Pa. property tax relief act filled with promises

August 01, 2006|by JENNIFER FITCH

WAYNESBORO, Pa. - The new law that Pennsylvania Gov. Ed Rendell says will bring $1 billion worth of property tax cuts annually also carries the first-ever cap in the amount the state's 501 school districts can raise taxes.

Special Session House Bill 39, signed June 27 by Rendell, requires districts to take property tax increases greater than a predetermined index to voters.

The law now known as Act 1 comes with 10 exemptions to keep tax increases off ballots. The exemptions, three of which must be approved in the county's Court of Common Please, include already-incurred debt for school construction, expenditure hikes in health care or special education, and contributions to retirees.

"School boards do not control those costs. ... (However), those exceptions are not automatic. They need to be approved," said Scott Shewell, spokesman for the Pennsylvania School Boards Association.


"By signing this bill, we guarantee that every Pennsylvania homeowner's property tax bill is reduced, and that taxpayers will have input in their school tax bills," Rendell wrote on his Web site.

Act 1 repealed Act 72 of 2004, which many considered flawed legislation. Participation in Act 72 was optional and ultimately rejected by the majority of school districts.

Districts that did participate in Act 72 were permitted to raise property taxes 3.9 percent this year, Shewell said. That percentage could be comparable to future base indexes, he said.

"A school district will not be able to raise taxes in excess of an inflationary index," said state Rep. Patrick E. Fleagle, R-Franklin.

Each school district then has the base index adjusted by a ratio.

"It's a ratio comparing the market value of homes in a district to the personal income," said Brian McDonald, spokesman for the Pennsylvania Department of Education.

Questions remain about components of the law and when gambling revenue will be available to provide for the tax relief.

Fourteen licenses have been made available in Pennsylvania for slots parlors. None have been issued, said state Rep. Rob Kauffman, R-Franklin/Cumberland.

"Only the future will determine what happens there," Kauffman said.

After this fiscal year, the state will have spent $100 million in bringing gambling to Pennsylvania and supplementing programs supposed to be funded with gaming revenue, he said.

"We're starting out this whole process in the hole," Kauffman said.

He called Act 1 "the governor's baby" and said it's not clear in how it affects school districts.

"We're at (the administration's) mercy when it comes to how this is interpreted," Kauffman said.

"It's still a matter of understanding the intricacies," Shewell said.

The school boards association is preparing Act 1 information for its Web site and encourages school districts to explain the process to residents.

"The citizens should be aware of how the school districts operate. We encourage school districts to develop relationships with the community," Shewell said.

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