Franklin Co. awaits ruling on tax refunds

May 10, 1997


Staff Writer

CHAMBERSBURG, Pa. - A bond issue may be the only way Franklin County can raise nearly $3.5 million in refunds it may be forced to give taxpayers who paid taxes on stocks and bonds, said G. Warren Elliott, County Commissioners president.

Franklin and Fulton counties are among 32 Pennsylvania counties that could be facing severe budget shortfalls if the state Supreme Court orders them to refund $231 million in personal property taxes paid on investments.

The refunds would run for three years.

Elliott said the commissioners repealed the county's personal property tax on stocks and bonds in August because they felt it was inequitable. He said the tax netted the county about $1.1 million a year. The commissioners made up the loss by increasing the mill rate by five to 23 mills, just two below the state limit, and by cutting spending, he said.


Elliott said even if the commissioners raised the mill rate to 25, it would still bring in only about $770,000 a year, far below the $32.5 million needed if the affected taxpayers were to get three years of refunds.

The tax levies 4 mills on every $100 of a stock's fair market value. The state Legislature made the tax optional about 25 years ago.

The average county tax on investments was less than $200 a year, Elliott said. That's less than $600 over three years, but multiplied by nearly 6,000 taxpayers, it totals nearly $3.5 million.

Overall, there are nearly 60,000 real property taxpayers in Franklin County, according to officials.

Elliott said there has been no outcry for refunds from taxpayers who paid the taxz.

"We never intended to give refunds. We don't have the money. We'd be forced to look at a bond issue," he said.

The issue surfaced when billionaire Walter Annenberg sued Montgomery County over the tax.

The case went to the state Supreme Court, which must decide whether the tax violates U.S. Constitutional protection of interstate commerce. In 1996, the U.S. Supreme Court ruled that North Carolina had wrongly taxed stock of out-of-state corporations while exempting in-state corporate stock. The decision required North Carolina to make refunds of tax payments dating back three years.

"I'll be very surprised if the (state) Supreme Court finds in favor of Annenberg," Elliott said. "The State Senate passed a bill banning refunds for all except one year in Senate Bill 2, its tax reform bill, but the House has no such language in its bill," he said.

The County Commissioners Association of Pennsylvania is lobbying the Legislature for a bill.

Fulton County faces a $55,000 bill if the refunds must be paid.

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