Freeman bill would compensate communities with high percentage of tax-exempt properties
HARRISBURG, June 28 - Pa. state Rep. Robert Freeman, D-Northampton, has introduced legislation that would provide special financial assistance to municipalities with high levels of tax-exempt property, such as institutions of higher learning, nonprofit medical facilities, government offices or state forests and game lands.
“Municipalities in the Lehigh Valley and across Pennsylvania with a large amount of tax-exempt properties are faced with the challenge of providing residents essential services without the real estate tax revenues of other communities,” Freeman said. “My legislation would provide annual financial assistance to those effected municipalities, giving them the ability to provide the essential services that ensure the health and safety of their residents and can put their community in a more stable financial position to attract economic development.”
Freeman explained that H.B. 1702 would establish the Tax-Exempt Property Municipal Assistance Fund to help municipalities with 15 percent 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.
“Many of the tax-exempt properties in our communities are significant employers and are important regional assets, but being tax exempt means they do not pay real estate taxes to their host municipality. That puts an undue burden on residential property owners in those communities who have to pick up the slack,” Freeman noted. “A high percentage of tax-exempt properties within a municipality’s borders leaves the affected community with a greatly diminished tax base, which in turn makes it difficult to provide essential services. My legislation would provide the financial compensation necessary to put these high tax-exempt property municipalities on a sounder financial footing to ensure their stability and success as a community.
"The liquor tax helped to rebuild Johnstown after it was devastated by a flood in 1936," Freeman said. "That was a long time ago, and it's time to target that money to municipalities that are falling further into financial distress simply because they have significant amounts of tax-exempt properties within their boundaries. This legislation can help hundreds of communities across our commonwealth, including those municipalities that are under the ACT 47 Financially Distressed Municipalities program, as they have a high percentage of tax-exempt property."
In the Lehigh Valley the legislation would provide significant funding to Allentown, Bethlehem, Easton, Fountain Hill, and other municipalities with high percentages of tax-exempt properties.
The legislation would require each county to annually provide the state with information regarding the assessed value of tax-exempt properties. 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 percent of the total revenue in the fund, and property owned by the municipality itself would not be eligible for compensation.