“That would be the first time in my life that schools have ever lived within their budgets,” a 70-year-old woman replied tartly.


A man from Cochranville said his school property taxes had just gone up $300.


A Solanco homeowner said he pays as much property tax on his Perry County hunting cabin as he does on his house here. Polls show that property taxes are Pennsylvanians’ No. 1 gripe. In Lancaster County, where reassessment produced sticker shock when homeowners opened their school tax bills this month, “outrage” might be a more descriptive term.


It’s part of the reason why 85 people packed the sweltering Fulton Grange Thursday evening to hear Armstrong, R-100th District, explain state House conservatives’ proposal to eliminate school property taxes in favor of a broader, but lower, sales tax.


And for the first time, that plan is being taken seriously in Harrisburg.


Members of the conservative Commonwealth Caucus, which has been fine-tuning the sales tax initiative for three years, have always taken their idea seriously. But conventional wisdom in the capital has held that the sales tax was going nowhere.


For one thing, many school boards hate the prospect of losing control over their finances. For another, lawmakers outside the Commonwealth Caucus have been concerned about the impact of taxing food and clothes on state retailers and low-income people.


Perhaps even more importantly, switching from property to sales taxes to fund schools is a major shift in policy, and change comes slowly, if ever, in Harrisburg.


Yet despite all those obstacles, the sales tax plan — actually five related pieces of legislation — is poised to come to the House floor for a vote this fall.


Four of the bills were approved by the House Finance Committee shortly before the Legislature adjourned for the summer. Caucus members say the fifth one also should make it out.


The Harrisburg rumor mill says some Commonwealth Caucus members agreed to vote for a controversial pay raise in exchange for a leadership promise to bring the sales tax legislation up for a vote, and one Lancaster County lawmaker said that was indeed a factor in his support for the $11,000 raise.


“If it comes up for a vote,” Armstrong predicted of the sales tax, “it will pass.”




Growing interest?




The average legislative town meeting tends to be lightly attended.


So Thursday’s packed Grange hall might be a barometer of taxpayer interest in doing something about school taxes.


Similar meetings are being held around the state to outline the sales tax plan, under which all school property taxes — but not county or municipal property taxes — would be replaced by a 5 percent “sales and use” tax on consumer goods and services.


Armstrong has another such meeting at 7 p.m. Tuesday at the Conestoga Fire House.


At the Grange, the audience had plenty of questions about “Plan for Pennsylvania’s Future.”


Would doctor bills be taxed? (No.) Do other states fund schools this way? (No, but most states tax food and clothes.) How would the money get back to the schools? (Via a new commission tasked with ruling on schools’ budget requests.) What happens if more money than schools need is collected? (It goes into a reserve fund for lean years.) Who’s against it? (Many school boards and some industry groups, including real estate brokers.) Isn’t this a communistic plan? (Short answer: No.)


And, finally: What can we do as citizens? (Contact your legislators; contact House and Senate leadership; contact the governor.)


Not that everyone was excited about the plan.


“It has too many holes,” said Boyd Robinson of Drumore Township, one of the people in the audience.


He’s concerned that out-of-state property owners won’t pay any taxes and that people will have a harder time buying homes if property values shoot up once real estate taxes are eliminated.


And sending all the money to Harrisburg, he said, is “a recipe for disaster.”


Allen Weicksel, a Peach Bottom dairy farmer, pointed out that of 10 states that have enacted property tax reform, none have switched to sales taxes as the alternative. Instead, he said, they all chose the income tax.


In letters to the editor, though, other taxpayers have hailed the sales tax as a solution to property taxes that, as Armstrong notes, double every 10 years. County lawmakers report being deluged by complaints after homeowners received their school tax bills early this month.


Some legislators have criticized the sales tax as burdening poor people by eliminating exemptions on food and clothing. Armstrong argued that the property tax, which is also a “regressive” tax, puts an even heavier burden on the poor by blocking them from homeownership and driving up rents.


He insists the sales tax will have “a tremendous stimulative effect” on the economy, producing 139,000 new jobs in the state, raising property values as taxes are eliminated and streamlining the tax collection bureaucracy. Armstrong said the property tax system is breaking taxpayers’ backs, and “we have the power to fix it.”


