PRINTER'S NO. 3107
No. 2458 Session of 1994
INTRODUCED BY RUBLEY, PITTS, E. Z. TAYLOR, FLICK, HERSHEY,
GERLACH, HENNESSEY, FICHTER, MARKOSEK, BUNT, MICOZZIE,
SCHULER, SEMMEL, TOMLINSON AND LAUB, JANUARY 26, 1994
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, JANUARY 26, 1994
AN ACT
1 Allowing school districts of the second class, third class or
2 fourth class to appoint a local tax study commission and
3 submit recommendations for changes in local tax structure;
4 requiring reductions; imposing limitations; and providing for
5 a referendum relating to the appointment of a commission.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the Local Option
10 School District Tax Reform Act.
11 Section 2. Definitions.
12 The following words and phrases when used in this act shall
13 have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Personal income." The classes of income enumerated in
16 section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
17 the Tax Reform Code of 1971, and upon which is imposed a
18 personal income tax by the Commonwealth. For purposes of this
19 act, the term "personal income" shall not include profits from
1 the sale of a principal residence or trade or business. In the
2 event a district levies, assesses or collects, or provides for
3 the levy, assessment or collection of any tax after having
4 accepted some or all of the recommendations of a local tax study
5 commission as hereinafter provided, the district shall exclude
6 from any personal income tax imposed as defined by the above
7 provisions and exclusions any person whose income is equal to or
8 less than the maximum income requirement necessary to qualify
9 for a property tax rebate or rent rebate in lieu of property
10 taxes or rent due under the act of March 11, 1971 (P.L.104,
11 No.3), known as the Senior Citizens Rebate and Assistance Act.
12 "School district." Includes school districts of the second,
13 third and fourth classes.
14 Section 3. Local tax study commission.
15 (a) First-year implementation.--Before any school district
16 of the second, third or fourth class levies, assesses or
17 collects, or provides for the levy, assessment or collection of
18 any tax, under the authority of this act, the board of school
19 directors may appoint a local tax study commission in accordance
20 with the following provisions:
21 (1) Membership.--The local tax study commission shall
22 consist of five, seven or nine members appointed by the
23 board. One member of the local tax study commission may be a
24 member of the school board, as deemed appropriate by the
25 board. No member of the local tax study commission shall be a
26 relative, by blood or marriage, of an official or employee of
27 the school district. All members shall be residents of the
28 district. Representatives on a local tax study commission
29 must reasonably reflect the socioeconomic, age and
30 occupational diversity of the school district.
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1 (2) Staff and expenses.--The board shall provide
2 necessary and reasonable staff to support the local tax study
3 commission and shall reimburse the members of the local tax
4 study commission for necessary and reasonable expenses in the
5 discharge of their duties.
6 (3) Public hearings.--The local tax study commission
7 shall hold at least one public fact-finding hearing, the
8 first to be held within two weeks of the creation of the
9 local tax study commission to gather background information
10 and solicit suggestions from residents, or any other persons
11 or parties interested in or affected by levy, assessment or
12 collection of taxes by the district. Within budgetary limits
13 approved by the school board, the local tax study commission
14 may sponsor public forums, shall provide for the broadest
15 possible distribution of public information and shall
16 encourage public discussion respecting the subject of its
17 work.
18 (4) Contents of study.--The local tax study commission
19 shall study the existing taxes levied, assessed and collected
20 by the district and determine if and how the tax policies of
21 the district could be strengthened or made more equitable by
22 adopting for levy, assessment and collection one or a
23 combination of any of the following taxes: personal income
24 tax, real estate tax, realty transfer tax or amusement tax at
25 such levels and in such combinations on permissible subjects
26 of taxation as do not exceed the limitations in this act.
27 This study shall include, but not be limited to,
28 consideration of all of the following:
29 (i) Historic rate and revenue provided by taxes
30 currently levied, assessed and collected by the district.
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1 (ii) The percentage of total revenues provided by
2 taxes currently levied, assessed and collected.
3 (iii) The age, income, employment and property use
4 characteristics of existing tax base.
5 (iv) The projected revenues of any taxes currently
6 levied, assessed and collected.
