Regular Session 2017-2018 Senate Bill 0615 P.N. 0689

PRINTER'S NO. 689

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

615

Session of

2017

INTRODUCED BY WHITE, EICHELBERGER, STEFANO, FOLMER, BARTOLOTTA,

DiSANTO, MARTIN, AUMENT, RAFFERTY, WARD, WAGNER, SCARNATI AND

RESCHENTHALER, APRIL 13, 2017

REFERRED TO FINANCE, APRIL 13, 2017

AN ACT

Amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873,

No.1), entitled "An act providing for taxation by school

districts, for the State funds formula, for tax relief in

first class cities, for school district choice and voter

participation, for other school district options and for a

task force on school cost reduction; making an appropriation;

prohibiting prior authorized taxation; providing for

installment payment of taxes; restricting the power of

certain school districts to levy, assess and collect taxes;

and making related repeals," in taxation by school districts,

repealing definitions and further providing for adoption of

preliminary budget proposals, for information to school

districts, for property tax limits on reassessment and for

public referendum requirements for increasing certain taxes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definitions of "employment cost index,"

"index" and "statewide average weekly wage" in section 302 of

the act of June 27, 2006 (1st Sp.Sess., P.L.1873, No.1), known

as the Taxpayer Relief Act, are repealed:

Section 302. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

["Employment cost index." The most recent official figures,

for the previous 12-month period beginning July 1 and ending

June 30 for the Employment Cost Index Series for Elementary and

Secondary Schools, reported by the Bureau of Labor Statistics of

the Federal Department of Labor.]

* * *

["Index." As follows:

(1) Except as set forth in paragraph (2), the average of

the percentage increase in the Statewide average weekly wage

and the employment cost index.

(2) For a school district with a market value/income aid

ratio greater than 0.400 for the school year prior to the

school year for which the index is calculated, the value

under paragraph (1) multiplied by the sum of:

(i) 0.75; and

(ii) the school district's market value/income aid

ratio for the school year prior to the school year for

which the index is calculated.]

* * *

["Statewide average weekly wage." That amount determined by

the Department of Labor and Industry in the same manner that it

determines the average weekly wage under section 404(e)(2) of

the act of December 5, 1936 (2nd Sp.Sess., 1937 P.L.2897, No.1),

known as the Unemployment Compensation Law, except that it shall

be calculated for the preceding calendar year.]

* * *

Section 2. Sections 311(d) and 313 of the act are amended to

read:

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Section 311. Adoption of preliminary budget proposals.

* * *

(d) Resolution.--

(1) A board of school directors may elect to adopt a

resolution indicating that it will not raise the rate of any

tax for the support of the public schools for the following

fiscal year [by more than the index]. The resolution must be

adopted no later than 110 days prior to the date of the

election immediately preceding the upcoming fiscal year. The

resolution must make the following unconditional

certifications:

(i) That the board of school directors will not

increase any tax [at a rate that exceeds the index as

calculated by the department].

(ii) That the board of school directors will comply

with the procedures set forth in section 687 of the

Public School Code for the adoption of its proposed and

final budgets.

(iii) That the board of school directors certifies

that [increasing any tax at a rate less than or equal to

the index will be sufficient] no tax increase is

necessary to balance its final budget.

(2) A board of school directors that adopts a resolution

under this section shall do all of the following:

(i) Comply with the procedures in section 687 of the

Public School Code for the adoption of its proposed and

final budgets and shall not be subject to subsections (a)

and (c).

[(ii) Submit information on a proposed increase in

the rate of a tax levied for the support of the public

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schools to the department on a uniform form prepared by

the department no later than five days after the adoption

of the resolution.]

(iii) Send a copy of the resolution adopted pursuant

to this section to the department no later than five days

after the adoption of the resolution.

[(3) A board of school directors that adopts a

resolution under this section shall not be eligible to seek

referendum exceptions under section 333(f), and section

333(e) shall not apply.

(4) Upon receipt of the information required under

paragraph (2)(ii), the department shall compare the proposed

percentage increase in the rate of the tax with the index.

