Category: Pennsylvania Legislation

By Sen Scott Wagner

After much debate and discussion on Monday in the Senate caucus, Senator Dave Argall later on the Senate floor offered an amendment to House Bill 683 that contained language that was similar to the language in Senate Bill 76.

The amendment was voted on by the full Senate – the vote was 24 – yes votes ( 18 Republicans – 6 Democrats ) and 24 – no votes ( 12 Republicans – 12 Democrats)  – Lt. Governor Stack cast the tie breaking vote of no – so the amendment failed.

While the no vote might be viewed as a defeat – I see progress – # 1 – the issue of school tax elimination made its way to the Senate floor for a vote – I personally, along with other Republican Senators, had many unanswered questions but I voted yes to get the ball on the field – I give our Senate Majority Leader Jake Corman credit for allowing the amendment to the Senate floor for a vote – # 2 – I am reaching out to many of the Republican Senators who voted no to ask what their concerns and reasons for voting no were.

The reasons for the no votes by some of my Republican colleagues are understandable and deserve a chance to be addressed.

Some of the reasons I heard from my colleagues who voted no on the bill were as follows:

– No cost containment is taking place in the schools – increasing wages and benefits, not tied to CPI Index
– Cannot support raising the sales tax to 7% when their Senate district borders Delaware where there is zero sales tax
– Issues with how the funds controlled by the state would flow to their school districts

Another large issue is the current “Hold Harmless” agreements– this means no school district would receive less funding next year than they received the previous year – some school districts are receiving $8-10,000 per student and some districts receive $20-25,000 per student – we need to completely rework the funding formula.

I am fully aware of the school property tax burden on many working families – I am also a private sector business owner.

When I received the tax rates proposed in the amendment on Monday I did a back of the napkin calculation of what the increased personal income tax and sales tax would cost my company and me – the result would be a minimum of  $200,000 per year (personal income tax and sales tax) – I am watchful of how the new taxes that are intended to eliminate school taxes on real estate would also impact businesses.

My calculation for the increased taxes my company and I would pay are the gross taxes that would apply –  we would see eliminated school taxes of approximately $60,000 on our various properties, which I would deduct from the additional taxes, but at the end of the day the increased tax impact would be in the $140,000 per year range – I am also aware that any additional sales tax that my business would pay would be deducted as a business expense and would reduce our federal tax liability.

For readers who understand different tax categories, my company is a Sub-S Corporation so pass through income would be taxed at the higher rate.

I can assure you of this point –  the “Property Tax Ball” is out on the field and is not going away – until it gets resolved.

This past April I circulated a memo proposing a piece of legislation called the “Taxpayer Fairness in Compensation Act” asking for co-sponsors.

Sen. Wagner represents the 28th District in the Pennsylvania Senate.

SB76 End Run Failure Explained

By Sen. Scott Wagner

This week has been busy with many people visiting my Senate office in Harrisburg and many emails received regarding Senate Bill 76 – The Property Tax Independence Act.

If SB76 is passed it would eliminate school taxes on all real estate.

To be clear – local county and municipal taxes would remain in place.

The elimination of school taxes would apply to all real estate in Pennsylvania – residential, commercial and industrial.

To completely eliminate school taxes on real estate in PA the legislature has to find between $12-14 Billion Dollars of revenue from other sources.

Other sources mean new taxes, increased taxes, and lifting exemptions on goods or services not currently taxed.

There is no free lunch – money is not falling out of the sky – so everyone has to have realistic expectations.

I have been a private sector business owner for over 35 years and I learned over 20 years ago this bit of wisdom from a business associate – “Begin with the end result in mind.”

So here is how we begin the task of eliminating school taxes on real estate – we have to identify the actual dollar amount that is needed to cover the school tax elimination – that is the easy part.

Here is the hard part of SB76 – we currently have 500 school districts in PA – each school district has a school board – to be clear there are 500 different school boards that are comprised of volunteer board members.

Each school district negotiates teacher contracts for wages and benefits without any input from the legislature.

Currently there are many school districts renewing teacher contracts with annual salary increases of anywhere from 2% to 3.5% increases – these increases are being given in a period when the CPI index is less than 1%.

The private sector business world is seeing dramatic health insurance increases – in the private sector it is customary for employees to pay for between 20% and 30% of their monthly health insurance costs.

In the Philadelphia School District teachers pay zero toward their health insurance – many teachers throughout PA pay a lower percentage toward their monthly health insurance costs than private sector workers.

We still have not fixed the pension crisis in PA.

Prevailing wage mandates are still required for construction and maintenance projects at school districts.

In my own school district in York this past summer the school district replaced roofs on several buildings – the school finance director requested two bids to replace the roofs, the first bid required using prevailing wage labor and the second bid did not require prevailing wage labor.

The prevailing wage labor price was $2.8 Million Dollars – the non-prevailing wage price was $2.2 Million Dollars a difference of $600,000 – Six Hundred Thousand Dollars – the district had no choice but to award the contract using mandated prevailing wage labor.

I call school districts the “Hungry Monster” that needs to be put on a diet – until we solve salary and health insurance increases – SB 76 will be a disaster – we MUST get school costs under control first.

Another very large issue with school boards is that I estimate that between 25% and 50% of volunteer school board members are married to a teacher, have a son or daughter who are teachers, the board member may be a teacher at another school or the board member may have been a former teacher – My point is that there is a large amount of conflict on school boards – these conflicts must be resolved and eliminated.

The conflict of interest on school boards is similar to the fox guarding the chicken coop.

So here is the dilemma that I face when voting on SB 76 – have spiraling costs been contained or eliminated – and where is replacement revenue coming from?

Here is another bit of wisdom I heard over 20 years  – “Align your expectations with reality.”

In reality the SB 76 issue is front burner for everyone – it must be done correctly or three years from now what was a good intention will explode.

That leads me to my closing comment –  “I am a person that will tell you what you need to hear – not want you want to hear.”

SB 76 must be done with great thought, planning and precision – My colleagues in the Senate are committed to getting this issue to the finish line.

I intend to vote for SB76 but it is important that it be done properly and not just jammed through.

Scott Wagner represents the 28th District in the Pennsylvania State Senate.

SB76 Free Lunch Not