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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY BRUBAKER, PILEGGI, PICCOLA, SOLOBAY, FOLMER, VOGEL, RAFFERTY, EICHELBERGER, ALLOWAY, WAUGH, VANCE, FERLO, BROWNE, ORIE, MENSCH AND WARD, MARCH 30, 2011 |
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| REFERRED TO FINANCE, MARCH 30, 2011 |
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| AN ACT |
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1 | Amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873, |
2 | No.1), entitled "An act providing for taxation by school |
3 | districts, for the State funds formula, for tax relief in |
4 | first class cities, for school district choice and voter |
5 | participation, for other school district options and for a |
6 | task force on school cost reduction; making an appropriation; |
7 | prohibiting prior authorized taxation; providing for |
8 | installment payment of taxes; restricting the power of |
9 | certain school districts to levy, assess and collect taxes; |
10 | and making related repeals," further providing for adoption |
11 | of preliminary budget proposals and for public referendum |
12 | requirements for increasing certain taxes. |
13 | The General Assembly of the Commonwealth of Pennsylvania |
14 | hereby enacts as follows: |
15 | Section 1. Section 311(d)(3) and (4) of the act of June 27, |
16 | 2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer |
17 | Relief Act, are amended to read: |
18 | Section 311. Adoption of preliminary budget proposals. |
19 | * * * |
20 | (d) Resolution.-- |
21 | * * * |
22 | [(3) A board of school directors that adopts a |
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1 | resolution under this section shall not be eligible to seek |
2 | referendum exceptions under section 333(f), and section |
3 | 333(e) shall not apply.] |
4 | (4) Upon receipt of the information required under |
5 | paragraph (2)(ii), the department shall compare the proposed |
6 | percentage increase in the rate of the tax with the index. |
7 | Within ten days of the receipt of the information required |
8 | under this subsection, the department shall inform the school |
9 | district whether the proposed tax rate increase is less than |
10 | or equal to the index. If the department determines that the |
11 | proposed percentage increase in the rate of the tax exceeds |
12 | the index, the school district shall be subject to |
13 | subsections (a) and (c), and [paragraphs (2)(i) and (3)] |
14 | paragraph (2)(i) shall not apply. The department's |
15 | determination under this paragraph shall not constitute an |
16 | adjudication. |
17 | Section 2. Section 333(b) introductory paragraph, (c)(3), |
18 | (e), (f), (g), (h), (i), (j), (k) and (n) of the act are amended |
19 | and the section is amended by adding a subsection to read: |
20 | Section 333. Public referendum requirements for increasing |
21 | certain taxes. |
22 | * * * |
23 | (b) Prohibitions.--[Except as set forth in subsection (i) |
24 | and (j), unless] Unless there is compliance with subsection (c), |
25 | a board of school directors may not do any of the following: |
26 | * * * |
27 | (c) Referendum.-- |
28 | * * * |
29 | (3) [Except as set forth in subsections (i) and (j), a] |
30 | A school district acting pursuant to this subsection shall |
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1 | submit the referendum question required under this section to |
2 | the election officials of each county in which it is situate |
3 | no later than 60 days prior to the election immediately |
4 | preceding the fiscal year in which the tax increase would |
5 | take effect. |
6 | * * * |
7 | (e) Tax rate submissions.--A school district that has |
8 | adopted a preliminary budget proposal under section 311 that |
9 | includes an increase in the rate of any tax levied for the |
10 | support of public schools shall submit information on the |
11 | increase to the department on a uniform form prepared by the |
12 | department. The school district shall submit such information no |
13 | later than 85 days prior to the date of the election immediately |
14 | preceding the beginning of the school district's fiscal year. |
15 | The department shall compare the proposed percentage increase in |
16 | the rate of any tax with the index. Within ten days of the |
17 | receipt of the information required under this subsection but no |
18 | later than 75 days prior to the date of the election immediately |
19 | preceding the beginning of the school district's fiscal year, |
20 | the department shall inform the school district whether the |
21 | proposed tax rate increase is less than or equal to the index. |
22 | If the department determines that the proposed percentage |
23 | increase in the rate of the tax exceeds the index, the |
24 | department shall notify the school district that: |
25 | (1) the proposed tax increase must be reduced to an |
26 | amount less than or equal to the index; or |
