PRINTER'S NO. 2083
No. 1741 Session of 1991
INTRODUCED BY GERLACH, CAWLEY, TIGUE, FOSTER, NYCE, ARMSTRONG,
NOYE, NAILOR, ANGSTADT, JADLOWIEC, TRELLO, STABACK,
TANGRETTI, HALUSKA, MERRY, MICOZZIE, MUNDY, COLAIZZO, HERMAN,
HANNA, GODSHALL, MARSICO, SCHEETZ, S. H. SMITH, BUSH, BARLEY,
HECKLER, SEMMEL, CLARK, TRICH, HAYES, LEE, MELIO, HERSHEY,
ARGALL, STETLER, BUNT, D. W. SNYDER, TOMLINSON, CARONE, FOX,
WOZNIAK, FLICK, ALLEN, KREBS, REBER, ULIANA, McCALL, DENT AND
LAWLESS, JUNE 24, 1991
REFERRED TO COMMITTEE ON EDUCATION, JUNE 24, 1991
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; providing for a
5 referendum relating to the appointment of a commission; and
6 making repeals.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short title.
10 This act shall be known and may be cited as the Local Option
11 School District Tax Reform Act.
12 Section 2. Definitions.
13 The following words and phrases when used in this act shall
14 have the meanings given to them in this section unless the
15 context clearly indicates otherwise:
16 "Personal income." The classes of income enumerated in
17 section 303 of the act of March 4, 1971 (P.L.6, No.2), known as
1 the Tax Reform Code of 1971, and upon which is imposed a
2 personal income tax by the Commonwealth.
3 "School district." Includes school districts of the second,
4 third and fourth classes.
5 Section 3. Local Tax Study Commission.
6 (a) First year implementation.--Before any school district
7 of the second, third or fourth class levies, assesses or
8 collects, or provides for the levy, assessment or collection of
9 any tax, under the authority of this act, the board of school
10 directors may appoint a local tax study commission in accordance
11 with the following provisions:
12 (1) Membership.--The local tax study commission shall
13 consist of five, seven or nine members appointed by the
14 board. No member of the local tax study commission shall be
15 an elected or appointed official or employee, or a relative,
16 by blood or marriage, of an official or employee of the
17 school district. All members shall be residents of the
18 district.
19 (2) Staff and expenses.--The board shall provide
20 necessary staff to support the local tax study commission and
21 shall reimburse the members of the local tax study commission
22 for necessary expenses in the discharge of their duties.
23 (3) Public hearings.--The local tax study commission
24 shall hold at least one public hearing during its
25 deliberations. At least one fact-finding hearing shall be
26 held within two weeks of the creation of the local tax study
27 commission to gather background information and solicit
28 suggestions from residents, or any other persons or parties
29 interested in or affected by levy, assessment or collection
30 of taxes by the district. The local tax study commission may
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1 sponsor public forums, shall provide for the broadest
2 possible distribution of public information and shall
3 encourage public discussion respecting the subject of its
4 work.
5 (4) Contents of study.--The local tax study commission
6 shall study the existing taxes levied, assessed and collected
7 by the district and determine if and how the tax policies of
8 the district could be strengthened or made more equitable by
9 adopting for levy, assessment and collection one or a
10 combination of any of the following taxes: personal income
11 tax, real estate tax, realty transfer tax, per capita tax; at
12 such levels and in such combinations on permissible subjects
13 of taxation as do not exceed the limitations in this act.
14 This study shall include, but not be limited to,
15 consideration of all of the following:
16 (i) Historic rate and revenue provided by taxes
17 currently levied, assessed and collected by the district.
18 (ii) The percentage of total revenues provided by
19 taxes currently levied, assessed and collected.
20 (iii) The age, income, employment and property use
21 characteristics of existing tax base.
22 (iv) The projected revenues of any taxes currently
23 levied, assessed and collected.
24 (v) The projected revenues of any taxes referred to
25 above not currently levied, assessed and collected by the
26 district.
27 (vi) The combined effect of any taxes referred to
28 above not currently levied, assessed and collected by the
29 district as it or they relate to taxes levied by other
30 taxing districts to which a taxpayer would be subject.
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1 (5) Recommendation.--Within 60 days of its appointment,
2 the local tax study commission shall make a nonbinding
3 recommendation to the board of the appropriate tax or
4 combination of taxes, identified in paragraph (4), to be
5 levied, assessed and collected commencing the next fiscal
6 year. Upon appointment of the commission, and except as
7 provided for in paragraph (6), no tax may be levied, assessed
8 or collected for the next fiscal year until receipt of the
9 recommendation of the local tax study commission. Within two
10 weeks of receiving the recommendation, the board shall hold a
11 public hearing to permit public comment on the
12 recommendation. Within 30 days of the public hearing, but not
13 later than 30 days prior to the commencement of the next
14 fiscal year, the board shall accept or reject the
15 recommendation of the local tax study commission or adopt any
16 other appropriate tax or combination of taxes for the
17 district commencing the next fiscal year as provided by law.
