Bill could keep tax hikes lower than expected

April 25, 2002|BY RICHARD F. BELISLE

A bill passed by the Pennsylvania Legislature will reduce significantly the amounts local school districts must pay into the state retirement fund.

As a result, area school districts might not have to raise taxes as much as they had predicted earlier this month.

School districts across Pennsylvania, including those in Franklin County, had said they expected to need large tax increases to cover their contributions to the state pension fund. In some cases the contribution was expected to go up by hundreds of thousands of dollars, local school officials have said.


State Rep. Pat Fleagle, R-Waynesboro, on Wednesday demonstrated the savings that will result from the new law.

Fleagle said the problem surfaced last year when the Legislature voted to increase state retirees' pensions from 2 percent of their annual income to 2.5 percent. That, coupled with lower stock dividends and interest income that resulted from the recent recession, caused pension fund contributions of local school districts to skyrocket.

The Legislature worked the numbers and was able to reduce the amount school districts have to pay into the fund next year, Fleagle said.

According to Fleagle, in the 2001-2002 fiscal year that ends June 30, the Waynesboro Area School District's annual contribution to the pension fund was $94,000. In the next fiscal year, because of the increase in benefits and loss in interest and stock market income, Waynesboro's contribution was to jump to $508,000.

The amount for the 2002-2003 fiscal year, thanks to the legislative action, will be $103,000, Fleagle said.

Waynesboro-area taxpayers had been facing a tax increase of nearly 5 mills, according to preliminary budget projections.

A mill represents $1 for every $1,000 of assessed property. Each mill brings in about $135,000, said Jack Kennedy, the district's business manager.

The Chambersburg Area School District Board of Directors was considering a 4-mill tax hike before the pension legislation was passed, Business Manager Rick Vensel said.

"This will bring it down to 2.45 mills," he said.

Last year the Chambersburg District paid $177,000 into the pension fund. The projection for the coming fiscal year, before the law was passed, was $956,000. The new law dropped it to slightly below $200,000, Vensel said.

As a result, the owner of an average-priced home will pay around $40 more next year in school taxes instead of $70 more.

The Tuscarora School District Board figured it would need another 4.5 mills next year to cover expenses. Its state pension contribution was expected to go from $61,000 a year to $331,000.

The new law means the contribution will go up by about $6,000.

Business Manager Rick Lipella said Wednesday the Tuscarora district now will need a 2.5 mill increase.

Fleagle's figures show that the Greencastle-Antrim School District, which was looking at a 4-mill tax hike, will benefit too.

That district paid $61,000 into the pension fund in the current fiscal year. It would have had to pay $330,000 in the next fiscal year, had the Legislature not stepped in. Now the line item will go up by about $6,000.

Greencastle-Antrim officials could not be reached for comment Wednesday.

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