7 (v) The projected revenues of any taxes referred to
8 above not currently levied, assessed and collected by the
9 district.
10 (5) Recommendation.--Within 60 days of its appointment,
11 the local tax study commission shall make a nonbinding
12 recommendation to the board of the appropriate tax or
13 combination of taxes, identified in paragraph (4), to be
14 levied, assessed and collected commencing the next fiscal
15 year. Upon appointment of the commission, and except as
16 provided for in paragraph (6), no tax may be levied, assessed
17 or collected for the next fiscal year until receipt of the
18 recommendation of the local tax study commission. Within two
19 weeks of receiving the recommendation, the board shall hold a
20 public hearing to permit public comment on the
21 recommendation. Within 60 days of the public hearing, but not
22 later than 30 days prior to the commencement of the next
23 fiscal year, the board shall accept or reject the
24 recommendation of the local tax study commission or adopt any
25 other appropriate tax or combination of taxes for the
26 district commencing the next fiscal year as provided by law.
27 (6) Failure to issue recommendation.--If the local tax
28 study commission fails to make a nonbinding recommendation
29 within 60 days of its appointment, the board shall discharge
30 the appointed local tax study commission, appoint itself as
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1 the local tax study commission and proceed to hold a public
2 hearing to permit public comment on the appropriate tax or
3 combination of taxes for the district commencing the next
4 fiscal year. Within 60 days of the public hearing, but not
5 later than 30 days prior to the commencement of the next
6 fiscal year, the board shall adopt the appropriate tax or
7 combination of taxes for the district commencing the next
8 fiscal year as provided by law.
9 (7) Public distribution of report.--The local tax study
10 commission shall publish or cause to be published, within 30
11 days of making its recommendation, a final report of its
12 activities and recommendations and shall deliver the final
13 report to the secretary of the board who shall supply copies
14 to any interested persons upon request.
15 (8) Receipts.--Receipts are required for all
16 reimbursable expenses.
17 (9) Materials.--All the records, receipts, tapes,
18 minutes of meetings and written discussions of the local tax
19 study commission shall, upon its discharge, be turned over to
20 the secretary of the district for the permanent safekeeping.
21 The secretary shall make such materials available for public
22 inspection at any time during regular business hours.
23 (10) Discharge.--The local tax study commission shall be
24 discharged upon the filing of its final report.
25 (b) Three-year review.--Any school district that levies,
26 assesses and collects, or provides for the levy, assessment or
27 collection of any tax, after having received the recommendations
28 of a local tax study commission and acted, shall continue to
29 levy, assess and collect the same tax or combination of taxes
30 for the next three fiscal years. However, nothing herein shall
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1 preclude the board to change or alter the rates of any such tax
2 or combination of taxes if it deems necessary. Before the third
3 fiscal year following the district's action on the
4 recommendations of a local tax study commission, and every third
5 fiscal year thereafter, the board may appoint a local tax study
6 commission in the manner provided in subsection (a). The local
7 tax study commission appointed under this subsection shall be
8 charged with all of the same powers and duties provided for the
9 local tax study commission under subsection (a). In the event
10 the district does not appoint a local tax study commission under
11 this subsection after having previously acted on the
12 recommendations of a local tax study commission, the district
13 shall continue to levy, assess and collect the same tax or
14 combination of taxes for the next three fiscal years.
15 Section 4. Tax levying authority clause.
16 Following the recommendation of the tax study commission, the
17 school board will have the authority through this act to
18 implement a new tax structure for its district. This tax
19 structure may include, but not be limited to, the following: a
20 personal income tax, real estate tax, realty transfer tax and an
21 amusement tax.
22 Section 5. Revenue estimate clause.
23 Prior to changing the tax structure, a school district shall
24 estimate, using its existing tax structure, the total revenue
25 which must be raised in the next fiscal year in order to balance
26 its budget. The district shall then plan for the imposition of
27 the new tax structure by a dollar amount equal to the estimated
28 revenue needed for the following fiscal year. The revenue
29 estimate must be completed prior to the initial imposition of
30 the new tax structure.
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1 Section 6. Antiwindfall clause.