27 | (2) the proposed tax increase must be approved by the |
28 | electorate under subsection (c)(1)[; or |
29 | (3) an exception must be sought under subsections (i) |
30 | and (j)]. |
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1 | [(f) Referendum exceptions.--A school district may, without |
2 | seeking voter approval under subsection (c), increase the rate |
3 | of a tax levied for the support of the public schools by more |
4 | than the index if all of the following apply: |
5 | (1) The revenue raised by the allowable increase under |
6 | the index is insufficient to balance the proposed budget due |
7 | to one or more of the expenditures listed in paragraph (2). |
8 | (2) The revenue generated by increasing the rate of a |
9 | tax by more than the index will be used to pay for any of the |
10 | following: |
11 | (i) Costs incurred in responding to or recovering |
12 | from an emergency or disaster declared pursuant to 35 |
13 | Pa.C.S. § 7301 (relating to general authority of |
14 | Governor) or 75 Pa.C.S. § 6108 (relating to power of |
15 | Governor during emergency). |
16 | (ii) Costs to implement a court order or an |
17 | administrative order from a Federal or State agency as |
18 | long as the tax increase is rescinded following |
19 | fulfillment of the court order or administrative order. |
20 | (iii) Costs associated with the following: |
21 | (A) For a board of school directors that elected |
22 | to participate in the former act of July 5, 2004 |
23 | (P.L.654, No.72), known as the Homeowner Tax Relief |
24 | Act, to pay interest and principal on any |
25 | indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt. |
26 | B (relating to indebtedness and borrowing) prior to |
27 | September 4, 2004. In no case may the school district |
28 | incur additional debt under this clause except for |
29 | the refinancing of existing debt, including the |
30 | payment of costs and expenses related to such |
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1 | refinancing and the establishment of funding of |
2 | appropriate debt service reserves. An increase under |
3 | this clause shall be rescinded following the final |
4 | payment of interest and principal. |
5 | (A.1) For a board of school directors that did |
6 | not elect to participate in the former act of July 5, |
7 | 2004 (P.L.654, No.72), known as the Homeowner Tax |
8 | Relief Act, to pay interest and principal on any |
9 | indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt. |
10 | B prior to the effective date of this act. In no case |
11 | may the school district incur additional debt under |
12 | this clause except for the refinancing of existing |
13 | debt, including the payment of costs and expenses |
14 | related to such refinancing and the establishment of |
15 | funding of appropriate debt service reserves. An |
16 | increase under this clause shall be rescinded |
17 | following the final payment of interest and |
18 | principal. |
19 | (B) To pay interest and principal on any |
20 | electoral debt incurred under 53 Pa.C.S. Pt. VII |
21 | Subpt. B. An increase under this clause shall be |
22 | rescinded following the final payment of interest and |
23 | principal. |
24 | (C) To pay interest and principal on |
25 | indebtedness for up to 60% of the construction cost |
26 | average on a square-foot basis if all of the |
27 | following apply: |
28 | (I) The indebtedness is for a school |
29 | construction project under 22 Pa. Code Ch. 21 |
30 | (relating to school buildings). |
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1 | (II) For a board of school directors that |
2 | elected to participate in the former Homeowner |
3 | Tax Relief Act, the indebtedness to fund |
4 | appropriate debt service reserves for the project |
5 | is incurred after September 3, 2004. |
6 | (II.1) For a board of school directors that |
7 | did not elect to participate in the former |
8 | Homeowner Tax Relief Act, the indebtedness to |
9 | fund appropriate debt service reserves for the |
10 | project is incurred on or after the effective |
11 | date of this act. |
12 | (III) The increase sought under this clause |
13 | is rescinded following final payment of interest |
14 | and principal. |
15 | (IV) The indebtedness is incurred only after |
16 | existing fund balances for school construction |
17 | and any undesignated fund balances have been |
18 | fully committed to fund the project. |
19 | (V) The indebtedness is for an academic |
20 | elementary or academic secondary school building. |
21 | For purposes of this subclause, the following |
22 | shall not be considered to be an academic |
23 | elementary or academic secondary school building: |
24 | natatorium, stadium bleachers, athletic field, |
25 | athletic field lighting equipment and apparatus |
26 | used to promote and conduct interscholastic |
27 | athletics. |
28 | (VI) For school districts of the second, |
29 | third and fourth class, the project has been |
