The state Legislature recently considered an amended bill that would freeze local real estate taxes for the upcoming year in response to the COVID-19 emergency. We join PSBA, PASBO and PSEA in opposing this measure, a heavy-handed, one-size-fits-all policy move that makes a challenging financial picture even worse.
Our school board is one of many grappling with enormous uncertainties in next year’s budget: Will our state funding be cut? Will federal stimulus money make its way to local school districts, and, if so, how much?
The local picture is clearer, but grim. PSBA projects districts could lose more than $325 million in revenue for the remainder of this fiscal year and more than $1 billion next year. In SDoL, we are projecting a $3 million loss.
That said, a property tax freeze may also be a solution in search of a problem. Our board is well aware of the economic toll of the COVID-19 emergency. That is why the administration last week presented an option to use fund reserves to balance next year’s budget and hold the line on property taxes. We are monitoring any savings we accrue from the school closure to offset this impact.
The board has to weigh this option against the permanent loss of revenue when tax rates do not keep up with growing expenses. Remember, we began our budget planning with a projected $10 million deficit—before this economic calamity. In any case, we have identified some $4 million in budget adjustments—some prudent, some painful—that are necessary to close our gaps.
Not every district in Pennsylvania has the luxury of cash reserves to weather this economic storm. For them, a one-year freeze would be devastating, making a one-size-fits-all approach inappropriate, especially at a point at which state funding levels for next year are so uncertain.
There are other options to provide taxpayers relief without a mandated property tax freeze. Rep. Todd Stephens (R-Montgomery) has suggested extending the discount period by 30 days and the face value period to December 31, 2020. This proposal would be far less financially devastating to many school districts.
We are grateful for the swift, decisive actions taken so far by the Legislature to mitigate the impact of the Covid-19 emergency. Lawmakers withdrew this latest property tax free from the house floor due to a lack of votes. We hope this is the last we hear of this damaging proposal.