Freeman bill would compensate communities with high percentage of tax-exempt properties

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HARRISBURG, March 20 – The state 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, under legislation introduced by state Rep. Robert Freeman.

“Municipalities in the Lehigh Valley and across Pennsylvania with a large amount of tax-exempt properties are faced with the challenge of providing residents with essential services but without a sustaining real estate tax revenue base,” said Freeman, D-Northampton. “My legislation would provide annual financial assistance to those affected municipalities, giving them the ability to provide those services that ensure the health and safety of their residents, and it would put their community in a more stable financial position to attract economic development and succeed.”

Freeman said H.B. 451 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.

“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 must pick up the slack,” Freeman said. “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 proposal 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. “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, college towns, county seats and municipalities that host nonprofit hospitals, 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% of the total revenue in the fund, and property owned by the municipality itself would not be eligible for compensation.

House Bill 451 was referred to the House Local Government Committee.


Information provided to TVL by:
Tom Andrews
House Democratic Communications Office