30 | approved by the department under section 731 of |
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1 | the act of March 10, 1949 (P.L.30, No.14), known |
2 | as the Public School Code of 1949. For |
3 | nonreimbursable projects in school districts of |
4 | the first class A, the plans and specifications |
5 | have been approved by the board of school |
6 | directors. For reimbursable projects in school |
7 | districts of the first class A, the plans and |
8 | specifications have been approved by the |
9 | department pursuant to 22 Pa. Code Ch. 21. |
10 | (D) To pay interest and principal on |
11 | indebtedness for up to $250,000 of the construction |
12 | cost of a nonacademic school construction project, as |
13 | adjusted annually by the percentage increase in the |
14 | average of the Statewide average weekly wage and the |
15 | employment cost index. An increase under this clause |
16 | shall be rescinded following the final payment of |
17 | interest and principal. |
18 | (E) For purposes of this subparagraph, electoral |
19 | debt includes the refunding or refinancing of |
20 | electoral debt for which an exception is permitted |
21 | under clause (B) as long as the refunding or |
22 | refinancing incurs no additional debt other than for: |
23 | (I) costs and expenses related to the |
24 | refunding or refinancing; and |
25 | (II) funding of appropriate debt service |
26 | reserves. |
27 | (F) For purposes of this subparagraph, |
28 | indebtedness includes the refunding or refinancing of |
29 | indebtedness for which an exception is permitted |
30 | under clauses (A), (A.1), (C) and (D) as long as the |
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1 | refunding or refinancing incurs no additional debt |
2 | other than for: |
3 | (I) costs and expenses related to the |
4 | refunding or refinancing; and |
5 | (II) funding of appropriate debt service |
6 | reserves. |
7 | (iv) Costs to respond to conditions which pose an |
8 | immediate threat of serious physical harm or injury to |
9 | the students, staff or residents of the school district |
10 | but only until the conditions causing the threat have |
11 | been fully resolved. |
12 | (v) Costs incurred in providing special education |
13 | programs and services to students with disabilities if |
14 | the increase in expenditures on special education |
15 | programs and services was greater than the index. The |
16 | dollar amount of this exception shall be equal to the |
17 | portion of the increase that exceeds the index. |
18 | (vi) Costs which: |
19 | (A) were incurred in the implementation of a |
20 | school improvement plan required under section |
21 | 1116(b) of the Elementary and Secondary Education Act |
22 | of 1965 (Public Law 89-10, 20 U.S.C. § 6316(b)); and |
23 | (B) were not offset by a State allocation. |
24 | (vii) Costs necessary to maintain: |
25 | (A) per-student local tax revenue, adjusted by |
26 | the index, if the percentage growth in average daily |
27 | membership between the school year determined under |
28 | subsection (j)(4) and the third school year preceding |
29 | the school year determined under subsection (j)(4) |
30 | exceeds 7.5%; or |
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1 | (B) actual instruction expense per average daily |
2 | membership, adjusted by the index, if the increase in |
3 | actual instruction expense per average daily |
4 | membership between the school year determined under |
5 | subsection (j)(4) and the school year preceding the |
6 | school year determined under subsection (j)(4) is |
7 | less than the index. |
8 | (viii) The maintenance of revenues derived from real |
9 | property taxes, earned income and net profits taxes, |
10 | personal income taxes, basic education funding |
11 | allocations and special education funding allocations, |
12 | adjusted by the index, for a school district where the |
13 | percentage increase in revenues derived from real |
14 | property taxes, earned income and net profits taxes, |
15 | personal income taxes, basic education funding |
16 | allocations and special education funding allocations |
17 | between the school year determined under subsection (j) |
18 | (4) and the school year preceding the school year |
19 | determined under subsection (j)(4) is less than the |
20 | index. |
21 | (ix) Costs incurred for providing health care- |
22 | related benefits which are directly attributable to a |
23 | collective bargaining agreement in effect on January 1, |
24 | 2006, between the school district and its employees' |
25 | organization if the anticipated increase in the cost of |
26 | health care-related benefits between the current year and |
27 | the upcoming year is greater than the index. The dollar |
28 | amount of this exception shall be equal to the portion of |
29 | the increase which exceeds the index. This subparagraph |
30 | shall not apply to a collective bargaining agreement |
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1 | renewed, extended or entered into after January 1, 2006.] |