“Every year we fail to do something,” he said, “... and every time we vote ourselves a pay raise, what we do is further distance ourselves from the people who are upset at us — and every time their taxes go up, they get madder at us.”




Vote swaps?




The reasons why the sales tax package may get a floor vote are shrouded in the usual Harrisburg smoke-filled-room deals.


But for a clue to the mystery, look at the roll-call vote earlier this month on the $11,000 pay raise for legislators. Capital sources were shocked to see Rep. Sam Rohrer, R-Berks County, the Commonwealth Caucus chairman, among the “yes” votes. Equally amazing was the yes vote from Rep. Tom Creighton of the county’s 37th District, a caucus member.


Insiders said the votes were part of a trade with legislative leaders who wanted the pay raise.


Rep. Sheila Miller, R-Berks County, another caucus member, was quoted in the Reading Eagle as saying she voted for the pay raise in exchange for a vote on the sales tax proposal. Creighton said the deal to move the sales tax out of committee was “not 100 percent, but a very high percentage factor” in his pay raise vote.


“That’s the first step to get our leadership to let us do things,” he said.


The deal ran into trouble in the House Finance Committee late last month, though.


Four of the five bills were reported out to the floor. But the fifth fell one vote short — sources said Rep. Jeff Habay, an Allegheny County Republican facing criminal charges of lying about an “anthrax” letter he claimed he got from a constituent, switched his vote at the last minute.


Rep. Gordon Denlinger, R-99th District, a caucus member and secretary of the finance committee, said the bills eliminating property taxes passed unanimously; the ones changing the sales tax split along party lines.


The fifth bill could be re-voted in the fall, he said, since the first vote ended in a tie, or it could resurface in an amended form.


Denlinger expects a floor vote probably in November. He also wouldn’t be surprised to see some changes in the plan made through negotiations; the House Appropriations Committee is expected to retain an outside accounting firm this summer to examine the initiative.


“We’re learning we have to be flexible and work on compromise,” Creighton said. “The bill that will get through will not look like what we have now, but hopefully it will look very similar.”




Change in atmosphere




Getting the package to the floor, though, is just one hurdle.


The conservatives have to convince their colleagues that the plan is workable, both economically and politically. In the past, that would have been nearly impossible. Now, though, there’s more openness to the idea.


“I think it passes the House,” one legislator said, so lawmakers can say they voted for property tax reform. But many House members may vote yes “hoping the Senate kills it.”


State Sen. Gib E. Armstrong, R-13th District — Rep. Armstrong’s father — agreed the Senate could be a tougher nut to crack.


But if the House brings the bills to the floor, a taxpayer revolt could change minds, Sen. Armstrong said. He pointed out that homeowners in western Pennsylvania are up in arms about rising property taxes.


“It might be very difficult to vote against it,” the senator said.


Gov. Ed Rendell, a Democrat, might seem to be an automatic veto on the plan. Rep. Armstrong isn’t so sure. “The governor is studying this,” Armstrong asserted Thursday.


Rendell’s spokeswoman, Kate Philips, said Friday that Budget Secretary Michael Masch will be doing an “independent review” of the proposal.


“The governor has strong concerns about raising the sales tax ... on things that are necessities, like food and clothing,” she said. He also wants to find out if the plan’s numbers really add up.


Still, Philips said, “He’s always open to good ideas and new ways of governing.”


Rendell campaigned three years ago on a promise to do something about skyrocketing property taxes. Yet the vehicle for fulfilling that promise, Act 72 — the law allowing schools to use revenue from slot machines to lower property taxes — was a nonstarter with school boards. Only 111 of 501 districts opted into the plan.


A Quinnipiac University poll last week found that 72 percent of voters surveyed blamed Rendell, who is up for re-election next year, for the failure.


Philips said there’s “an enormous amount of pressure” not only on Rendell but on the Legislature to address property tax concerns.


Rep. Armstrong figures that Rendell will be under such pressure to deliver on his campaign promise — and legislators will be feeling such heat too — that the sales tax plan will start looking good by fall.


“I don’t think too many of us want to go home ... and tell our constituents, ‘We voted against meaningful property tax reform.’ ”