Pa. school board to vote on tax relief

November 08, 2006|by DON AINES

CHAMBERSBURG, Pa. - The Chambersburg School Board is scheduled to vote tonight on a property tax relief proposal that would provide a homestead exemption of $259 for most homeowners in its first year, although an increase in the earned income tax would result in many households paying more taxes.

The district's local tax study commission held a public hearing Tuesday night on its tax reform proposal which, if accepted by the board, will be placed on the May 15 primary ballot to be approved or rejected by district voters. If the referendum is approved, the new tax rate would go into effect July 1, 2007.

The proposal raises the earned income tax from .5 percent to 1.2 percent, the minimum increase allowed under the guidelines set by Act 1. In the second year, the homestead and farmstead exclusions, which property owners must apply for to receive, would go up to $367, according to figures provided by Public Financial Management Inc., the firm hired by the district to assist the tax study commission.

In the first year of the plan, a household with an income of $25,000 would pay $84 less in combined real estate and earned income taxes. Homeowners with a household income of $55,000, however, will pay $126 more in taxes due to the increase in the earned income tax, according to the figures.

"I thought they would have come up with a solution ... besides socking it to the homeowner," said Charles Stanat of Greenvillage, Pa., one of about a half-dozen members of the public attending the hearing. A sales tax would be a more fair method of taxing everyone to pay for schools, he said.

"Unfortunately, that option wasn't given to us," said Barbara Montgomery, chairwoman of the commission.

Commission member Troy Meck said that Act 1 provided the commission with only two choices for providing property tax relief - either an earned income tax on wages and salaries, or a personal income tax that also includes interest income, dividends and other forms of income.

"This is not a perfect solution. This is going to help some people and it's going to hurt some people," school board member Lori Leedy said. Most renters, she said, will see no tax relief, even though they pay property taxes through their rent.

The proposed tax relief is based on the average assessed value of homes in the district, said Jason Brockman of Public Financial Management.

District resident Wallace Jones asked if the homestead exemption could go down as more property owners register for the exemption.

"As more homeowners apply for that ... there is the potential of less money being available for the homestead exemption," Brockman said.

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