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Keeping up with the K-9s

Gov. Tom Wolf firmly rejected claims his plan to dramatically increase school funding with a huge infusion of cash is a “big tax hike” during a media Zoom conference, pointing out that while he wants to increase personal income tax, the plan would only impact the upper 33% earners in the state, with the rest either seeing no increase or even a decrease.

Wolf also suggested the change could lead to reduced school property taxes in some places because it provides substantially more money to districts struggling with low property assessments and low income residents. Wilkes-Barre Area, for example, would see annual state funding for basic education nearly double under the proposal, from $30.4 million to $59.1 million.

The change comes from Wolf’s effort to funnel all Basic Education Funding (BEF) through a “Fair Funding” formula intended to make sure all districts have sufficient money to provide an equal education, regardless of the local tax base. Though adopted in 2016 by the state, only “new money” added to the state education budget is allotted through the formula.

Wolf said currently that means about 11% of state BEF money goes through the formula, with the rest doled out “based on student head counts from 1992.” Districts where enrollment has grown are getting less than need, while those that may have shrunk could be getting more than needed.

The idea of a property tax cut from an increase in state funding isn’t new here. It’s common for local school board members and district officials to lay the blame for higher taxes at the feet of state lawmakers, contending the state doesn’t pay its fair share, driving up local taxes.

In April of 2019, Superintendent Brian Costello proposed a deal, saying that if the state increased district funding by the the full amount under the Fair Funding Formula, the district would reduce property taxes by 36%. The move was meant, in part, to encourage residents to contact state legislators to advocate for using the formula, but nothing came of it in Harrisburg.

Asked directly if he would consider some type of property-tax reduction requirement for the massive increases some districts would get under his proposal — to make the tax hike more palatable to critics of the plan — Wolf chose to frame the entire proposal as a tax cut for most.

He said the proposal increases BEF funding by $1.1 billion while using another $200 million to make sure all districts see at least some increase in funding, thus creating a “hold harmless” scenario. And while the money comes from increasing the Personal Income Tax from 3.07% to 4.49%, he stressed a big increase in exemptions for lower income earners means most people won’t pay more.

“I’m not sure how a reduction for 40% of the people and no change for 27% is an increase,” he said. “I want to improve funding for basic things like education. This doesn’t disadvantage families starting out, or starting a business maybe. We need to help them, and that’s what this does.”

Wolf questioned Pennsylvania’s regressive flat income tax system. “Why should a family just starting out be asked to pay the same tax rate I’m paying? I’m 72.” He also argued the Keystone State income tax rate would still be lower than in many neighboring states.

Wolf said he believes the proposal has a decent chance to muster enough support in the Republican-led legislature even though some lawmakers called it dead on arrival, arguing a lot of people in Republican-controlled districts would benefit from it.

“Look at what’s really happening, not at some tag line from somebody with an ax to grind,” he said. By providing equitable and adequate funding to all school districts, “this puts Pennsylvania on the path to a really bright future for everyone.”

Wolf rejects ‘tax increase’ label for education budget plan