N.J. delivers tax cuts while Rendell backslides in Pa.
N.J. Gov. Jon Corzine signs a big tax cut for 95 percent of the state's residents while his neighbor, Pennsylvania Gov. Ed Rendell, backtracks on his promise to reduce taxes.
Two liberal Democrats. Two governors of neighboring states. That's where the similarities end.
In just over a year in office, New Jersey Gov. Jon S. Corzine has delivered on his promise to cut property taxes.
A jubilant Corzine signed legislation last week to provide most of New Jersey's homeowners with a 20 percent cut in their property taxes.
Contrast that with Pennsylvania Gov. Edward G. Rendell, who promised to cut property taxes in 2002 when he first ran for governor. Once elected, Rendell reneged on his pledge four years in a row. Inexplicably elected to a second term in 2006, Rendell still hasn't delivered on his promise to reduce taxes.
Rendell originally promised he would cut property taxes by 30 percent "standing on my head." He later promised to cut taxes if the state Legislature legalized casino gambling in Pennsylvania. The Legislature fell for Rendell's pledge in July 2004. It's now 2007 and not a single dollar from casino revenues has been returned to homeowners in the form of tax cuts.
Now Rendell is promising to provide property tax relief if the Legislature approves an increase in the Pennsylvania sales tax by one percentage point. New Jersey raised its sales tax last year from 6 percent to 7 percent to provide the money for property tax cuts and took in $1.4 billion in additional revenue.
Unlike Corzine's plan, Rendell would use only a portion of the proposed sales tax increase for property tax cuts in Pennsylvania.
In the first year of the sales tax increase, only one-third of the $1.2 billion anticipated revenue would go for property tax relief. The other two-thirds goes to pay for the massive spending orgy ($6 billion and counting) that Rendell has pushed through the Legislature over the past four years.
In the second year of the sales tax hike, about 50 percent will go for tax relief. A typical Pennsylvania homeowner might get back $180. The rest goes to cover Rendell's mounting budget debts.
The bill that Corzine signed also caps annual property tax increases at 4 percent. Rendell promised to hold the line on future tax increases when he signed Act 1 into law last spring. But Rendell's Department of Education has allowed 40 percent of the state's school districts to raise property taxes above the cap this year, effectively killing any hope of putting a stop to double-digit increases in property taxes.
If this year's general fund budget proposal is any indication (seven new taxes or increases in existing taxes and fees proposed by Rendell), be prepared to dig deeper as long as Rendell is in office.
New Jersey homeowners pay an average of $6,330 a year in property taxes, which is twice the national average. Pennsylvania ranks 24th in property taxes among the states, but the ranking doesn't take into consideration Pennsylvania's higher percentage of elderly residents.
Under Corzine's plan, households earning up to $100,000 will get a 20 percent cut. Those earning up to $150,000 will get a 15 percent cut, and households earning up to $250,000 will get a 10 percent cut. The cut will average $1,051 per household. That's a lot more than what Rendell has promised to give back using both the casino revenues and a sales tax increase.
Not only will 1.9 million of New Jersey's 2 million households get relief, but the state's 800,000 renters will also get a tax break.
Rendell's various tax-cutting schemes have never included help for the state's renters. And his much ballyhooed Act 1, which voters will decide on May 15, would benefit a small percentage of low-income seniors. In many school districts across Pennsylvania, two-thirds of the residents would see no benefit under the tax shift Rendell is promoting as tax relief.
The Pennsylvania Taxpayers Cyber Coalition, made up of a dozen citizens groups, is urging voters to vote "no" on May 15. Another taxpayers' group, STOP (Stop Taxing Our Properties) also wants voters to reject referendums on May 15 regardless of their language.
So far, 12 school districts in Pennsylvania have passed resolutions calling for repeal of Act 1 and demanding the state Legislature return to the drawing board to fix the state's property tax mess.
A viable option for eliminating Pennsylvania property taxes is the Plan for Pennsylvania's Future (better known as the Commonwealth Caucus plan), which has been rejected in the past by the governor and the majority of Democrats in the state Legislature.
The Commonwealth Caucus plan would broaden the sales tax base to include most goods and services and close current loopholes while retaining key exemptions for basic living expenses. Under the plan proposed by Rep. Sam Rohrer, a Republican from Berks County, the state sales tax would actually be reduced from 6 percent to 5 percent if additional goods and services were covered by the sales tax. In return, all property taxes would be eliminated.
Despite opposition from Rendell and many Democrats to the Commonwealth Caucus plan, Rohrer points out that his proposal is the only plan that has been independently researched and "subjected to the rigors of an independent economic study."
If the voters in a majority of the state's school districts turn down the Act 1 referendum questions on May 15, the pressure will build on Rendell and the Legislature to deal with the property tax issue again.
Pennsylvania residents have waited too long for property tax relief. Rendell has broken too many promises. New Jersey is proof that tax relief can become a reality if elected officials have the political will to act.
Tony Phyrillas is a leading conservative political columnist and blogger based in Pennsylvania. He is a veteran journalist with 25 years experience as a reporter, editor and columnist for several newspapers. Phyrillas received recognition for column writing in 2010 from the Associated Press Managing Editors, in 2007 from Suburban Newspapers of America and in 2006 from the Society of Professional Journalists, Keystone Chapter. A graduate of Penn State University, Phyrillas is the city editor and political columnist for The Mercury, a two-time Pulitzer Prize-winning daily newspaper in Pottstown, Pa. In addition to The Mercury website (www.pottsmerc.com), his columns are featured on more than a dozen political websites and blogs. Phyrillas is a frequent guest (and occasional host) on talk radio and has been a panelist on the "Journalists Roundtable" public affairs TV program on the Pennsylvania Cable Network (PCN). Phyrillas was named one of the '10 Leading Greek-American Bloggers in the World' in 2007 by Odyssey: The World of Greece magazine. BlogNetNews.com ranked Phyrillas the Most Influential Political Blogger in Pennsylvania for three consecutive years (2007-2010). You can follow Phyrillas on Twitter @TonyPhyrillas