Common Core Presentation

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What is wrong with HB 1189 – quite a bit.

Our representatives in Harrisburg are set to vote on education property tax relief, but not the bill (HB 76) that you have seen promoted here on these pages and other taxpayer groups across the state. Instead of the “People’s Bill” party leadership has ushered throughEmptyPocketsB copy committee and onto the floor, HB 1189, the Optional Property Tax Elimination Act (OPTEA).

Some of our representative are ready to vote on any bill that gets to the house floor and that promises relief. But is it wise to vote for relief that is either ineffective (after all, it is titled OPTIONAL) or even destructive? Unlike HB/SB 76 this bill has not had analysis by professional independent agencies, but we can examine HB 1189 for it’s many shortcomings.

One such examination is found HERE

Here are some of the main points:

  • OPTEA Guarantees Nothing – As noted above, it is optional.
  • The OPTEA Replacement Revenue Sources Raise Costs for Everyone -“Section 613. Mercantile or business privilege tax.
    (a) Wholesale dealers.–Each school district shall have the power and may levy, assess and collect a tax on each dollar of the whole volume of business transacted by wholesale dealers in goods, wares and merchandise.
    (b) Retail sales.–Each school district shall have the power and may levy, assess and collect a tax on each dollar of sales by:
    (1) Retail dealers in goods, wares and merchandise, including proprietors of restaurants or other places where food, drink and refreshments are served.
    (2) Providers of services.”

If a school district chooses to impose a mercantile tax in combination with an earned income tax it would be devastating to small businesses. The mercantile tax is assessed on gross sales, regardless of whether or not the business is profitable, so the merchant is taxed on the front end. The merchant then pays again on the back end through the earned income tax on his or her profits, effectively taxing the merchant twice on the same income.

Finally, see (b)(1) and (b)(2) above. Section (b)(1) does not specify what goods are to be taxed. Will the tax be imposed on providers of life necessities such as utilities, home heating fuels, and prescription drugs? “Services” in (b)(2) are not defined; will the mercantile tax apply to ALL services including tuition, health, hospital, and dental services, and home health care? Including the providers of these items and services in the mercantile tax base will almost certainly raise costs for consumers as providers increase prices to offset the increased taxes. The result of such overarching taxation would be to cause harm to the most vulnerable of Pennsylvania’s taxpayers – the poor and those on fixed incomes.

  • OPTEA Is Clearly Discriminatory, Favoring Wealthy School Districts – Not specifically mentioned in this study is the disparity WITHIN most school districts. The big box stores, supermarkets, malls, industries, & warehouses normally found in the townships may be able to absorb more taxes. But in the boros and cities small shops, “Mom & Pop” stores, and small businesses are often already struggling to stay afloat. HB 1189 will adversely affect these areas inside the school districts.
  • OPTEA Has Little Legislative or Taxpayer Support – OPTEA has approximately a third of the co-sponsors that HB 76 has and just from one party. HB 76 has broad bipartisan appeal. And support from the people.

To read the entire analysis please click here: hb1189_analysis_web_rev1_0902813

Is your state representative aware of the problems of HB 1189 or is your rep ready to vote for any bill labeled relief?

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Wheels Coming Off Common Core? Let’s Debate!

Wheels Coming Off Common Core? Let’s Debate! (Cato Institute) / CC BY-NC-SA 3.0
By NEAL MCCLUSKEY  (originally published on SEPTEMBER 25, 2013 in CATO AT LIBERTY)

Not long ago I thought the Common Core couldn’t be stopped, or really even slowed down.

Oops.

A couple of days ago Florida governor Rick Scott declared that he wanted to reexamine state implementation of the Core and withdraw from the PARCC assessment consortium, one of two national groups the federal government funded to create Core-aligned tests. Though hardly a complete withdrawal from the Core, the move is huge. Why? Because arguably the biggest, most influential backer of the Common Core is former Florida governor Jeb Bush, and his own state, and a governor of his own party, bucked him. Florida is also, well, a pretty big state. Not surprisingly, now two more GOP governors –Bobby Jindal of Louisiana and Scott Walker of Wisconsin – are signaling desires to unbuckle their states from the Core.

What happened that caused this suddenly powerful – and at least to me, unexpected – revolt? It is almost certainly that the Core is now reaching the district and school level, and parents and citizens are becoming fully aware of standards most of their states adopted lightning fast in 2010 to get federal Race to the Top money. They’re becoming aware, and either don’t like what they see in the standards, or don’t like federal imposition. They may also be getting increasingly sick of being told that the federal government wasn’t a driving force behind Core adoption when it absolutely was, and being called ignorant or unhinged for pointing out reality.

