One area school district OKs Act 1

May 17, 2007|by DON AINES

CHAMBERSBURG, PA. - It was rejected by five of the six school districts in Franklin County, all but a handful of the 501 districts in Pennsylvania and in 17 of its 26 precincts, but there were enough votes to put the Act 1 tax shifting referendum over the top in the Chambersburg Area School District, according to complete, but unofficial results from the Franklin County Election Board.

"I know of five. There may be more," Chambersburg Business Manager Rick Vensel said of the number of school districts in Pennsylvania that approved the referendum.

The referendum passed with 51.6 percent of the vote in the Chambersburg school district, which takes in the borough, Greene, Hamilton, Letterkenny and Lurgan townships, and most of Guilford Township. The final tally was 4,182 in favor and 3,922 against the referendum, which will increase the earned income tax paid to the district from the current 0.5 percent to 1.2 percent.


In exchange, homeowners and farmers who filed for homestead and farmstead exclusions will see their property taxes lowered by $367, according to a statement explaining the effect of Act 1, also known as the Taxpayer Relief Act, for the district. It will take effect in the 2007-08 school year, but due to lags in collecting the new tax, relief in the first year will be less, according to district estimates.

It is revenue-neutral, meaning the increased earned income tax is not supposed to exceed the reduction in property taxes, but it is hardly neutral in its effect on taxpayers.

People who live in rented housing will see their earned income taxes increase, but will not be seeing their rents go down. Households with incomes above about $52,000 will pay more in earned income taxes to the district than they will receive from their homestead exclusion, Vensel said.

Who will benefit most are retirees who own homes, because they will receive the exclusion, but their pensions and Social Security income are not subject to the earned income tax.

The retiree vote

The referendum won by 260 votes and more than enough of the "yes" votes to tip the scales came from one precinct, Guilford 2, where many retirees live in the Penn National development. Guilford 2 voters approved the referendum 581 to 273, a margin of 308 votes, according to election results.

Turnout countywide was 23 percent, but somewhat higher in Guilford 2 at 32 percent, according to county figures.

The median household income in the county in 2004 was estimated at $45,454 by the U.S. Census Bureau. Nearly 34,000 homestead and farmstead exclusions have been granted in Franklin County, Tax Assessor Gary Martin said recently. Vensel said 22,854 of them are in the Chambersburg district.

Elsewhere in the county, the referendums failed to pass. Waynesboro Area School District voters rejected it, 58 percent to 42 percent; the margin was 57 percent to 43 percent in the Tuscarora School District; 59 percent to 41 percent in the Fannett-Metal School District; and 54 to 46 percent in the Greencastle-Antrim School District, according to election results.

The Shippensburg Area School District is split between Franklin and Cumberland counties, and election results from those counties show that the referendum was defeated.

Fannett-Metal voters also rejected a "back-end" referendum on its proposed 2007-08 budget. The referendum was required because the district's proposed 8.53-mill increase in property taxes exceeded a cap set by the state under Act 1. The district could have raised taxes 3.8 mills without going to a referendum under Act 1.

"If this referendum question fails, the result could be the district's failure to meet its possible obligations within a new collective bargaining agreement as well as possible program and staff reductions," according to the "nonlegal interpretive statement" issued to explain possible ramifications of not approving the mill increase. The statement said the current contract with teachers expires June 30.

Know more in 30 seconds

The issue: Voters across Pennsylvania were asked to vote on Act 1 tax referendums in Tuesday's primary election. The referendum imposes a higher earned income tax in exchange for lowering property taxes.

What's new: Chambersburg Area School District was one of about five districts among the 501 in Pennsylvania to approve the referendum. The other five school districts in Franklin County rejected similar referendums.

What's next: Chambersburg district residents will see their earned income tax for schools go from the current 0.5 percent to 1.2 percent on July 1. Those with homestead and farmstead exclusions will see taxes lowered by about $367. In the other districts, the earned income tax will remain the same.

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