Within ten days of the receipt of the information required

under this subsection, the department shall inform the school

district whether the proposed tax rate increase is less than

or equal to the index. If the department determines that the

proposed percentage increase in the rate of the tax exceeds

the index, the school district shall be subject to

subsections (a) and (c), and paragraphs (2)(i) and (3) shall

not apply. The department's determination under this

paragraph shall not constitute an adjudication.]

Section 313. Information to school districts.

(1) No later than September 30, 2006, and September 30

of each year thereafter, the department shall provide each

school district with the [following information:

(i) The] dates by which actions required under this

chapter shall take place.

[(ii) The index for the applicable fiscal year.]

(2) For the 2006-2007 school year, the department shall

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provide each school district with the information required

under this section no later than ten days after the effective

date of this act.

Section 3. Section 327 of the act is repealed:

[Section 327. Property tax limits on reassessment.

Notwithstanding any other provision of law, including this

act, after any county makes a countywide revision of assessment

of real property at values based upon an established

predetermined ratio as required by law or after any county

changes its established predetermined ratio, a board of school

directors in a school district located within that county which,

after July 1, 2006, for the first time levies its real estate

taxes on that revised assessment or valuation shall for the

first year reduce its tax rate, if necessary, for the purpose of

having the percentage increase in taxes levied for that year

against the real properties contained in the duplicate for the

preceding year be less than or equal to the index for the

preceding year notwithstanding the increased valuations of such

properties under the revised assessment. For the purpose of

determining the total amount of taxes to be levied for the first

year, the amount to be levied on newly constructed buildings or

structures or on increased valuations based on new improvements

made to existing houses need not be considered. The tax rate

shall be fixed for that year at a figure which will accomplish

this purpose. The provisions of section 333 shall apply to

increases in the tax rate above the limits provided in this

section.]

Section 4. Section 333(b), (c)(3), (e), (f), (g), (h), (j),

(l) and (n) of the act are amended to read:

Section 333. Public referendum requirements for increasing

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certain taxes.

* * *

(b) Prohibitions.--[Except as set forth in subsection (j),

unless] Unless there is compliance with subsection (c), a board

of school directors may not do any of the following:

(1) Increase the rate of a tax levied for the support of

the public schools [by more than the index. For purposes of

compliance with this paragraph, a school district which is

situated in more than one county and which levies real estate

taxes under section 672.1 of the act of March 10, 1949

(P.L.30, No.14), known as the Public School Code of 1949,

shall apply the index to each separate rate of real estate

taxes levied].

(2) Levy a tax for the support of the public schools

which was not levied in the 2005-2006 fiscal year.

(3) Raise the rate of the earned income and net profits

tax if already imposed under the authority of the Local Tax

Enabling Act except as otherwise provided for under section

331.2 or 332.

(4) Notwithstanding any other provision of this chapter

to the contrary, the adoption of a referendum under section

331.2 or 332 confers on the board of school directors the

authority to raise income taxes only to the extent contained

in the language of the referendum, and any future increase of

an income tax to be used for the purpose of property tax

reduction shall be submitted to the electors of the school

district at a subsequent municipal election pursuant to the

provisions of section 332.

* * *

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(3) [Except as set forth in subsection (j), a] A school

district acting pursuant to this subsection shall submit the

referendum question required under this section to the

election officials of each county in which it is situate no

later than 60 days prior to the election immediately

preceding the fiscal year in which the tax increase would

take effect.

* * *

(e) Tax rate submissions.--A school district that has

adopted a preliminary budget proposal under section 311 that

includes an increase in the rate of any tax levied for the

support of public schools shall submit information on the

increase to the department on a uniform form prepared by the

department. The school district shall submit such information no

later than 85 days prior to the date of the election immediately

preceding the beginning of the school district's fiscal year.

[The department shall compare the proposed percentage increase

in the rate of any tax with the index. Within ten days of the

receipt of the information required under this subsection but no

later than 75 days prior to the date of the election immediately

preceding the beginning of the school district's fiscal year,

the department shall inform the school district whether the

proposed tax rate increase is less than or equal to the index.

