The measure is supposed to grant tax relief to Pennsylvania homeowners.
By MARY GRZEBIENIAK
VINDICATOR CORRESPONDENT
Voters in Mercer and Lawrence counties will join most Pennsylvania voters Tuesday in deciding whether to shift some of the local school funding burden from property taxes to income taxes.
The Act 1 referendum asks voters whether they want to increase the local earned income tax by a percentage that varies by school district.
The increase would be effective July 1. Additional income tax increases can be asked in municipal elections beginning in November 2009.
In districts where the referendum passes, property owners who have filed for a Homestead/Farmstead exemption will receive a reduction in their school property taxes by an amount which also varies by district.
Those who have not filed for the exemption can file an application for next year.
The measure is intended to deliver long-promised property tax relief to Pennsylvania homeowners, according to a state Web site.
Some property owners, however, will actually pay higher taxes if the referendum passes, depending on their income.
Calculation tool
Residents can calculate the amount they will pay if the referendum passes in their district by using one of the tax calculators available online.
One is available at the Hermitage School District's Web site at www.hermitage.k12.pa.us and another is at Sharpsville School District's Web site at www.Sharpsville.k12.pa.us.
Tresa Templeton, business manager for the Sharon School District, said that whether a district passes its referendum, Act 1 will make changes in other areas.
For example, Act 1 mandates that property owners must now have the option of paying their school real estate taxes in installments.
In addition, Act 1 has expanded senior citizens' property tax and rent rebate programs by raising the income limit from $15,000 to $35,000.
The application deadline for this rebate is June 30, and forms are available with local real estate tax collectors or at municipal buildings, she said.
Forms can also be obtained by going to www.revenue.state.pa.us. The form number is PA-1000.
School board authority
Act 1 also limits the authority of school boards in all districts to increase taxes.
Up until now, Pennsylvania school boards have had the authority to increase property tax millage as needed. Now the state has imposed an inflationary index which boards cannot exceed without going to the voters for approval.
Templeton explained that the index is 5.2 percent for 2007-2008 and that in Sharon, this means the board could increase the taxes by 2.96 mills without voter permission.
The law, however, also provides a list of 10 exceptions to the limit, which can be granted by the Pennsylvania Department of Education or Commonwealth Court.
Critics of Act 1 have charged that the exceptions render the limit meaningless.
Some of the exceptions include emergencies, court orders and ensuring that district revenue keeps pace with inflation.
Local school districts are already struggling to implement provisions of the law.
Monique Barber, business manager for the Hermitage Schools, said the effect of the tax shift is supposed to be "revenue neutral" on school district budgets.
But she pointed out that her district has already spent $5,000 to $10,000 sending out applications and required mailings for the Homestead/Farmstead exemptions.
She said the state Legislature provided no financial help to local districts for the mandated start-up costs.
In other districts
Templeton said the Sharon district's cash flow will be affected if the referendum passes there.
She explained that most real estate taxes are received in the first six months of the year, while income taxes are paid quarterly by employers.
Michael DeForest, the Mercer County Tax Collector, said Act 1 is the latest effort by the Legislature to reform property taxes and shift some of the cost of school funding away from property owners.
An earlier tax relief proposal, Act 72, failed in 2004 when 80 percent of Pennsylvania's school boards chose not to participate. Act 1 does not allow school boards to opt out.
State gaming revenues are also part of Act 1 and are supposed to eventually help make up for revenue lost from the Homestead/Farmstead exemptions and other Act 1 provisions.
But Barber remarked that the gaming revenues are far below projections, and that other financial sources — such as new statewide taxes — are now being considered in Harrisburg to make up the shortfall.
Sunday, May 13, 2007
The measure is supposed to grant tax relief to Pennsylvania homeowners.
By MARY GRZEBIENIAK
VINDICATOR CORRESPONDENT
Voters in Mercer and Lawrence counties will join most Pennsylvania voters Tuesday in deciding whether to shift some of the local school funding burden from property taxes to income taxes.
The Act 1 referendum asks voters whether they want to increase the local earned income tax by a percentage that varies by school district.
The increase would be effective July 1. Additional income tax increases can be asked in municipal elections beginning in November 2009.
In districts where the referendum passes, property owners who have filed for a Homestead/Farmstead exemption will receive a reduction in their school property taxes by an amount which also varies by district.
Those who have not filed for the exemption can file an application for next year.
The measure is intended to deliver long-promised property tax relief to Pennsylvania homeowners, according to a state Web site.
Some property owners, however, will actually pay higher taxes if the referendum passes, depending on their income.
Calculation tool
Residents can calculate the amount they will pay if the referendum passes in their district by using one of the tax calculators available online.
One is available at the Hermitage School District's Web site at www.hermitage.k12.pa.us and another is at Sharpsville School District's Web site at www.Sharpsville.k12.pa.us.
Tresa Templeton, business manager for the Sharon School District, said that whether a district passes its referendum, Act 1 will make changes in other areas.
For example, Act 1 mandates that property owners must now have the option of paying their school real estate taxes in installments.
In addition, Act 1 has expanded senior citizens' property tax and rent rebate programs by raising the income limit from $15,000 to $35,000.
The application deadline for this rebate is June 30, and forms are available with local real estate tax collectors or at municipal buildings, she said.
Forms can also be obtained by going to www.revenue.state.pa.us. The form number is PA-1000.
School board authority
Act 1 also limits the authority of school boards in all districts to increase taxes.
Up until now, Pennsylvania school boards have had the authority to increase property tax millage as needed. Now the state has imposed an inflationary index which boards cannot exceed without going to the voters for approval.
Templeton explained that the index is 5.2 percent for 2007-2008 and that in Sharon, this means the board could increase the taxes by 2.96 mills without voter permission.
The law, however, also provides a list of 10 exceptions to the limit, which can be granted by the Pennsylvania Department of Education or Commonwealth Court.
Critics of Act 1 have charged that the exceptions render the limit meaningless.
Some of the exceptions include emergencies, court orders and ensuring that district revenue keeps pace with inflation.
Local school districts are already struggling to implement provisions of the law.
Monique Barber, business manager for the Hermitage Schools, said the effect of the tax shift is supposed to be "revenue neutral" on school district budgets.
But she pointed out that her district has already spent $5,000 to $10,000 sending out applications and required mailings for the Homestead/Farmstead exemptions.
She said the state Legislature provided no financial help to local districts for the mandated start-up costs.
In other districts
Templeton said the Sharon district's cash flow will be affected if the referendum passes there.
She explained that most real estate taxes are received in the first six months of the year, while income taxes are paid quarterly by employers.
Michael DeForest, the Mercer County Tax Collector, said Act 1 is the latest effort by the Legislature to reform property taxes and shift some of the cost of school funding away from property owners.
An earlier tax relief proposal, Act 72, failed in 2004 when 80 percent of Pennsylvania's school boards chose not to participate. Act 1 does not allow school boards to opt out.
State gaming revenues are also part of Act 1 and are supposed to eventually help make up for revenue lost from the Homestead/Farmstead exemptions and other Act 1 provisions.
But Barber remarked that the gaming revenues are far below projections, and that other financial sources — such as new statewide taxes — are now being considered in Harrisburg to make up the shortfall.
Sunday, May 13, 2007
such as new statewide taxes — are now being considered in Harrisburg to make up the shortfall.
