PRINTER'S NO. 1489
No. 1263 Session of 2005
INTRODUCED BY CIVERA, BARRAR, CAPPELLI, CORNELL, FAIRCHILD,
GANNON, GEIST, GINGRICH, HARPER, HARRIS, HENNESSEY, KILLION,
MICOZZIE, NAILOR, RAYMOND, READSHAW, RUBLEY, SATHER,
SCAVELLO, E. Z. TAYLOR, TIGUE, WATSON AND WILT,
MARCH 31, 2005
REFERRED TO COMMITTEE ON FINANCE, MARCH 31, 2005
AN ACT
1 Amending the act of July 5, 2004 (P.L.654, No.72), entitled "An
2 act providing for taxation by school districts, for State
3 funds and for wage and net profits tax relief in cities of
4 the first class; and making an appropriation," further
5 providing for qualifying contributions, for adoption of
6 referendums, for referendum requirements and for disposition
7 of tax revenue and property tax reduction allocation.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Sections 331, 332(c), 333(f)(2)(ix) and 334 of
11 the act of July 5, 2004 (P.L.654, No.72), known as the Homeowner
12 Tax Relief Act, are amended to read:
13 Section 331. Qualifying contribution.
14 (a) General rule.--Except as set forth in subsection (b), a
15 school district shall[, by] take one of the following actions:
16 (1) By resolution, levy, assess and collect the 0.1%
17 earned income and net profits tax authorized under section
18 321(b)(1) in order to qualify for a property tax reduction
19 allocation under section 505. The board of school directors
1 shall adopt the resolution by [May 30] August 15 of the first
2 year in which a certification under section 503(a) is made.
3 Within five days after adopting the resolution, the board of
4 school directors shall notify the department in a form and
5 manner prescribed by the department in order to establish the
6 school district's eligibility to receive a property tax
7 reduction allocation pursuant to Chapter 5.
8 (2) Propose a referendum question at the municipal
9 election of 2007 seeking voter approval allowing the school
10 district to levy, assess and collect the 0.1% earned income
11 and net profits tax authorized under section 321(b)(1) in
12 order to qualify for a property tax reduction allocation
13 under section 505. If a referendum question under this
14 subsection is approved by the electorate, the board of school
15 directors shall impose the tax and be entitled for property
16 tax reduction allocations beginning fiscal year 2008-2009.
17 (b) Exception.--Subsection (a) shall not apply if any of the
18 following apply:
19 (1) A school district which does not, prior to May 30 of
20 the year in which a school district will receive a payment
21 under section 505(b), impose an earned income and net profits
22 tax under the Local Tax Enabling Act or any other statute may
23 qualify for a property tax reduction allocation under Chapter
24 5 without levying the tax required under subsection (a) if
25 the school district proposes a referendum required under
26 section 332(e). The board of school directors shall adopt a
27 resolution proposing a referendum by May 30 of the year in
28 which a certification under section 503(a) is made. Within
29 five days after adopting the resolution, the board of school
30 directors shall notify the department in a form and manner
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1 prescribed by the department in order to establish the school
2 district's eligibility to receive a property tax reduction
3 allocation pursuant to Chapter 5. If a referendum proposed
4 under section 332(e) is not approved by the electorate, a
5 district shall enact by resolution the 0.1% earned income net
6 profits tax authorized under section 321(b)(1) in order to
7 maintain eligibility for a property tax reduction allocation
8 under Chapter 5.
9 (2) A referendum proposed under section 332(d.1) is
10 approved by the electorate.
