Freeman bill to help communities with high percentage of tax-exempt properties moved out of committee

HARRISBURG, Jan. 22 – A bill introduced by Rep. Robert Freeman to financially help municipalities with high levels of tax-exempt property cleared its first hurdle today when the House Local Government Committee reported out the bill by a 22-1 vote.

Tax-exempt property that may impact municipalities include colleges and universities, nonprofit medical facilities, county and other government offices or state forests and game lands.

"Because of the effect tax-exempt properties have on the real estate tax base of several communities in the Lehigh Valley and across Pennsylvania, affected municipalities often have difficulty providing the essential services expected from local government," said Freeman, D-Northampton. "By providing annual funding to these municipalities, we can enable them to fix and maintain infrastructure and to provide the essential services that ensure the health and safety of their residents."

House Bill 1677 would establish the Tax-Exempt Property Municipal Assistance Fund to help municipalities with 15% or more of their total assessed property value as tax-exempt property within their borders. It would be funded by the state's existing 18% Liquor Tax, known as the Johnstown Flood Tax.

"The Johnstown Flood Tax was created to help Johnstown rebuild after it was devastated by a flood in 1936," Freeman said. "That was a long time ago, and that money can be used to help other communities facing distress to regain financial stability. It's time to target that money to municipalities that are struggling financially simply because they have significant amounts of tax-exempt properties within their boundaries. This legislation can help hundreds of communities across our commonwealth."

For example, in the case of Easton, over 27% of the total assessed value of property is tax exempt, while Fountain Hill has over 40%.

Freeman said that many communities under the Act 47 Financially Distressed Municipalities program also have a high percentage of tax-exempt property.

The legislation would require each county to annually provide the state with information regarding the assessed value of tax-exempt properties within each municipality of the county. The funding formula would be based on the assessed value of those properties as if they were taxable. No municipality would receive more than 10% of the total revenue in the fund, and property owned by the municipality itself would not be eligible for compensation.

The bill now goes to the full House for consideration.