What Does Senate Bill 76 Do?

Senate Bill 76 would impose a foundational re-organization of the state’s taxation and educational systems, with potentially vast negative consequences for Pennsylvania’s schools, its workers and consumers, and the economy of the commonwealth.

SB 76:

  • Eliminates all school property taxes except those needed to pay outstanding construction debt.
  • Makes permanent the state budget cuts to education enacted in recent years by basing school district funding on current funding levels.
  • Drains billions of dollars from public schools in upcoming years by artificially capping state education funding at a rate that is not connected to actual costs. SB 76 would cap education funding growth by linking it to growth in sales tax or the statewide “average weekly wage” (calculated by the Bureau of Labor Statistics) growth in the previous year, whichever is less. The state’s Independent Fiscal Office projects that schools would receive $2.6 billion less in funding by 2018-19 under SB 76 than could be expected from the current system.
  • Undermines local control over school funding and hands funding decisions to Harrisburg. School district are prohibited from levying property taxes. Earned income, net profits, and personal income taxes are allowable but require a voter referendum.
  • Raises other taxes — the personal income tax would go from 3.07% to 4.34%, and the sales tax from 6% to 7%.
  • Jeopardizes school funding by relying on more volatile sources of funding, since income and sales tax revenue can drop significantly during a bad economy.
  • Imposes a sales tax on food for the first time, making Pennsylvania one of only three states to tax food. Only WIC-eligible items would be exempted.
  • Expands the sales tax to a range of products and services, including child care services, clothing and footwear over $50, dry cleaning charges, non-prescription medications, hair salons, funeral expenses, non-tuition fees at some colleges, non-housing charges at many nursing care facilities, many legal & accounting services, garbage collection, tow truck charges, parking fees, taxis, public transit, and in-state train, plane, and charter bus transportation.
  • While applying sales tax to most services used by individuals and families, the legislation exempts many business-to-business services from the sales tax.
  • Eliminates all property taxes for corporations that own shopping malls, factories, skyscrapers, and other commercial enterprises, shifting the cost to individual taxpayers and small businesses. Over 23% of all assessed property in Pennsylvania is commercial or industrial, much of which is corporate owned.