2 A school district shall not receive a tax windfall by the
3 changing of its tax structure. If a school district levies a tax
4 which is not presently used and the total projected revenue of
5 the district exceeds the amount of revenue lost through
6 abolition or reduction of existing taxes, then the district must
7 reduce the rate of taxes so the revenue raised does not exceed
8 revenue lost through abolition or reduction of existing taxes.
9 Section 7. Limitations.
10 (a) Revenue limits.--Taxes levied by a school district are
11 limited as follows:
12 (1) For the first fiscal year of imposition of a tax
13 under the authority of this act, tax revenues are limited to
14 an increase in the aggregate tax revenues over the aggregate
15 tax revenues for the fiscal year beginning during the
16 preceding calendar year which does not exceed the greater of
17 the following:
18 (i) The average percentage of the annual increase in
19 aggregate tax revenues collected over the immediately
20 preceding five fiscal years plus 2%.
21 (ii) The average annual percentage increase in the
22 Consumer Price Index for All Urban Consumers, United
23 States City Average, All Items, for the 24-month period
24 immediately preceding the start of that fiscal year, for
25 which statistics are available, as determined and
26 published by the Department of Community Affairs.
27 (2) For the second and third fiscal years beginning
28 after the imposition of a tax under the authority of this
29 act, tax revenues are limited to an increase in the aggregate
30 tax revenues over the aggregate tax revenues for the fiscal
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1 year beginning during the preceding calendar year which does
2 not exceed the greater of the following:
3 (i) The average percentage of the annual increase in
4 aggregate tax revenues collected over the immediately
5 preceding five fiscal years.
6 (ii) The average annual percentage increase in the
7 Consumer Price Index for All Urban Consumers, United
8 States City Average, All Items, for the 24-month period
9 immediately preceding the start of that fiscal year, for
10 which statistics are available, as determined and
11 published by the Department of Community Affairs.
12 (b) Application.--The limitations contained in this section,
13 unless expressly repealed, apply to every tax levied.
14 (c) Exclusions.--The limitations contained in subsection (a)
15 do not apply to taxes levied to cover:
16 (1) Interest and principal on any indebtedness incurred
17 pursuant to the act of July 12, 1972 (P.L.781, No.185), known
18 as the Local Government Unit Debt Act, or any prior or
19 subsequent act governing the incurrence of indebtedness by a
20 school district.
21 (2) An increase in costs of personnel, resources or
22 facilities directly attributable to an increase in enrollment
23 or existing contractual obligations.
24 (3) Increases in pension fund requirements which are in
25 excess of the annual average increase over the immediately
26 preceding five fiscal years.
27 (4) Federal and/or State reimbursement which was less
28 than the previous year.
29 (5) Unfunded or underfunded mandates.
30 (d) Court order.--The limitations contained in this section
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1 may be exceeded by order of the court of common pleas upon
2 petition of the district. A petition under this subsection must
3 be made by resolution by majority action of the board of
4 directors.
5 Section 8. Referendum.
6 (a) When held.--If the board of school directors does not
7 elect to create a local tax study commission, then upon
8 submission to the county board of elections of a petition
9 containing the signatures of electors resident in a school
10 district, the number of said signatures equal to or exceeding 3%
11 of the total number of registered voters in the school district
12 as of the last general election, the county board of elections
13 shall, at the next primary, municipal or general election
14 conduct a referendum within that school district.
15 (b) Ballot question.--The ballot question for this
16 referendum shall be as follows:
17 Do you favor the appointment of a local tax study
18 commission for the school district of (name of district)?
19 (c) Conduct of election.--The referendum shall be conducted
20 in accordance with the act of June 3, 1937 (P.L.1333, No.320),
21 known as the Pennsylvania Election Code.
22 (d) Appointment of commission.--If a majority of the
23 electors voting thereon vote in the affirmative, the board of
24 school directors within 30 days shall appoint a local tax study
25 commission in accordance with this act.
26 Section 9. Repeals.
27 All acts and parts of acts are repealed insofar as they are
28 inconsistent with this act.
29 Section 10. Effective date.
30 This act shall take effect in 60 days.
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