If the department determines that the proposed percentage

increase in the rate of the tax exceeds the index, the

department shall notify the school district that:

(1) the proposed tax increase must be reduced to an

amount less than or equal to the index;

(2) the proposed tax increase must be approved by the

electorate under subsection (c)(1); or

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(3) an exception must be sought under subsection (j).

(f) Referendum exceptions.--A school district may, without

seeking voter approval under subsection (c), increase the rate

of a tax levied for the support of the public schools by more

than the index if all of the following apply:

(1) The revenue raised by the allowable increase under

the index is insufficient to balance the proposed budget due

to one or more of the expenditures listed in paragraph (2).

(2) The revenue generated by increasing the rate of a

tax by more than the index will be used to pay for any of the

following:

(iii) Costs associated with the following:

(A) For a board of school directors that elected

to participate in the former act of July 5, 2004

(P.L.654, No.72), known as the Homeowner Tax Relief

Act, to pay interest and principal on any

indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.

B (relating to indebtedness and borrowing) prior to

September 4, 2004. In no case may the school district

incur additional debt under this clause except for

the refinancing of existing debt, including the

payment of costs and expenses related to such

refinancing and the establishment of funding of

appropriate debt service reserves. An increase under

this clause shall be rescinded following the final

payment of interest and principal.

(A.1) For a board of school directors that did

not elect to participate in the former act of July 5,

2004 (P.L.654, No.72), known as the Homeowner Tax

Relief Act, to pay interest and principal on any

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indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.

B prior to the effective date of this act. In no case

may the school district incur additional debt under

this clause except for the refinancing of existing

debt, including the payment of costs and expenses

related to such refinancing and the establishment of

funding of appropriate debt service reserves. An

increase under this clause shall be rescinded

following the final payment of interest and

principal.

(B) To pay interest and principal on any

electoral debt incurred under 53 Pa.C.S. Pt. VII

Subpt. B. An increase under this clause shall be

rescinded following the final payment of interest and

principal.

(E) For purposes of this subparagraph, electoral

debt includes the refunding or refinancing of

electoral debt for which an exception is permitted

under clause (B) as long as the refunding or

refinancing incurs no additional debt other than for:

(I) costs and expenses related to the

refunding or refinancing; and

(II) funding of appropriate debt service

reserves.

(F) For purposes of this subparagraph,

indebtedness includes the refunding or refinancing of

indebtedness for which an exception is permitted

under clauses (A) and (A.1) as long as the refunding

or refinancing incurs no additional debt other than

for:

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(I) costs and expenses related to the

refunding or refinancing; and

(II) funding of appropriate debt service

reserves.

(v) Costs incurred in providing special education

programs and services to students with disabilities if

the increase in expenditures on special education

programs and services, net of State special education

payments, was greater than the index. The dollar amount

of this exception shall be equal to the portion of the

increase that exceeds the index.

(g) Revenue derived from increase.--Any revenue derived from

an increase in the rate of any tax allowed pursuant to

subsection (f)(2)(iii) shall not exceed the anticipated dollar

amount of the expenditure.

(h) Limitation on tax rate.--The increase in the rate of any

tax allowed pursuant to an exception under subsection (f)(2)(v)

or (n) shall not exceed the rate increase required as determined

by the department pursuant to subsection (j).

(j) Department approval.--

(1) A school district that seeks to increase the rate of

tax due to an expenditure under subsection (f)(2)(iii) or (v)

or (n) shall obtain the approval of the department before

imposing the tax increase. The department shall establish

procedures for administering the provisions of this

subsection, which may include an administrative hearing on

the school district's submission.

(2) A school district proceeding under the provisions of

this subsection shall publish in a newspaper of general

circulation and on the district's publicly accessible

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Internet site, if one is maintained, notice of its intent to

seek department approval at least one week prior to

submitting its request for approval to the department. If the

department schedules a hearing on the school district's

request, the school district shall publish notice of the

hearing in a newspaper of general circulation and on the

district's publicly accessible Internet site, if one is

maintained, immediately upon receiving the information from

the department. The notice shall include the date, time and

place of the hearing.

(3) The department shall approve a school district's

request under this subsection if a review of the data under

paragraph (4) demonstrates that:

(i) the school district qualifies for one or more

exceptions under subsection (f)(2)(iii) or (v) or (n);

and

(ii) the sum of the dollar amounts of the exceptions

for which the school district qualifies makes the school

district eligible under subsection (f)(1).