Case in point for calling opponents misinformed, alas, is Jeb Bush, who just last week said that Common Core resistance “is political,” and implied that anyone against the Core is “comfortable with mediocrity.” He also suggested once again that the Core is fully voluntary for states, implying that opponents are either misinformed or lying when they fear “a national takeover.” Of course, there are numerous reasons to oppose the Core that are all about what’s best for kids.

It would help the national debate over Common Core immensely – and probably even help Core supporters – were Core advocates to be forthright about the federal power behind Core adoption, and were they to stop smearing opponents. It’s hard to imagine that most concerned citizens, when they know that Washington drove adoption with Race to the Top and locked it in with No Child Left Behind waivers, wouldn’t feel insulted and even lied to when they are called ignorant or crazy for being concerned about a reality Core supporters refuse to acknowledge.

To be fair, a couple of Core advocates have at least somewhat acknowledged Washington’s intrusion: Chester Finn and Michael Petrilli of the Thomas B. Fordham Institute. They are to be commended for their acknowledgment, though I think they greatly understate the federal role and assert lots of debatable things about numerous other aspects of the Core. And speaking of debatable…

On October 3, Finn and Petrilli have graciously agreed to come to Cato for a Core debate against me and Emmett McGroarty of the American Principles Project. I hope you’ll join us either either live or over the Web for this big event. Not only will it be greatly entertaining, but also hugely informative. Common Core is something desperately in need of open and honest debate, and we plan to deliver that on October 3. Register today!

Wheels Coming Off Common Core? Let’s Debate! (Cato Institute) / CC BY-NC-SA 3.0
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Who’s Afraid of School Profits?

Who’s Afraid of School Profits? (Cato Institute) / CC BY-NC-SA 3.0

By JASON BEDRICK  (originally published on MAY 21, 2013 in CATO AT LIBERTY)

Should there be a separation of school and profit? Many opponents of education reform seem to think so.

Case in point, a blog post at the Washington Post yesterday decried “outside forces that want to make big profits on the backs of our nation’s most vulnerable children.” Setting aside that the vast majority of private schools are nonprofit, the author apparently misses the fact that parents choose to send their kids to these schools. (Does it make sense to complain that other businesses are profiting “on the backs” of their paying customers?) In order to persuade parents to switch to private schools, they must offer parents something that the free-to-attend government schools do not. Even when a school choice program covers the full cost of private school tuition, the parents would merely be financially indifferent. To motivate parents to choose something other than the default government school option, private schools still must offer something better.

Moreover, it is absurd to think that profit—in the sense of financial gain—is limited only to the for-profit sector. Do teachers, principals, and other school staff from janitors to bus drivers “profit” from their salaries or wages? What of the profits made by the corporations that publish the textbooks that students read? Or construct school buildings? Or manufacture desks, whiteboards, pens, pencils, and playgrounds? Whether government- or privately-run, nearly every adult involved in the formal education process is earning a “profit” short of the parents who volunteer to chaperone the high school dance.

Those who denounce “profits” in education simply don’t understand the role of profits in a market. Perhaps they are confused because in the government-run education system with which they are familiar, there is little connection between financial gain and meeting the needs of students. In a competitive market, by contrast, profits (and, just as importantly, losses) provide valuable information. As explained in Herbert Walberg and Joseph Bast’s excellent book, Education and Capitalism: How Overcoming Our Fear of Markets and Economics Can Improve America’s Schools (which is celebrating its 10th anniversary):

In a capitalist economy, profits are the reward earned by firms that maximize the quality of services and goods, minimize overhead and bureaucracy, motivate their workers to achieve high and consistent levels of productivity, and avoid unnecessary expenditures. Successful firms sell better, cheaper, or better and cheaper products and services than do other firms. Customers notice, and business gradually shifts from inefficient to efficient firms. […]

Low-performing government schools don’t gradually lose customers and face the threat of closure, the way an inefficiently run business does. As a result, there is little urgency for reform. Their assets do not move from the control of those who have misused them into the hands of others who could do a better job. (Pages 98-9)

In our existing education system, only the financially well-off can afford to live in the expensive districts with high-performing government schools or to pay for private schooling. Without school choice programs, low-income families are locked out of these markets. Instead, their only option is the local, assigned, government school. If I blogged for WaPo, I might say that these underperforming schools are built on “the backs of our nation’s most vulnerable children.”

