TESTIMONY OF SENATOR MIKE STACK PROPERTY TAX SPECIAL SESSION – LEGISLATION COMMITTEE 11-15-05

Thank you to Chairman Wenger, Senator Wozniak, and the members of the committee for allowing me to speak with you this morning. This is an exciting moment for Pennsylvania as we are finally seeing light at the end of the tunnel for property tax reform. I am pleased to have the opportunity to testify before the committee about my property tax relief proposal, which is Special Session Senate Bill 24. Throughout the negotiations on this issue, I have been concerned that we may have neglected a certain segment of Pennsylvania’s population: the senior citizens of Philadelphia. Like the rest of our seniors they have worked hard, played by the rules, and paid their taxes for decades. They have become the backbone of our neighborhoods. They have raised their families, and many have taken on the responsibility of raising their grandchildren and great-grandchildren. They are an indispensable part of the fabric of Philadelphia. They are people who stayed in the city through thick and thin, and soon they may be rewarded for their loyalty with massive property tax hikes and no help from Harrisburg. As you know, the framework established under Act 72 provides tax relief for Philadelphia residents who are earning a paycheck in the city. It also doubles the property tax relief for Philadelphians enrolled in the Property Tax and Rent Rebate Program. Wage tax relief is certainly long overdue for Philadelphia, and it will greatly help with our city’s economic revival. However, property tax relief for Philadelphia’s seniors is also essential to continuing our city’s rebirth. The fact is that most of Philadelphia’s seniors will receive no economic benefit from expanded gaming in the commonwealth. It is unfair that Philadelphia retirees, who have been hit just as hard by property taxes as seniors in any other part of the state, are being denied any form of relief under Act 72. In addition, commuters into the city will be receiving a double dose of relief, with lower property and wage tax bills, while many Philadelphia seniors see nothing. This is an oversight that must be rectified. At this very moment, the city of Philadelphia is looking at a new property-tax assessment system that could send taxes through the roof for certain seniors. The new system will be based on full valuations of homes at current sale prices, which will likely result in huge new tax bills for homeowners in the Northeast, University City, South Philadelphia, and Center City. Northeast Philadelphia, the region of the city that I represent, is currently experiencing rising property values, and new housing developments are being planned for the Delaware riverfront. This is good news for the city of Philadelphia, but it is potentially devastating news for older homeowners who are living on Social Security and small pensions. The Philadelphia Inquirer cited one example, a 71-year-old homeowner who lives in Queen Village — Mr. Joe Figurski. Under the new assessment plan, Mr. Figurski’s property tax bill will go up 170 percent to $5,727. This is only one individual. Who knows how many Philadelphia seniors will be forced out of their homes, forced out of the neighborhoods they have known their entire lives? Without property tax relief, an unknown number of Philadelphia seniors will be forced to give up their city homes and relocate to the suburbs or elsewhere. This will destabilize existing urban communities and lead to further suburban sprawl. In addition, delivering life-sustaining services will be much more difficult for a suburban elderly population. We have the opportunity to stop this travesty, but we must take action soon. I have proposed legislation that would provide a $250 property tax rebate to Philadelphia seniors who make less than $50,000 annually. This is less than the estimated $330 average tax reduction that will be delivered statewide, and I believe this is a fair amount to provide for struggling Philadelphia seniors. Before, I go any further, there is a point that must be addressed: Senate Bill 24, as currently drafted, would remove the provision in Act 72 that provides additional property tax relief to Philadelphians enrolled in the Property Tax and Rent Rebate Program. This was a drafting error. The legislative intent is to provide property tax relief to all those covered under Act 72 and add Philadelphia seniors with household incomes below $50,000. We would welcome the opportunity to fix this provision if this bill receives further consideration. Another question you may be considering is how much this proposal would cost. Using 2000 Census data, we have estimated that approximately 119,000 households would qualify for the $250 property tax rebate. This means that Senate Bill 24 would cost no more than $30 million. I would like to add that the $30 million figure is an overestimate in many ways, because it includes renters and wage-earners. Of course, I would welcome any input that the staff of the Appropriations Committee or Revenue Department can provide to clarify these numbers. In conclusion, I hope that you will seriously consider this proposal and discuss ways to help Philadelphia’s senior homeowners. They have serious problems that need to be addressed, and they are facing an uncertain future. I understand that many of you may be hesitant to support a proposal that primarily helps Philadelphia residents. Obviously, this plan may not be the most popular idea in the building. But it does even the playing field by treating Philadelphia senior citizens more fairly. Additionally, I would support any proposal to expand the property tax and rent rebate program for all of Pennsylvania’s seniors. This is particularly important for Philadelphia seniors because of the city’s higher cost of living, as compared to other areas in the state. Thank you for having me here today and permitting me to give voice to the concerns of Philadelphia’s senior citizens. I know by working together we can begin to solve the property tax problem. I look forward to working with this committee and all my colleagues toward this end.

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