.S. Department of Agriculture announced funds to help schools more easily purchase U.S.-grown foods amid widespread supply shortages.
1 min read
Empty school cafeteria
iStock/Getty Images Plus
Education Funding Letter to the Editor More Money for Schools Isn’t the Answer
The real problem is not funding but demands that teachers do more than just teach their subject, writes Walt Gardner.
1 min read