Fight over spreading school tax cuts across Pennsylvania may be harder than hiking state taxes



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HARRISBURG, Pennsylvania — Raising taxes will be a battle among Pennsylvania state lawmakers as they face Gov. Tom Wolf's call to correct a persistent budget deficit and a school funding system riven by huge spending disparities between rich and poor districts. And, should lawmakers agree to raise taxes, deciding how the money is spent will be quite another battle.

Wolf's administration pledges that every homeowner across Pennsylvania will get a property tax cut under the Democrat's plan to make school funding fairer. But Republicans who control the Legislature are deciding that Wolf's plan is less than fair to many of their districts.

In a Senate Appropriations Committee hearing Monday, Sen. Stewart Greenleaf, R-Montgomery, made that clear.

The two relatively wealthy southeastern Pennsylvania counties he represents, Greenleaf said, already pay an outsized portion of state income and sales taxes, and get a relatively meager return. Wolf's plan to raise taxes on income and sales and pump billions into school property tax cuts, additional public school aid and a projected $2 billion deficit will make it worse, he suggested.

"Montgomery County under this proposal will receive $242.5 million in tax benefits as a result of the proposal," Greenleaf told Wolf's budget secretary during a Monday hearing. "That's the good news. The bad news is the residents of Montgomery County are going to pay $500 million in increased income tax and sales tax. ... Same with Bucks County. They would get a $185 million benefit by this program, but have to pay over $300 million in taxes. So that's a problem and it has to be addressed."

Wolf's administration has said that his $3.2 billion in property tax cuts — about one-quarter of the total in school property taxes collected statewide — is targeted toward higher poverty, higher tax school districts. Big beneficiaries include cities represented by Democrats: Erie, Harrisburg, Johnstown, Reading and Scranton.

But Wolf backers also point out that numerous districts represented partly or completely by Republicans — Allentown, Altoona, Lebanon, York and dozens of smaller towns or rural districts — are among the biggest beneficiaries, too.

One complaint that Republicans repeatedly raise is that lower-income households in wealthier districts, in particular, would get stuck with a bigger tax bill under Wolf's plan.

"They're going to want to see some equitable distribution of that relief across all geographic areas, not simply focused on those selected areas that Gov. Wolf has chosen," said Rep. Stephen Bloom, R-Cumberland.

Under Wolf's formula, just over $2 billion of $3.8 billion in tax cuts would go to the bottom half of school districts in average income. Divided by attendance, the bottom half of school districts in income would get $2,400 in tax cuts per student, based on 2012-13 statistics, the latest available. Property tax cuts per student would average $1,900 for the top half of districts in income.

Rep. Tom Killion, R-Delaware, said he, like Wolf, wants poorer and higher tax districts to do well.

"But it's got to be fair," Killion said.

House Minority Whip Mike Hanna, D-Clinton, said Republicans are being selective in how they look at Wolf's plan, and are ignoring other aspects that the administration says are designed to ensure a more equitable system of taxation and school funding.

"We have to at least start from the same place," Hanna said. "Republicans have to be willing to look at this budget in total, because it all rises and falls together."

Besides, every state program creates winners and losers in every county, Hanna said, and Wolf's plan is designed to ensure that households earning under $100,000 pay less.

"It's got to be about protecting the middle class," Hanna said.

In the meantime, Republicans are working to develop a response to Wolf's plan, and their ideas on how to distribute money to school districts do not promise to be popular with Democrats.

"No matter which way you go, somebody's ox is going to get gored," said Sen. John Wozniak, D-Cambria. "And trying to make it fair is always going to be in the eye of the beholder."


Marc Levy covers politics and government for The Associated Press in Pennsylvania. He can be reached at mlevy@ap.org. Follow him on Twitter at http://www.twitter.com/timelywriter .

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