Who’s Afraid of School Profits? (Cato Institute) / CC BY-NC-SA 3.0
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Peering through the smokescreen

WPCT2_090213

  This is about the Property Tax Independence Act, a grassroot initiated bill that has broad bipartisan support and will forever eliminate the school property tax. HB 76 has 92 sponsors in the PA state House, SB 76 has 23 sponsors in the state Senate. Nearly a majority in both chambers. The only thing stopping it from coming to a vote on the floor is party leadership that keeps it bottled up in committee.

PEERING THROUGH THE SMOKESCREEN

  Let’s take the complaint that some legislative leaders express, that the HB/SB 76 supporters will not compromise so they are their own worse enemy and will sink this bill with their own stubbornness. Let’s examine this. At the heart of this bill, that’s bottled up in committee, is the insistence that the school property tax should be abolished permanently for all time. There is no compromise with the terms “permanent abolishment”, it’s simply inherent in the phrase – anything else is temporary. So the complaint is just a re-statement of fact to the nature of the bill. This is known as a tautology, a form of circular reasoning that simply restates a fact as a reason. It is a fallacious smoke screen. The discussion does not progress if we throw tautologies at each other, we need to ask why is this the position of the bill & its backers. In other words, why should we eliminate forever this regressive tax? That answer falls into two main categories, previous experience and the nature of the tax.

WHAT EXPERIENCE TEACHES US

   Experience has shown us that tax “relief” and exclusions have been miserable failures. Relief that comes from slot machine revenues has been shown to be pitifully inadequate. The amount of revenue taken in has leveled off, there are only so many people with only so much money to throw away into one-armed bandits. The taxes do not level off and the millage accumulates. And remember that this was the rational for bringing casinos into PA. Now we have “Gambling Hotlines” to deal with the families that gambling destroys.

  Relief has also taken the form of exclusions. Businesses are lured in by offering tax free zones, KOZ’s & LERTA’s, where in return for bringing in business a corporation avoids being taxed for a set period of time. The problem there is too often the business was already PA based and this just succeeds at the expense of another county’s loss. And once the time period passes there is nothing to ensure that the business permanently stays. But the most egregious factor in any exclusion is the fact that the loss of income needs to be made up by the properties that are not excluded. What’s good for the business moving in is bad news to the existing businesses and homeowners. These opportunity zones are a wonderful opportunity for the companies that are politically connected. This is one of those things that’ll make the most trusting soul wonder why the same political leaders that have a say in distributing campaign funds are so against HB/SB 76. A statewide tax free zone is not subject to favoritism or the suspicion it generates.

  Exclusions will always have the disadvantage of burdening the other property owners. Freeing the seniors from it sounds wonderful but then home ownership is further out of the reach of the young. Exclude all homeowners and then the businesses will be crippled in a state that already ranks near the bottom in being business friendly.

EXCLUSIONS, TAXATION, & SHELL GAMES

  Let’s begin with what is already law. Below I have reproduced an amendment found in the PA constitution.

 ARTICLE VIII, SECTION 2(b)(vi). AMENDMENT OF NOVEMBER 4, 1997

Exemptions and special provisions

Legislative History

(b) The General Assembly may, by law:

(vi). Authorize local taxing authorities to exclude from taxation an amount based on the assessed value of homestead property. The exclusions authorized by this clause shall not exceed one-half of the median assessed value of all homestead property within a local taxing jurisdiction. A local taxing authority may not increase the millage rate of its tax on real property to pay for these exclusions. [Source: 1997 Pa. Laws 633]

  So here we learn that our school board can provide relief up to 50% of the assessed value on homestead property. Does anyone receive this? Of course not! You’re school board cannot raise the millage to replace what revenue it will lose. Currently homestead relief is supplied by the slot revenue the state distributes and that is nowhere near a 50% break. In the recent past a constitutional amendment has been proposed to take this exclusion up to 100%. It has been tried on three occasions in the past and has been voted in only one chamber, a far cry from passage in the entire General Assembly twice plus a voter referendum that is required for such an amendment. Currently it is proposed again, HB125. If no one is getting 50% what sense is there to raising the cap up to 100%? It looks good when you back and support something that looks like property tax elimination (up to 100%) but who will know or understand that it really isn’t? Only someone who has read down this far.

  Now someone thinks they have come up with a way to pay for these higher exclusion rates. Where does the money come from, has Harrisburg discovered or invented another revenue source like slots revenue? No, not at the state level. Are they going to increase an existing tax to pay for this? No, not at the state level. See it’s important that none of this looks like Harrisburg is raising your taxes. Harrisburg sets the pension rates and rules. Harrisburg creates all the rules and regulations that your local school board must enact. Harrisburg agrees to all the changes in education that the federal government seems to create with each change of administration in Washington DC. That costs money too. But remember, your legislator is there to “hold the line on taxes”. Remember that.