11 Section 332. Adoption of referendum.
12 * * *
13 (c) Proposed tax rate.--The proposed rate of the earned
14 income and net profits tax or personal income tax shall be
15 established by the board of school directors of the school
16 district in accordance with the following:
17 (1) For the municipal election of 2007, the proposed tax
18 rate shall not be less than the rate required to provide an
19 exclusion for homestead property and farmstead property equal
20 to 50% of the maximum exclusion under 53 Pa.C.S. § 8586
21 (relating to limitations). The proposed tax rate shall not
22 exceed the rate required to provide an exclusion for
23 homestead property and farmstead property equal to the
24 maximum exclusion under 53 Pa.C.S. § 8586. In calculating the
25 proposed minimum tax rate under this paragraph, a school
26 district shall include:
27 (i) funds generated from the tax imposed under
28 section 331;
29 (ii) funds received pursuant to a property tax
30 reduction allocation under Chapter 5;
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1 (iii) funds received under section [324(b)] 324; and
2 (iv) any funds currently collected for the purposes
3 of providing homestead and farmstead exclusions.
4 (2) For subsequent municipal elections, the proposed tax
5 rate shall not exceed the rate required to provide an
6 exclusion for homestead property and farmstead property equal
7 to the maximum exclusion under 53 Pa.C.S. § 8586.
8 * * *
9 Section 333. Public referendum requirements for increasing
10 certain taxes.
11 * * *
12 (f) Referendum exceptions.--A school district may, without
13 seeking voter approval under subsection (c), increase the rate
14 of a tax levied for the support of the public schools by more
15 than the index if all of the following apply:
16 * * *
17 (2) The revenue generated by increasing the rate of a
18 tax by more than the index will be used to pay for any of the
19 following:
20 * * *
21 (ix) Costs incurred [for providing health care-
22 related benefits which are directly attributable to]
23 under a collective bargaining agreement in effect on the
24 effective date of this section between the school
25 district and its employees' organization if the
26 anticipated increase in the [cost of health care-related
27 benefits] costs between the current year and the upcoming
28 year is greater than the index. The dollar amount of this
29 exception shall be equal to the portion of the increase
30 which exceeds the index. This subparagraph shall not
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1 apply to a collective bargaining agreement renewed,
2 extended or entered into after the effective date of this
3 section.
4 * * *
5 Section 334. Disposition of income tax revenue and property tax
6 reduction allocations.
7 (a) Earned income and net profits tax revenue.--All earned
8 income and net profits tax revenue received by the school
9 district pursuant to this chapter shall be used as follows:
10 (1) In the fiscal year that the tax under section
11 321(b)(1) is implemented, all revenue received by a school
12 district that is directly attributable to that tax shall be
13 used to fund exclusions for homestead and farmstead property.
14 (2) In the second fiscal year and each fiscal year
15 thereafter, the revenue received by the school district shall
16 be used to maintain the amount established in paragraph (1).
17 All remaining revenue may be used for the operations of the
18 school district.
19 (3) Except as set forth in section 321(b)(4), in the
20 fiscal year that a tax under section 321(b)(2) is implemented
21 or increased, all revenue received by a school district that
22 is directly attributable to that tax shall be used to fund
23 exclusions for homestead and farmstead property.
24 (4) In the second fiscal year and each fiscal year
25 thereafter, the revenue received by the school district shall
26 be used to maintain the amount established in paragraph (3).
27 [All remaining revenue may be used for the operations of the
28 school district.]
29 (b) Personal income tax revenue.--All personal income tax
30 revenue received by the school district pursuant to this chapter
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1 shall be used as follows:
2 (1) Except as set forth in section 321(c)(6), in the
3 fiscal year that the tax under section 321(c) is implemented
4 or increased, all revenue received by the school district
5 pursuant to section 321(c)(2)(ii) and (iii) shall be used to
6 fund exclusions for homestead and farmstead property.
7 (2) In the second fiscal year and each fiscal year
8 thereafter, all revenue received by the school district
9 pursuant to section 321(c)(2)(ii) and (iii) shall be used to
10 maintain the amount established in paragraph (1). [All
11 remaining revenue may be used for the operations of the
12 school district.]
13 Section 2. This act shall take effect in 60 days.
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