3 hopefuls are all over the lot on realty taxes
This is the second in a series of four stories on issues in the Harrisburg mayor's race. Other stories -- on residential and commercial development, and education -- will appear each
Monday.
Monday, April 25, 2005
BY JOHN LUCIEW
Of The Patriot-News
The three Democrats running for mayor of Harrisburg find rare common ground when it comes to property taxes.
They agree they're too high.
However, Mayor Stephen R. Reed, ad man Jason Smith and former city police officer Ernie Napoli differ on how to lower tax rates in the city and in Harrisburg School District.
Napoli would consider selling stock in the waste incinerator, which is being renovated and expanded. He'd tap revenue from the steam-generation plant, which will operate on incinerator heat.
Napoli said he'd even consider adding a 25-cent toll on main arteries into the city, forcing commuters to help pay for the services they enjoy in Harrisburg.
"Nobody likes to pay taxes," Napoli said. "People feel the taxes are too high. They have to be reduced."
For Smith, tax relief could be realized by squeezing money from the budget of the school district, which accounts for two-thirds of property taxes.
"We pay an astronomical $110 million each year for our schools and just $64 million for all other city services," he said.
Smith said some of that money would be better used improving neighborhoods so kids have better lives and are more prepared to learn.
"It's time we paid attention to the real priorities and give our kids the lives they deserve," he said, adding that the school district's high failure rate could be tied to social ills, not academics.
"You can't spend your way to a better education," Smith said. "We cannot continue to tax our people from their homes and turn away businesses through high taxation."
Reed, who has controlled the city schools since December 2000, acknowledged the big bite the school system takes from taxpayers. But he insists relief is on the way.
Its name is Act 72, the state law designed to turn slot-machine revenues into tax cuts for schools.
While Act 72 is controversial in many school districts, Reed said it should have whole-hearted support in Harrisburg.
That's because the city and its taxpayers stand to get the maximum amount of relief under the law.
"In Harrisburg, we will make out very well," Reed said.
Relief estimates are as high as $600 per owner-occupied dwelling, beginning as early as the 2006-07 school year.
"Some people in Harrisburg are going to end up paying little or no school real estate taxes," Reed said. "This will be a boon to home ownership, and it will increase property values."
But to be implemented, Act 72 must be approved by the school board and the district board of control by May 30 and by voter referendum in the fall. Reed said he would help mount a publicity effort to pass the measure.
Reed also claims a role in more immediate, if smaller, tax relief. For the first time, the city will issue cash rebates -- expected to be 10 percent of city property taxes -- to commercial and residential owners.
The rebates are being funded by the new Emergency and Municipal Services Tax, a $52 annual levy on Harrisburg's 68,000 workers.
Reed had proposed adding the tax, but Smith said Reed was slow in deciding to use the money for tax rebates.
Initially, Reed had proposed using the tax for public safety and road improvements.
Smith advocated putting all of the money toward tax relief, which he said would mean a reduction of about 17 percent in city property taxes.
In the end, City Council earmarked $1.6 million of the $2.6 million in job-tax revenues for tax relief -- enough for an across-the-board rebate of 10 percent to 12 percent.
Reed said the rebate checks won't be sent to residents until summer, well after the May 17 primary.
The mayor's opponents have another way to keep taxes in check: rein in Reed's spending. Napoli is advocating a state audit of city finances to find out how much debt the city is carrying.
"He's constantly spending," Napoli said of Reed. "It's got to stop."
"A new administration by its nature enables new efficiencies," Smith said.
"Two years ago, Reed proposed raising taxes. I was there on the front lines, telling him to sell Annie Oakley's underpants instead," Smith added, referring to artifacts Reed had amassed for his proposed Wild West museum.
Reed labels the entire state property tax system as outdated. He favors an expanded state sales tax to fund schools.
"It's regressive," Reed said of the property tax. "It penalizes those who invest and maintain property. We ought to be rewarding that."
*********
$.25 toll on Market St. Bridge?!? Uhh, people will just use the
other bridges to get to where they need to go. Crime in HBG too high?!? It's bad in spots, sure, but NO WHERE NEAR what it used to be.
Q: How can a city such as Harrisburg, where taxes are seen as high, expect to attract businesses and residents that could expand the tax base and lower the burden on current residents?
ERNIE NAPOLI: I don't know of any business that would come into the city of Harrisburg because of the crime problem. There are not enough police to protect the property owners' businesses. To lower the burden on current residents, I'd put a 25-cent toll on the Market Street Bridge and take those funds and help reduce property taxes.
MAYOR REED: State law granting tax exemption to 46 percent of all real estate and millions in unfunded federal/state mandates affect tax rates here. Reliance on taxes has been cut by creating alternative revenues. Tax abatement, lower building taxes and other incentives have produced tax base expansion, $212 million to $1.6 billion, an increase in the number of businesses, 1,908 to 8,864, and largely stems massive population losses of 20 and more years ago. Harrisburg's total cost-of-living is mid-range in the region. State tax reform to replace property taxes remains sorely needed.
JASON SMITH: High taxes can be offset by well-delivered services, great urban planning, and responsive government. Unfortunately, Harrisburg is not really offsetting its high taxes very well! My Harrisburg 2.0 plan provides the vision we need to enhance city life--and my platform provides ways to lower taxes immediately, as well as long-term.
Q: In the balance between taxes and city services, how can Harrisburg maintain or expand amenities, while holding the line or cutting taxes?
NAPOLI: To hold the line or to cut taxes, I would take some of the income from the steam generating plant when it is back in operation.
REED: Hundreds of projects -- parks, arts facilities, housing, neighborhood infrastructure and more -- have been achieved without use of city tax dollars. This will continue through the alternative revenue sources we have devised.
To prevent tax increases, the city has reduced staff, merged agencies, used technology to increase performance, created partnerships, secured grants, raised private funds, established performance standards, initiated loss controls to cut insurance/benefit costs, installed energy savings measures, done highly competitive pricing, cut overtime, travel and the number of vehicles and cell phones, and spawned nonprofit entities to take on supportive functions -- as just some examples.
SMITH: Our current administration wastes hundreds of thousands each year on consultants. We have a hiring freeze on staff while administrator salaries rise every year. We waste millions on artifacts and hundreds of thousands to keep unsuccessful museums afloat. We take out bonds for city projects and scoop money off the top for the mayor's use...to be paid back at high rates later.
By focusing on our priorities and thinking creatively, we can get more mileage out of the tax dollars we have. By creating usage fees for those who use our city but don't live here, we can generate some tax relief. And through aggressive marketing and urban planning, we can bring in new residents and expand our tax base long-term.