2 | (f.1) Rescission.-- |
3 | (1) Any increase in a rate of a tax levied for support |
4 | of the public schools imposed prior to or during the |
5 | 2011-2012 school year under a referendum exception granted |
6 | under section 333 or section 333 of the former Homeowner Tax |
7 | Relief Act shall be rescinded: |
8 | (i) immediately following fulfillment of the court |
9 | order or administrative order that was the basis for the |
10 | referendum exception; |
11 | (ii) immediately following the payment of costs to |
12 | resolve a condition which posed an immediate threat of |
13 | serious physical harm or injury to the students, staff or |
14 | residents of the school district that was the basis for |
15 | the referendum exception; or |
16 | (iii) following the final payment of interest and |
17 | principal related to the indebtedness. |
18 | (2) For the purposes of this subsection, the term "final |
19 | payment of interest and principal" shall not include a school |
20 | district's payment of debt as a result of refunding or |
21 | refinancing the debt unless the original debt has been fully |
22 | paid. |
23 | [(g) Revenue derived from increase.--Any revenue derived |
24 | from an increase in the rate of any tax allowed pursuant to |
25 | subsection (f)(2)(iii) shall not exceed the anticipated dollar |
26 | amount of the expenditure. |
27 | (h) Limitation on tax rate.--The increase in the rate of any |
28 | tax allowed pursuant to an exception under subsection (f)(2)(i), |
29 | (ii), (iv), (v), (vi), (vii), (viii) or (ix) or (n) shall not |
30 | exceed the rate increase required as determined by a court of |
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1 | common pleas or the department pursuant to subsection (i) or |
2 | (j). |
3 | (i) Court action.-- |
4 | (1) Prior to the imposition of a tax increase under |
5 | subsection (f)(2)(i), (ii) and (iv) and no later than 75 days |
6 | prior to the election immediately preceding the beginning of |
7 | the school district's fiscal year, approval by the court of |
8 | common pleas in the judicial district in which the |
9 | administrative office of the school district is located must |
10 | be sought. The board of school directors shall publish in a |
11 | newspaper of general circulation and on the district's |
12 | publicly accessible Internet site, if one is maintained, |
13 | notice of its intent to file a petition under this subsection |
14 | at least one week prior to the filing of the petition. The |
15 | board of school directors shall also publish in a newspaper |
16 | of general circulation and on the district's publicly |
17 | accessible Internet site, if one is maintained, notice, as |
18 | soon as possible following notification from the court that a |
19 | hearing has been scheduled, stating the date, time and place |
20 | of the hearing on the petition. The following shall apply to |
21 | any proceedings instituted under this subsection: |
22 | (i) The school district must prove by clear and |
23 | convincing evidence that it qualifies for each exception |
24 | sought. |
25 | (ii) The school district must prove by clear and |
26 | convincing evidence the anticipated dollar amount of the |
27 | expenditure for each exception sought. |
28 | (2) The court shall rule on the school district's |
29 | petition and inform the school district of its decision no |
30 | later than 55 days prior to the date of the election |
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1 | immediately preceding the beginning of the school district's |
2 | fiscal year. If the court approves the petition, the court |
3 | shall also determine the dollar amount of the expenditure for |
4 | which an exception is granted, the tax rate increase required |
5 | to fund the exception and the appropriate duration of the |
6 | increase. If the court denies the petition, the school |
7 | district may submit a referendum question under subsection |
8 | (c)(1). The question must be submitted to the election |
9 | officials no later than 50 days prior to the date of the |
10 | election immediately preceding the beginning of the school |
11 | district's fiscal year. |
12 | (j) Department approval.-- |
13 | (1) A school district that seeks to increase the rate of |
14 | tax due to an expenditure under subsection (f)(2)(iii), (v), |
15 | (vi), (vii), (viii) or (ix) or (n) shall obtain the approval |
16 | of the department before imposing the tax increase. The |
17 | department shall establish procedures for administering the |
18 | provisions of this subsection, which may include an |
19 | administrative hearing on the school district's submission. |
20 | (2) A school district proceeding under the provisions of |
21 | this subsection shall publish in a newspaper of general |
22 | circulation and on the district's publicly accessible |
23 | Internet site, if one is maintained, notice of its intent to |
24 | seek department approval at least one week prior to |
