There is perhaps no greater debate in America than the one surrounding taxes, whether it is at the national, state, or local level. While taxes serve the important purpose of funding government programs, they also bear quite a burden on taxpayers. For example, property taxes account for the majority of revenue for local governments across the country.1 Pennsylvania is no different. In 2000, property taxes accounted for nearly $10 billion of revenue in Pennsylvania, which was 30 percent of total local government revenues and 70 percent of all local government tax revenues.2
Property taxes accounted for an even larger piece of the pie when it came to school districts: approximately 85 percent of the total tax revenues for Pennsylvania school districts in 2000.3 Nearly half of all school district revenue came from the collection of property taxes.4 Only counties relied more heavily on property taxes as a source of revenue.5
The state‟s heavy reliance on property taxes by school districts hit the wallets of Pennsylvania taxpayers and led to several attempts by legislators to harness the spending.6 The most recent attempt was Act 1 of 2006.7 Act 1 attempts to do what other legislation failed to do: provide property tax relief to all Pennsylvanians, but it, too, falls short of its mark.8
Although it was enacted more than three years ago, the Act still plays a prominent role today. Less than two years ago, homeowners started reaping the benefits of Act 1 when the first reduction in property tax bills occurred.9 Last fall, taxpayers could have faced another referendum on their ballots, asking whether they favor increasing the local income tax to offset a decrease in property tax.10 Officials faulted public confusion for the last referendum overwhelmingly failing across the Commonwealth.11 Also, last year‟s budget impasse resulted in new legislation that could significantly alter property tax relief in the future.12