Part of school-tax burden could move from property tax to income tax.
By By Robyn Meadows
Published Aug 04, 2006 13:47
But long before the gambling money shows up, the law gives residents a chance to see relief sooner.
School districts across the state must form tax study commissions — by Sept. 14 — with five, seven or nine residents each.
Members of the commissions will study school funding and recommend ballot measures on school taxes for the May 2007 primary. School boards must approve the questions before they go to the voters.
Shifts in taxes could come either by raising the earned income tax or by taxing district residents on their total incomes, including interest, dividends and the like.
“Ultimately, the schools are going to have the same amount of money, it’s (about) who is going to pay the bills,” Columbia Business Manager Laura Cowburn said.
Some districts are advertising to find suitable volunteers for the commissions. School boards will have to approve the participants before Sept. 14.
Those interested should contact their local districts.
The rules: Only one board member can sit on the commission, and it cannot include any district employees or their relatives.
Members should also represent the demographics of the community — its various occupations, age and economic status. The school board has to approve the members.
“In other words, you can’t have a bunch of millionaires sitting there,” Lancaster School District Business Manager Curt Baker said.
School administrators are not allowed to lead the studies, but they can answer questions.
Commissions must make recommendations on changes in taxes to their school boards by December. The boards would have to give final approval to any question.
But Baker sees school boards sticking with their commissions’ recommendations.
“I would anticipate that in most instances they would,” he said.
Once a board agrees to or modifies a commission’s recommendations, it will go to a referendum.
“Some (districts) will vote for it, and some won’t,” Solanco Business Manager Tim Shrom said. “No one knows who they are” yet.
What is the range of possible increases in the earned income tax?
Commissions could recommend earned income tax increases ranging from 0.5 percent to 2 percent, depending on the makeup of the district, said Clarence Kegel Jr., from Kegel Kelin Almy & Grimm, a local law firm that represents eight school districts in the county.
Most county residents now pay a 1 percent earned income tax with half going to their local municipality and half going to the school district. If voters, for example, approved a 1 percent increase, the district would receive 1.5 percent of the new 2 percent earned income tax.
If voters approve raising the earned income tax, then those approved for homestead or farmstead exemption will see lower property tax bills for 2007-08.
Those who have not been approved for exemption will not see their tax bills go down.
About 70 percent of those eligible for exemption in the county have already been approved, Kegel said.
But those not exempted, and renters, who work, will see an increase in their earned income tax.
Retired seniors, who own homes, will see reductions on their property tax bills.
Middle-income earners might not see any great reduction in their taxes.
A higher earned income tax could zero out cuts to property taxes, Cowburn said.
If a district chooses to enact a personal income tax, it would tax wages and other earnings such as interest, rental income, gains from property sales, investments and dividends.
In the end, Cowburn said, this is about “deciding what’s best for your community.”
If residents vote no on the ballot measure, the law still provides property tax relief later when the state slot machine revenues reach $400 million and with another $100 million in a reserve fund.
Seniors will see relief sooner with an expansion of the property tax and rent rebate program in July 2007.
The income limit for seniors in the program (excluding one half for Social Security) has been raised from $15,000 to $35,000 and the potential rebate raised from $500 to $650.
Relief for seniors sounds good, but school districts expect to feel some headaches over the new law.
The law mandates that districts wanting to hike taxes above an inflation index must gain voter approval first.
Kegel, who is advising districts on the tax law, said: “My personal belief is that it’s not meaningful tax relief, and I share the school boards’ opinion that the real problem with taxes is expenses imposed from Harrisburg and Washington, D.C., that force them to raise taxes.”
The Pennsylvania School Boards Association agrees that the law falls short.
“I don’t know a school board member across the state who would say they enjoy raising taxes,” said Association spokesman Scott Shewell.
They do it because they have to in order to fund local education, he said. For more information on property tax relief, visit the state’s Web site on the law at www.papropertytaxrelief.com.
Talkback on LancasterOnline
Welcome to the new TalkBack on LancasterOnline. Please use the comment box below to share your opinion on this
article. If you would prefer to use the previous TalkBack forums instead, please use this link.