(4) For the purpose of determining the eligibility of a

school district for an exception under subsection (f)(2)(v),

the department shall utilize data from the most recent school

years for which annual financial report data required under

section 2553 of the Public School Code of 1949 has been

received. The department shall inform school districts of the

school years determined under this subsection no later than

30 days prior to the date on which public inspection of

proposed school budgets is required under section 311(c).

(5) (i) The department shall rule on the school

district's request and shall inform the school district of

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its decision no later than 55 days prior to the date of the

election immediately preceding the beginning of the school

district's fiscal year.

(ii) If the department approves the request, the

department shall determine the dollar amount of the

expenditure for which the exception is sought and the tax

rate increase required to fund the exception.

(iii) If the department denies the request, the

school district may submit a referendum question under

subsection (c)(1). The question must be submitted to the

election officials no later than 50 days prior to the

date of the election immediately preceding the beginning

of the school district's fiscal year.

(6) Within 30 days of the deadline under paragraph (5)

(i), the department shall submit a report to the President

pro tempore of the Senate, the Minority Leader of the Senate,

the Speaker of the House of Representatives and the Minority

Leader of the House of Representatives enumerating the school

districts which sought an exception under this subsection.

The department shall also publish the report on its publicly

accessible Internet site. The report shall include:

(i) The name of each school district making a

request under this subsection.

(ii) The specific exceptions requested by each

school district and the dollar amount of the expenditure

for each exception.

(iii) The department's ruling on the request for the

exception.

(iv) If the exception was approved, the dollar

amount of the expenditure for which the exception was

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sought and the tax rate increase required to fund the

exception.

(v) A statistical summary of the information in

subparagraphs (ii), (iii) and (iv).

(l) Index calculation.--No later than August 15, 2005, and

each August 15 thereafter, the department shall calculate the

index. The department shall publish the index by September 1,

2005, and each September 1 thereafter in the Pennsylvania

Bulletin.]

* * *

[(n) Treatment of certain required payments.--

(1) The provisions of subsections (f) and (j) shall

apply to a school district's share of payments to the Public

School Employees' Retirement System as required under 24

Pa.C.S. § 8327 (relating to payments by employers) if the

increase in estimated payments between the current year and

the upcoming year, as determined by the department under this

section, is greater than the index.

(2) For purposes of this subsection, the following

apply:

(i) The school district's share of payments as

required by 24 Pa.C.S. § 8327 for the current year shall

be determined by the department using:

(A) The lesser of the school district's total

compensation for the current year or the school

district's total compensation for the 2011-2012

school year.

(B) The employer contribution rate under 24

Pa.C.S. § 8328 (relating to actuarial cost method)

for the current year.

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on the school district's total compensation under

clause (A) and the employer contribution rate under

clause (B).

(ii) The school district's share of payments as

required by 24 Pa.C.S. § 8327 for the upcoming year shall

be determined by the department using all of the

following:

(A) The lesser of the school district's:

(I) estimated total compensation for the

upcoming year; or

(II) total compensation for the 2011-2012

school year.

(B) The employer contribution rate under 24

Pa.C.S. § 8328 for the upcoming year.

on the school district's total compensation under

clause (A) and the employer contribution rate under

clause (B).

(3) The dollar amount to which subsection (f) applies

shall be determined as follows:

(i) Multiply:

(A) the index; by

(B) the school district's share of payments for

the current year, as determined by the department

under this subsection.

(ii) Subtract:

(A) the product under subparagraph (i); from

(B) the amount of increase, as determined by the

department under this subsection, in the school

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district's share of payments between:

(I) the current year; and

(II) the upcoming year.

(4) As used in this subsection, the term "compensation"

has the meaning ascribed in 24 Pa.C.S. § 8102 (relating to

definitions).]

* * *

Section 5. The amendment of section 333 of the act shall

apply to any proposed tax increase that takes effect in a fiscal

year beginning after December 31, 2018.

Section 6. This act shall take effect July 1, 2018, or

immediately, whichever is later.

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