PENNSYLVANIA Legislative discord stalls property-tax cuts

The Senate approved a measure, but the House must continue discussion.
HARRISBURG (AP) -- Property-tax cuts became an even hotter political potato Thursday, as Gov. Ed Rendell pressed lawmakers for legislation and Republicans called on the Democrat to bridge disagreements between the House and Senate.
Eleven weeks into a special session called by Rendell to address rising school property taxes, the House of Representatives remained sure only of what it would not pass.
The Senate, meanwhile, approved a measure Thursday that calls for district-by-district referendums to cut property taxes by increasing local income taxes, and went home for the holidays.
This week was scheduled to be the end of the Legislature's fall voting session. But with property taxes expected to be an important election issue in 2006, legislators have scrambled in recent days to solve a 30-year riddle for policy-makers.
Rendell's spokeswoman said the governor would sign the Senate bill if the House approves it. But House leaders gave the plan only a lukewarm endorsement, saying they had hoped to accomplish a bigger -- and mandatory -- property tax cut by expanding state-level taxes.
The House was set to return next week in hopes of passing a bill, while Senate leaders said they were prepared to return to Harrisburg before Jan. 1 if a deal between the chambers is at hand.
Governor's role
"I think this ball's now in [Rendell's] court to have the [legislative] leadership come in, and now he needs to close the deal," said David J. Brightbill, the Senate's Republican leader from Lebanon County, complaining that Rendell had not lobbied House leaders to pass the Senate bill.
The governor's press secretary, Kate Philips, said the real communication gap is between the House and Senate.
"The governor, he's been involved intimately and personally," Philips said.
Initially, Rendell called the special session in September to ask the Legislature to force school districts to accept spending restrictions and the promise of gambling money for property tax cuts after most districts had rejected them.
That plan was called Act 72 and came about as a hard-fought compromise between the Democratic governor and the Republican-controlled Legislature to legalize slot machines, use one-third of the gambling revenue for property-tax cuts, and control school spending increases that drive up property taxes.
Though the House and Senate have sought to accommodate the governor's request this fall, they also have tried to enlarge property-tax cuts by shifting some of the burden off homeowners and onto different taxes.
Senate plan
Under the Senate plan, which passed 48-2, local school boards outside of Philadelphia, Scranton and Pittsburgh would be required to ask voters in last May's primary election whether to raise local taxes on income to offset property-tax cuts beginning in 2006.
The three exempt cities already levy sizable local income taxes but would benefit from other aspects of the bill, including the anticipated revenue from slot-machine gambling and expanded rent and property tax rebates for the low-income elderly, they said.
If every district approves the minimum offset, local income taxes would absorb $1 billion of about $6 billion in school property taxes that homeowners pay and yield a $272 annual reduction on the average homeowner's property-tax bill.
That tax cut could rise to $537 if a tax on slot-machine gambling eventually generates the expected $1 billion in revenue.
House considerations
The House was considering a handful of possibilities that would involve expanding the state sales tax to currently exempt items, like toiletries, and raising the state income tax rate to offset more than $2 billion in property tax revenue.
On Thursday, however, the House soundly thumped Rendell's legislation, 182-12, and last month rejected a plan to wipe out all property taxes, largely through a major expansion of the state sales tax to exempt goods and services.
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