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Nov 23, 9:38 PM EST

Senate narrowly rejects measure to kill school property tax

HARRISBURG, Pa. (AP) -- The Pennsylvania Senate narrowly rejected a measure Monday night to eliminate billions of dollars in school property taxes statewide by replacing the money with increases in state tax rates on sales and income, although the legislation could re-emerge with more support.

Many more items and services currently exempt from the state sales tax also would have been taxed, including daycare, movie tickets, trash pickup, diapers and caskets, prompting one opponent to say that it would tax from "the cradle to the grave."

The preliminary vote tied, but was recorded as 24-25 after Lt. Gov. Mike Stack cast a vote against it to break the deadlock.

The vote split both parties, and both party's majority leaders opposed it, but it could re-emerge since one co-sponsor was absent and a newly elected candidate from a suburban Pittsburgh district was to take office later this week.

Still, the future of the bill is in doubt beyond the Senate. Gov. Tom Wolf said Monday that he opposes it, while a similar bill failed in the House two years ago, 138 to 59.

During more than an hour of debate, proponents promoted the move as modernizing the tax code and public school funding by ridding the state of a tax that doesn't reflect one's ability to pay and puts the fixed-income elderly at risk of being forced out of their homes.

"This is a unique, quantum change in the way we look at Pennsylvania," said Sen. John Wozniak, D-Cambria. "If you have the ability to pay, then you should pay. But it should not be on the property tax, which is there whether you're making a million dollars or you're a widow on a fixed-income making $15,000."

Opponents, however, said it would put unfair restraints on school boards and grant unwarranted tax breaks to major commercial enterprises, such as owners of casinos and skyscrapers, and translate into a tax increase in many areas.

"This is just too big a giveaway," said Sen. Robert Tomlinson, R-Bucks.

The legislation would have imposed a multibillion-dollar state takeover of public school funding from school boards and a monumental change in state taxation. The Legislature's Independent Fiscal Office projects total school property tax collections, including existing state rebates, will exceed $14 billion next year.

The legislation, however, arrived on the Senate floor without any independent assessment of how much the proposed tax changes would net. It was not clear that the 91-page legislation could raise the precise amount of school property taxes to be collected by districts next year, or even that it was required to raise that amount before taking effect.

Nationally, about four in five states use the property tax to help fund schools.

The measure would have ended the collection of school property taxes from millions of Pennsylvania households and businesses starting July 1, except to pay off about $25 billion in school debts.

The bill also would have delivered a significant new constraint to the ability of school districts to raise taxes in the future. The state's allotment would get an inflationary increase every year, and districts wanting to spend above that would have had to win voter approval to increase local income or wage taxes.

Starting Jan. 1, the personal income tax rate would rise from 3.07 percent to 4.95 percent while more types of food, clothing and shoes would be exposed to a new, higher tax on sales - 7 percent, up from 6 percent.

The sales tax also would be applied to a wider range of services that are currently exempt. Renters would immediately pay higher sales taxes, with no guarantee that their rent would come down proportionally or even immediately.

A number of high-profile organizations opposed it, including the Pennsylvania Chamber of Business and Industry, the Pennsylvania Bar Association, the NAACP and a range of education advocacy organizations, food charities and trade associations.

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