Gov. Wolf’s Proposed Property Tax Shift

As part of his 2015-16 budget proposal, Gov. Tom Wolf has proposed using some revenue from increased state taxes for school property tax relief beginning in 2016-17. This policy brief examines more closely the proposed tax shift.

Key Findings:

• Under Gov. Wolf’s proposal, funding for property tax relief would not be distributed to school districts until October 2016. Homeowners would receive no tax relief for more than a year after state tax increases begin.
• Over the first two years of Gov. Wolf’s proposal, the commonwealth would collect more than $12 billion in new state taxes. Of that amount, $3.67 billion would be distributed to school districts for property tax rebates. In other words, only 30 cents of every dollar in new state taxes would be used for property tax relief.
• In 2016-17, Gov. Wolf’s $3.67 billion in property tax relief averages $1,147 per family of four. But his increases in state taxes amount to more than $2,500 per family of four—a net tax increase of almost $1,400 per family.
• Across the state, the disparity in property tax relief under Gov. Wolf’s proposal would vary widely. Based on current homestead exemptions, school districts would receive between $301 and $5,209 per homeowner.
• The top 20 districts will get an average allocation of $2,860 per homeowner. The bottom 20 will get an average of $477 per homeowner.
• The redistribution favors districts that currently receive most of their funding from state taxes, while districts getting the least relief currently receive more than 60% of their funding from local taxes.

Gov. Wolf’s proposed tax shift provides only 30 cents in property tax relief for every dollar in new state taxes, creates winners and losers (mostly losers) among school districts, offers no guarantee of lower property taxes, and creates an arbitrary system of doling out state money unrelated to tax burdens.