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Welcome to "Mike's Memo," an update on what's happening in the 48th Legislative District, the State Capitol, and the progress of my legislative priorities. If you haven't done so already, please take a few moments to visit my website at www.senatorfolmer.com to learn more about issues that may affect you and your family.

Week of December 7, 2015

Bills Signed into Law by the Governor
Senate Bill 77 – Act 65 – eases requirements for beagle trainers;
Senate Bill 609 – Act 66 – creates the Prostate Cancer Surveillance, Education, Detection and Treatment Act and task force;
Senate Bill 775 – Act 67 – consolidates and revises the Third Class City Code;
Senate Bill 791 – Act 68 – amends the Second Class Township Code providing for removal of elected officers who fail to perform their duties;
Senate Bill 793 – Act 69 – amends the Second Class Township Code to provide for property maintenance codes, reserved powers and the Uniform Construction Code;
Senate Bill 887 – Act 70 – further protects highway workers and first emergency responders in work zones;
House Bill 89 – Act 62 – raises mandatory retirement age for judges and magisterial district judges from 70 to 75 upon voter approval of a corresponding amendment to the Pennsylvania Constitution;
House Bill 239 – Act 63 – amends the County Pension Law for supplemental benefits;
House Bill 753 – Act 64 – expands the Intra-Governmental Council on Long-Term Care at the PA Department of Aging.

Ralph Backenstoes Receives ALS Practitioner of the Year Award
Congratulations to Ralph Backenstoes, of Annville, Lebanon County, for being selected to receive the ALS Practitioner of the Year Award! Each year, the PA Emergency Health Services Council (an advisory board to the PA Department of Health on matters related to emergency medical services) coordinates the PA State EMS Awards to recognize distinguished EMS individuals and organizations.

PennDOT State Farm Safety Patrol Assists Motorists
The PA Department of Transportation State Farm Safety Patrol offers free motorist assistance on select expressways in the Harrisburg, Lehigh Valley, Philadelphia and Pittsburgh regions, helping with towing, jump starts and flat tire repair on heavily traveled roads during the business week.

The list of expressways includes:
Allegheny County: Interstates 79, 279 and 376
Bucks, Chester, Delaware, Montgomery and Philadelphia Counties: Interstates 76, 476 and 676, U.S. 1, 30, 202 and 422, and Routes 63 and 309
Cumberland, Dauphin and York Counties: Interstates 81 and 83, and Route 581
Lehigh and Northampton Counties: Interstate 78, U.S. 22, and Routes 33 and 309

Nearly 11% percent of the cost of the patrol is offset by a Public-Private Partnership (P3) sponsorship with State Farm, and helps offset the roughly $4 million annual cost to operate the service. In 2014, the patrols assisted 22,281 motorists.

Column : The Failures of Local Tax Reform
People throughout the 48th Senatorial District have repeatedly told me school property taxes are their biggest headache and they want their elimination to be a top priority of the General Assembly. This much needed and long overdue goal recently fell one vote short when the Senate attempted to amend the provisions of Senate Bill 76 into another bill.

A big problem in advancing SB 76 are lingering concerns with its companion: the House rejected House Bill 76 (59–138) because opponents said the numbers didn’t work and it was flawed.

In response to these concerns, Senator Argall and I worked to correct the deficiencies of HB 76. We met with opponents to hear their concerns. We studied Independent Fiscal Office analyses and dissected pages of comments from the PA Department of Revenue on the bill as originally drafted. Prior to the Senate vote, SB 76 was further refined to ensure it’s technically correct and works. It is and it does.

To eliminate school property taxes requires nearly $13 Billion in replacement revenues. There are just four alternatives to raise the $13 Billion to eliminate school property taxes: Personal Income Tax (PIT), Earned Income Tax (EIT), Sales & Use Tax, and/or another (new) tax. Three of these four options are incorporated into SB 76: PIT, Sales, and EIT.

To eliminate school property taxes, SB 76 proposes a combination of changes in Sales and Personal Income Taxes. The Sales Tax would be broadened and expanded to 7% and the PIT would be increased from the current 3.07% to 4.95%. Locally, schools could raise additional funds through either a local PIT or EIT – after voter approval.

I prefer Sales Taxes to replace school property taxes because I believe people have some control over paying consumption taxes, more people pay Sales Taxes than those paying property taxes, and the Sales Tax is paid with each purchase while property taxes are large bills.

Increasing the Sales Tax rate to 7% (8% in Pittsburgh and 9% in Philadelphia) and expanding the base (food items not on the WIC list, clothing over $50, and certain services) would raise about $6 Billion in replacement revenues. Raising the PIT from 3.07% to 4.95% would raise another $7 Billion in replacement revenues to eliminate school property taxes.

To calculate how proposed SB 76 changes would impact you, compare what you now pay in school property taxes to what you would pay under an expanded PIT and Sales Tax. For the latter, you would need to spend an additional $14,285.71 in newly taxable items for each $1,000 you now pay in school property taxes.

Like any tax, shifting from one tax to another has different impacts on different taxpayers. SB 76 opponents focused on this. Unfortunately, they offered no alternatives, simply promising to “continue to offer our expertise and assistance to develop a responsible approach to address concerns where it is most needed, using sustainable and proven strategies.” Opposing SB 76 with no alternatives means you support the status quo.

Total elimination of school property taxes is hard – especially with just four options for equal revenues. It’s why elimination has proven to be so elusive for so long.

Act 511 was passed 50 years ago to reduce the burdens of school and municipal property taxes through a myriad of other taxes, including: amusement taxes, mercantile and gross receipts taxes, business taxes, realty transfer taxes, per capita taxes, personal property taxes, occupation and occupation privilege taxes, and local Earned Income Taxes. These taxes proved equally unpopular and were changed or repealed over time while school taxes continued to increase.

In 1987, Governor Casey and the General Assembly sent voters a bipartisan plan to reduce reliance on property taxes through expanded wage taxes, optional personal property and county Sales Taxes, Realty Transfer Tax for municipalities, municipal service fees, property tax millage restrictions, and payments for tax exempt properties. That plan was overwhelmingly rejected by the voters statewide by a margin of over 4 to 1.

During the Rendell Administration, gaming and a subsequent expansion of gambling was promised to reduce property taxes by a minimum of 20%. It didn’t, it hasn’t, and it never will.

Rather than focusing on the merits of total elimination of school property taxes, opponents focus on the tax shift of SB 76. However, unlike the House debate, the arguments against SB 76 concentrated on policy rather than technical issues.

All the rhetoric against SB 76 doesn’t change the fact it works and the numbers add up. Those who support eliminating school property taxes support SB 76. Those who oppose SB 76 – or say there’s a better plan – should now step forward.  Otherwise, you’re supporting the status quo, which has prevailed for far too long. We’re waiting for your plan.


Contact Informationn
Please feel free to contact me at any time on state-related issues that are of concern to you. I may be reached through my website or my Lebanon or Harrisburg offices.

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