25 | submitting its request for approval to the department. If the |
26 | department schedules a hearing on the school district's |
27 | request, the school district shall publish notice of the |
28 | hearing in a newspaper of general circulation and on the |
29 | district's publicly accessible Internet site, if one is |
30 | maintained, immediately upon receiving the information from |
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1 | the department. The notice shall include the date, time and |
2 | place of the hearing. |
3 | (3) The department shall approve a school district's |
4 | request under this subsection if a review of the data under |
5 | paragraph (4) demonstrates that: |
6 | (i) the school district qualifies for one or more |
7 | exceptions under subsection (f)(2)(iii), (v), (vi), |
8 | (vii), (viii) or (ix) or (n); and |
9 | (ii) the sum of the dollar amounts of the exceptions |
10 | for which the school district qualifies makes the school |
11 | district eligible under subsection (f)(1). |
12 | (4) For the purpose of determining the eligibility of a |
13 | school district for an exception under subsection (f)(2)(v), |
14 | (vi), (vii) or (viii), the department shall utilize data from |
15 | the most recent school years for which annual financial |
16 | report data required under section 2553 of the Public School |
17 | Code of 1949 has been received. The department shall inform |
18 | school districts of the school years determined under this |
19 | subsection no later than 30 days prior to the date on which |
20 | public inspection of proposed school budgets is required |
21 | under section 311(c). |
22 | (5) (i) The department shall rule on the school |
23 | district's request and shall inform the school district |
24 | of its decision no later than 55 days prior to the date |
25 | of the election immediately preceding the beginning of |
26 | the school district's fiscal year. |
27 | (ii) If the department approves the request, the |
28 | department shall determine the dollar amount of the |
29 | expenditure for which the exception is sought and the tax |
30 | rate increase required to fund the exception. |
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1 | (iii) If the department denies the request, the |
2 | school district may submit a referendum question under |
3 | subsection (c)(1). The question must be submitted to the |
4 | election officials no later than 50 days prior to the |
5 | date of the election immediately preceding the beginning |
6 | of the school district's fiscal year. |
7 | (6) Within 30 days of the deadline under paragraph (5) |
8 | (i), the department shall submit a report to the President |
9 | pro tempore of the Senate, the Minority Leader of the Senate, |
10 | the Speaker of the House of Representatives and the Minority |
11 | Leader of the House of Representatives enumerating the school |
12 | districts which sought an exception under this subsection. |
13 | The department shall also publish the report on its publicly |
14 | accessible Internet site. The report shall include: |
15 | (i) The name of each school district making a |
16 | request under this subsection. |
17 | (ii) The specific exceptions requested by each |
18 | school district and the dollar amount of the expenditure |
19 | for each exception. |
20 | (iii) The department's ruling on the request for the |
21 | exception. |
22 | (iv) If the exception was approved, the dollar |
23 | amount of the expenditure for which the exception was |
24 | sought and the tax rate increase required to fund the |
25 | exception. |
26 | (v) A statistical summary of the information in |
27 | subparagraphs (ii), (iii) and (iv). |
28 | (k) Objections.--Any person who resides within or pays real |
29 | property taxes to the school district filing a petition under |
30 | subsection (i) may file with the court written objections to any |
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1 | petition filed under this section.] |
2 | * * * |
3 | [(n) Treatment of certain required payments.--The provisions |
4 | of subsections (f) and (j) shall apply to a school district's |
5 | share of payments to the Public School Employees' Retirement |
6 | System as required under 24 Pa.C.S. § 8327 (relating to payments |
7 | by employers) if the increase in the actual dollar amount of |
8 | estimated payments between the current year and the upcoming |
9 | year is greater than the index. The dollar amount to which |
10 | subsection (f) applies shall equal that portion of the increase |
11 | which exceeds the product of the index and the actual dollar |
12 | value of payments for the current year.] |
13 | Section 3. The amendment of section 333 of the act shall |
14 | apply to any proposed tax increase that takes effect in a fiscal |
15 | year beginning after December 31, 2011. |
16 | Section 4. This act shall take effect July 1, 2011, or |
17 | immediately, whichever is later. |
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