Give Voters a Say on School Taxes

Five years ago, state lawmakers passed Act 1 to provide property tax relief and give voters a voice on school tax increases.  But since slot machine gambling was introduced in Pennsylvania, school property taxes have grown by almost $700 per homeowner.  And yet 98 percent of school districts have avoided voter referenda on tax hikes.  It is time to give voters real control over school taxes.

Every state in the nation limits the ability of school boards to raise property taxes. Eleven states don’t give school boards taxing authority; 36 states require voter referendum on school budgets, property tax increases or all bond issues; and three states without referenda place a cap on school taxes. Pennsylvania counts among those with a referendum requirement—but our law is a toothless tiger that has become “referendum in name only.”

Act 1 of 2006 required that school districts seeking property taxes above an “index” must obtain voter approval. But there was a catch: The index was set at a level higher than the rate of inflation, and 10 exemptions to the referendum requirement were allowed.  

In five years, only 12 of 500 school districts have held voter referenda, while 1,345 waivers for school tax increases above the index were requested from the Pennsylvania Department of Education.  It’s safe to say Pennsylvania remains the only state without real controls over school taxes and spending. 

Despite a 30 percent increase in state aid since 2005, property taxes still continue to climb. The promised “relief” from school property taxes from gambling (roughly $700 million per year), has been dwarfed by the increase in school property taxes: more than $2.1 billion, or $688 per homeowner, far exceeding both inflation and student enrollment growth.

Thankfully, there is legislation currently being considered, including House Bill 1326, which would give voters more control over school taxes by eliminating the Act 1 loopholes. Combined with mandate relief legislation to give school boards more flexibility in spending, these bills will help control the growth in school spending and property taxes.

Lobbyists for the school boards’ association and other groups are pushing hard to keep the loopholes.  They claim that tax increases will be needed in the future to retain core services and address rising pension costs.  Moreover, they contend school districts have by and large been fiscally responsible with tax dollars.  But this is a case that should be made directly to voters, not to bureaucrats in Harrisburg.

Many opponents of real voter referendum for school tax increases claim that voters will always reject increases, and schools will have to make drastic cuts to programs. But the data from other states with taxpayer controls on school budgets does not support this view. The evidence shows that voters are willing to approve school tax and spending increases if and when they are convinced that those increases are worthwhile.

For instance, in Ohio, voters had a say in 1,664 tax issues from 2006 to 2009. In 54 percent of these referenda, voters approved these tax increases or renewals. This trend is consistent in states like New York, New Jersey and Michigan, where voters approved a majority of all school budgets, tax increases, or bond issues.

States with voter referenda have not endured drastic cuts. Taxpayers have been willing to raise their own taxes when school districts have been able to demonstrate to voters the need for additional tax revenue and fiscally responsible spending.

If a strong voter referendum requirement were in place in Pennsylvania, local school boards would have to make a compelling case to taxpayers as to why a tax hike is necessary or find an alternative way of balancing their budgets. State legislators should give Pennsylvania voters the right those in other states enjoy: the final say on all school tax increases.

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Nathan A. Benefield is Director of Policy Research with the Commonwealth Foundation (, an independent, nonprofit public policy research and educational institute based in Harrisburg.