Majority Leader of the Senate Jake Corman suggested Monday that his caucus walked away from a deal to increase the sales tax to pay for property tax relief because Gov. Wolf and Democratic legislators were insisting on allocating the money in a way that was (1) unfair to Republican districts and (2) too generous to Philadelphia
(“I could never have gone to my caucus and said: ‘Vote for this increase in sales tax and a disproportionate share of the money will go to Philadelphia.’ I couldn’t have done it, and we could not have gotten the votes.”)
While this sentiment fits with a familar Pennsylvania political narrative, it doesn’t fit with what we know about how Gov. Wolf wanted to allocate property tax relief — based on his original property tax relief proposal.
(1) As we documented in July, the original Wolf proposal was fair to Republican school districts, in most cases fairer than the May House Republican plan for property tax relief. In fact, homeowners in all but a small handful of the very richest school districts would have received a larger share of property tax relief under the Wolf proposal than the House Republican proposal. In more than half of rural Republican districts, typical homeowners would have received more dollars of relief under the Wolf proposal than the House proposal, even though the former gave out less total property tax relief.
(2) The original Wolf proposal gave out very little money in property tax relief to Philadelphia homeowners ($357), less, in fact, than the House Republican proposal ($474). To be sure, the Wolf proposal would also have given out $450 million in wage and cigarette tax relief to Philadelphia — 12 percent of the total $3.8 billion in tax relief for a city with 12 percent of the state’s population. Keep in mind, further, that suburban commuters would have received a portion of the wage relief for the city. Is this a disproportionate share of relief for Philadelphia? We don’t think so.
Even this far along into this year’s property tax debate, most Pennsylvanians and many lawmakers of both parties — possibly including Sen. Corman — still may not have processed how much tax relief middle-class and rural districts would receive under the allocation approach favored by Gov. Wolf, or how much relief would go to rich districts and businesses in the House proposal (the only public proposal put forward by Republicans). Allocating as much property tax relief as the House Republican proposal did to a small number of wealthy areas in which constitutents are neither clamoring for nor need property tax relief doesn’t make sense on policy or political grounds — for either major political party.
Better understanding of alternative property tax relief formulas might yet make possible a bipartisan compromise that benefits communities of modest means throughout the commonwealth.