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Saturday, June 4, 2016

Guest Editorial:The gutting of rural Pennsylvania


The gutting of rural Pennsylvania
By Paul W. Heimel

How would you feel if somebody moved into your house, sectioned-off half of your rooms and refused to pay rent?
Then he welcomed his friends, took over another room or two, and started selling off your furniture.
Admittedly, that analogy is a stretch. But it captures the essence of what is happening in much of rural Pennsylvania.

State agencies continue to acquire real estate for their forest, park and game land system. Nearly 4 MILLION acres are now owned by the state -- and there are more purchases in the works.

All of this state-owned land is, by law, tax-exempt. The bulk of it lies in the state’s most rural counties, where the tax base is already severely restricted by low population and economic recession.

Let’s examine Potter County, in the heart of the “Pennsylvania Wilds,” as an example. Our population stands at about 17,000 and our median income is one of the lowest in the state. A county with more than 680,000 acres might be expected to produce a sizeable amount of revenue from the real estate tax. But not when you deduct the 290,000 acres of state forest, game and park lands.

Another 270,000 acres are taxed at a fraction of their value due to the “Clean and Green” law, which preserves farmland and forests by giving their owners a tax break.

In the final analysis, taxes on less than 18 percent of the county’s real estate are the main funding source to support our schools, counties and local governments. That’s an overwhelming burden for those who subsidize the other 82 percent.

School districts, counties and local governments in rural areas must provide the same services – many of them mandated by the state – as their counterparts in cities and suburbs. Something has to give.

There is an easy and relatively inexpensive way for the state to correct this imbalance and rescue many rural governments that are marching toward insolvency.

Long ago, to its credit, the legislature recognized the inequity and approved an annual payment-in-lieu-of-taxes (PILT) to each affected school district, county and municipality. But as budgets have multiplied over the ensuing decades, PILT payments have not kept up. For the past decade, they’ve been stuck at a paltry $1.20 per acre for each taxing body.

An increase in the PILT is sorely needed, and it would hardly be a state budget-buster. Doubling the payment to a modest $2.40 per acre would cost the state $14 million.

And where would that money come from? Here’s one idea. State land has become a major revenue-generator -- not from selling furniture, but by marketing natural resources.

Each year, the state pockets millions of dollars by cutting timber and leasing land for gas and oil drilling. Since the property is tax-exempt, doesn’t it make sense to share a fraction of those profits with the hosts?

Lawmakers are heading into the stretch run in their 2016-17 state budget negotiations. Now is the time to address the inequity.

That’s the message being sent to Harrisburg by the County Commissioners Assn. of Pennsylvania, Pennsylvania State Assn. of Township Supervisors, Pennsylvania School Boards Assn., Pennsylvania Assn. for Rural and Small Schools, Pennsylvania State Grange, Pennsylvania Landowners Assn. and the Pennsylvania Forest Products Assn.

One might think that a coalition this broadly based would make the higher PILT a slam-dunk. But we’re hearing otherwise from Harrisburg insiders. Please consider contacting your State Senator, State Representative, and Governor Wolf in support of our cause.

Simply put, this is the right thing to do. The future of rural Pennsylvania may depend on it.

(Paul W. Heimel is in his ninth year as vice-chairman of the Potter County Board of Commissioners. He is chairman of the Pa. State Land Tax Fairness Coalition, an organization of county and local government officials formed to support higher compensation in-lieu-of-taxes for state-owned land. To learn more about the coalition, go to www.pastatelandtaxfairness.com.