  The proposed legislation that claims to comes up with a way to reduce the property tax, maybe up to 100%, is HB 1189 – a bill introduced by Rep. Seth Grove. It’s main concern is to protect Harrisburg, but you won’t read that in the text of the bill. HB 1189 would allow school districts to swap property taxes for an earned income tax, a business privilege tax, a mercantile tax or a combination of two or three. This would all be at the local level, remember who’s holding the line on taxes. Should a local school district avail itself of this option I suppose a school district’s business manager will now have the levers of the local economy within his or her grasp, or maybe even worse the board itself. And there’s no cost control or promise that the property tax will not rise in the future. Reading Eagle columnist Mary Young described it this way, “Grove’s proposal would provide three blank checks to each district instead of the one they have now.” Thank you Mary, I will always think of “three blank checks” whenever I hear of HB 1189. And those are checks drawn locally of course, because Harrisburg is not raising your taxes. No, they wouldn’t do that…

THE NATURE OF THE PROPERTY TAX

  Now let’s examine this tax, what exactly is the property tax is based on? It’s not based on the property itself, it’s based on the assumption that the property owner has money. Income tax is taxing money that is actually there, wealth & profit that is created. The sales tax is taking in revenue from money that is actually there, or the sales transaction would not take place.

   How can property, in itself, can be considered a factor in raising revenue? Homes or open fields do not generate a dime, in fact they are a financial drain due to needed maintenance. A rental property doesn’t generate income until it’s rented, and that income will show up in both state & federal taxes. A business has business taxes and it’s employees that pay income taxes. A struggling business does not need a tax that taxes it’s very existence (the property it resides on) when it’s having a hard time paying & retaining employees.

  The property tax is the most regressive tax. It’s not based on any generation of profit or wealth, only on the assumption that owning property equals an ability to pay. Why are we basing a tax on an assumption? The time when every property owner was the “Lord of the Manor” is long behind us.

   This leads us to an obvious question. Why then has this form of taxation even worked if it’s not based on the ability to pay? The inescapable answer is shocking because most of us have never thought it through this far. It works because it’s extortion. It is simply, “Pay, or lose your house, your home, your property”. That is why we pay – the threat of losing the home or property that you struggled to pay off is a great motivation. And many long time property owners, people who have lived in their home and raised their families there for decades can look back and add up the property taxes they have paid and realize they have paid more to the state than they have to the bank. This extortion goes on forever, at least the bank leaves you alone after you pay them off.

CONCLUSION – A SAD COMMENTARY

  There is good reason to permanently abolish the school property tax. Harrisburg has abused it for too long and all trust in them has eroded. Even now as we push for this bill there are those who will agree with the principle and the details of the bill, but they don’t trust Harrisburg to not abuse it. They see the problems that are created, like the pension debacle, and then the lack of political will to fix it. Especially this past year when a single party is in the majority but can’t even get it’s own agenda enacted. People have lost all faith in Harrisburg. And perversely that is the biggest obstacle I have observed while trying to convince people to get behind this. And I think that some in Harrisburg know this too and use it to their advantage. In his latest column Stan Huskey of the Times Herald quotes State Rep. Kerry Benninghoff, “It was interesting to hear Benninghoff say, basically, that he didn’t think Harrisburg could be trusted with the money because if they come up short somewhere else they might just use the school tax money in the general fund.” That is why HB/SB 76 set it up in a different fund that is distributed yearly so it is not there to raid for other purposes. If Rep Benninghoff had read the bill he would know that (and I think he read it). The very problem, how politics works in our state capitol, is the biggest obstruction in trying to change it and they apparently know how to play on that. What a sad commentary on our current political scene.

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A presentation on the Property Tax Independence Act

76LogoRound   A presentation will be given by the driving force behind this movement, David Baldinger. 

Locally co-sponsored by Senators Lisa Boscola & Bob Mensch and Representatives Marcia Hahn & Daniel T. McNeill this grassroots initiated bill has wide bipartisan support and is poised to change the way education is funded in Pennsylvania. With side benefits of reinvigorating the real estate market and the state economy in general this bill should be a priority for everyone. The current status quo of thousands of foreclosures, seniors having to take out reverse mortgages, and young people being unable afford to buy homes shackled with high taxes cannot continue.

  Also speaking will be Jim Rodkey who will address “the myth of local control” which will cover state level controls through both legislative and administrative policies such as Common Core and a series of Acts all designed to remove our School Districts from the control of the our local government and place them in the hands of the Department of Education.

