November 2017 Constitutional Amendment Ballot Question FAQ

November 2017 Constitutional Amendment Ballot Question FAQ:

House Bill 1285 (HB 1285), introduced by Representative Maloney, is an amendment to the Pennsylvania Constitution. HB 1285 was approved by both Chambers of the General Assembly during both the 15/16 Legislative Session and the 17/18 Legislative Session, and is now scheduled for public vote via referendum on November 7th, 2017. Below are some frequently asked constituent questions and their answers:

Q: What is the current homestead exemption and what does the constitutional amendment change?

A: Currently, the Pennsylvania Constitution, as well as Statute, allows a homestead exemption of 50% of the median assessed value of homesteads. For example, if the median value of homesteads in a political subdivision is $100,000, then the political subdivision would be able to exempt up to $50,000 from the value of homesteads within its jurisdiction before assessing their property tax rate. The Constitutional Amendment would enable a future General Assembly to increase the exemption amount to 100% of the value of each homestead. This means a homestead valued at $50,000 would receive a $50,000 exemption. A homestead valued at $100,000 would receive a $100,000 exemption.  A homestead valued at $200,000 would receive a $200,000 exemption.

Q: If the Constitutional Amendment is successful, would this have an immediate effect on property taxes?

A: No. The amendment is merely providing an additional tool for the General Assembly to provide property tax relief. The Pennsylvania Constitution would be amended, not current law.

Q: If the Constitutional Amendment passes, what has to happen next?

A: The General Assembly would have to amend Title 53, Section 8586 to increase the current statutory exemption limit of 50% of the median assessed value of homestead property. The constitutional amendment simply makes it constitutional to increase the exemption up to as high as 100% of each homestead’s assessed value, it does not change the statute addressing the maximum homestead exemption. If the Statute is subsequently changed to increase the exemption, local taxing jurisdictions would still have to authorize the exemption – provided the funding to do so is available.

Q: Does the exemption have to be 100% of the assessed value of each homestead?

A: No. The General Assembly could amend Title 53 to allow any amount of exemption.  It could be changed to any amount, such as; 75% of the median assessed value, 80% of each homestead’s assessed value, 100% of the median assessed value or the maximum of 100% of each homestead.

Q: How would any amount of increased exemption be funded?

A: If the Constitutional Amendment is successful, and a future General Assembly decides to amend Title 53 to increase the exemption (to whatever amount it determines), they could take multiple approaches. Currently, the exemption has to be funded by the local taxing jurisdiction offering it. The law could be changed to increase the maximum exemption and leave the current funding abilities as is. The General Assembly could also increase the exemption, and at the same time, provide for a state level funding source and allocation.  Finally, the General Assembly could increase the maximum exemption, while also authorizing political subdivisions to enact new revenue options. These could be adjustments in the earned income tax rate, local sales taxes, etc.