When: Friday September 6th, 2013 7:00PM to 9:00PM (doors open at 6:30)

Where: Chrin Community Center 4100 Green Pond Road Palmer,PA 18045 (See Map – Directions)

Please join us. Admittance is free. All are welcome.

This presentation will be part of the monthly general meeting of the Lehigh Valley 9-12 Project Tea Party Group. Guest speakers do not necessarily reflect the views of the organization.
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Help us fill this bus!

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Back home…

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It all rolls downhill

RaisingTaxes

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Why is school property tax reform not going anywhere?

You can read this question two ways…

Why is school property tax reform not going anywhere? Because the people promoting it will not let it die quietly in committee. They will  inform everyone they know, and many they don’t, about the topic and where your state rep and senator stand on the issue. It is within our legislators power to bring the bill to a vote. They out number the “leaders” that are holding it up.

What’s that, somebody is holding it up? Why is school property tax reform not going anywhere? To learn more, the who and why of the hold up go read the latest column by Mary Young in the Reading Eagle.

Locally our school district is represented in Harrisburg by State Senator Lisa Boscola (D) and Representatives Marcia Hahn (R) and and Joe Emrick (R). Two of these legislators have co-sponsored the proposal to eliminate the school property tax and one has not. But the split is not on party or ideological lines. Senator Boscola has co-sponsored the Senate bill SB 76 and Marcia Hahn has done the same with the identical bill in the House, HB 76.

That is the pattern across the state. The party split between the Senate co-sponsors is almost even. Legislators that support the bills come from both urban and rural settings. So what is the issue that causes some to resist bringing these bills to a vote??

Of course everyone has their reasons and excuses and there are answers to every naysayer. Mary Young has the short list in her column. The PTCC has the longer answers and reasons why. There’s my short video presentation and there’s the in-depth video by David Baldinger.

The Problem is the Status Quo

The problem is that the status quo is unacceptable. And that is where the split occurs, between those who realize this and those who are willing to maintain it. This is the status quo: It begins with regulations and unfunded/underfunded mandates in DC that travel to Harrisburg. There the “carrot”, maybe with full funding at first, is accepted and the new regulations and mandates are imposed. Add to this anything else that Harrisburg may pass like pension benefit increases that remain underfunded by the state or other mandates and regulations. The status quo is to then pass all this on to the school districts. You see, Harrisburg doesn’t have to increase everyone’s taxes to fully pay for everything it passes, that’s what school boards are for. And that’s what the property owner is there for, the last stop in the tax shifting shuffle. Some claim that HB/SB 76 is simply shifting the tax burden elsewhere – the truth is that the sleight of hand has already been performed by the way the system is currently set up. The status quo is there to protect Harrisburg at the expense of the home owner.

The status quo “fix” is a patchwork of  exemptions, rebates, and opportunity zones that are in place to provide “relief” and business enticements. The relief is very limited and based on how much slot machine revenue is brought in. The relief money received does not increase, if it increases at all, at anywhere near the rate that property taxes increase. So the increase in taxes will quickly outstrip the “relief”. The business enticements allow for a picking of the winners and losers and does not guarantee that the business will be there after the tax exemption disappears. Now imagine a state-wide enterprise zone which is the entire Keystone State.

Any re-working of the exemptions and rebates will not resolve the problem. If you increase the relief or totally exempt one group, say seniors, you will have to increase the burden onto the rest. More homeowners will have to sell, default, or face the sheriff sale before they reach the bliss of tax exemption in their old age. And more young people would face property taxes too prohibitively high to attain home ownership.

Why is school property tax reform not going anywhere?

A message for those legislators content with the status quo: If it doesn’t go anywhere in Harrisburg, it will not go away in your district. It will remain. It deserves to be brought to the floor for a vote. If you disagree with it on principle, let’s have that discussion and you can explain to the homeowners in your district why they should be the  taxpayer that picks up the tab with what amounts to an eternal rental payment to the state.

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Teacher’s union – Please allow the property taxes to rise higher

The Pennsylvania State Education Association has just released a “White Paper” titled, Sounding the Alarm 2.  In it we find this recommendation:

Release districts from revenue limitations of Act 1: The Legislature should suspend the referenda requirement until the state adequately and equitably funds public schools.

That means the normal limit (1.7%) on raising taxes before a referendum is necessary would be waived and your school board could raise your property tax to the point it feels is needed.

Just one more good reason to pass The Property Tax Independence Act – HB/SB 76

 
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