18 (6) Failure to issue recommendation.--If the local tax
19 study commission fails to make a nonbinding recommendation
20 within 60 days of its appointment, the board shall discharge
21 the appointed local tax study commission, appoint itself as
22 the local tax study commission, and proceed to hold a public
23 hearing to permit public comment on the appropriate tax or
24 combination of taxes for the district commencing the next
25 fiscal year. Within 30 days of the public hearing, but not
26 later than 30 days prior to the commencement of the next
27 fiscal year, the board shall adopt the appropriate tax or
28 combination of taxes for the district commencing the next
29 fiscal year as provided by law.
30 (7) Public distribution of report.--The local tax study
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1 commission shall publish or cause to be published, within 30
2 days of making its recommendation, sufficient copies of a
3 final report of its activities and recommendation for public
4 study information and shall deliver to the secretary of the
5 board sufficient copies of the report to supply copies to any
6 interested person upon request.
7 (8) Itemization of expenses.--There shall be attached to
8 each copy of the report of the local tax study commission a
9 statement, sworn to by the members of the local tax study
10 commission in the performance of its work and the preparation
11 and filing of the report. In addition, the list shall
12 identify specifically the supplier of each item.
13 (9) Materials.--All the records, receipts, tapes,
14 minutes of meetings and written discussions of the local tax
15 study commission shall, upon its discharge, be turned over to
16 the secretary of the district for the permanent safekeeping.
17 The secretary shall make such materials available for public
18 inspection at any time during regular business hours.
19 (10) Discharge.--The local tax study commission shall be
20 discharged upon the filing of its final report.
21 (b) Five-year review.--For any school district that levies,
22 assesses and collects, or provides for the levy, assessment or
23 collection of any tax, after having accepted some or all of the
24 recommendations of a local tax study commission, the district
25 shall continue to levy, assess and collect the same tax or
26 combination of taxes for the next five fiscal years. However,
27 nothing herein shall preclude the board to change or alter the
28 rates of any such tax or combination of taxes if it deems
29 necessary. Before the fifth fiscal year following the district's
30 acceptance of some or all of the recommendations of a local tax
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1 study commission, and every fifth fiscal year thereafter, the
2 board may appoint a local tax study commission in the manner
3 provided in subsection (a). The local tax study commission
4 appointed under this subsection shall be charged with all of the
5 same powers and duties provided for the local tax study
6 commission under subsection (a).
7 Section 4. Mandatory reductions.
8 When, pursuant to this act, a school district imposes a tax
9 on personal income from which revenue generated will exceed the
10 revenue generated by any previously assessed earned income tax,
11 the revenue generated by the personal income tax which is in
12 excess of revenue generated by the earned income tax shall be
13 used to provide a dollar-for-dollar reduction of the aggregate
14 real property tax of the school district, or other tax, as
15 determined by the school board.
16 Section 5. Limitations.
17 (a) Revenue limits.--Taxes levied by a school district are
18 limited as follows:
19 (1) For the first fiscal year of imposition of a tax
20 under the authority of this act, tax revenues are limited to
21 an increase in the aggregate tax revenues over the aggregate
22 tax revenues for the fiscal year beginning during the
23 preceding calendar year which does not exceed the greater of
24 the following:
25 (i) The sum of the average percentage of the annual
26 increase in aggregate tax revenues collected over the
27 immediately preceding five fiscal years plus 2%.
28 (ii) The average annual percentage increase in the
29 Consumer Price Index for All Urban Consumers, United
30 States City Average, All Items, for the 24-month period
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1 immediately preceding the start of that fiscal year, for
2 which statistics are available, as determined and
3 published by the Department of Community Affairs.
4 (2) For the second, third and fourth fiscal years
5 beginning after the imposition of a tax under the authority
6 of this act, tax revenues are limited to an increase in the
7 aggregate tax revenues over the aggregate tax revenues for
8 the fiscal year beginning during the preceding calendar year
9 which does not exceed the greater of the following:
10 (i) The sum of the average percentage of the annual
11 increase in aggregate tax revenues collected over the
12 immediately preceding five fiscal years.
13 (ii) The average annual percentage increase in the
14 Consumer Price Index for All Urban Consumers, United
15 States City Average, All Items, for the 24-month period
16 immediately preceding the start of that fiscal year, for
17 which statistics are available, as determined and
18 published by the Department of Community Affairs.
19 (b) Application.--The limitations contained in this section,
20 unless expressly repealed, apply to every tax levied.
21 Section 6. Referendum.
22 (a) When held.--If the board of school directors does not
23 elect to create a local tax study commission, then upon
24 submission to the county board of elections of a petition
25 containing the signatures of electors resident in a school
26 district, the number of said signatures equal to or exceeding 3%
27 of the total number of votes cast at the last general election
28 in that school district, the county board of elections shall, at
29 the next primary, municipal or general election conduct a
30 referendum within that school district.
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1 (b) Ballot question.--The ballot question for this
2 referendum shall be as follows:
3 Do you favor the appointment of a local tax study
4 commission for the school district of (name of district)?
5 (c) Conduct of election.--The referendum shall be conducted
6 in accordance with the act of June 3, 1937 (P.L.1333, No.320),
7 known as the Pennsylvania Election Code.
8 (d) Appointment of commission.--If a majority of the
9 electors voting thereon vote in the affirmative, the board of
10 school directors within 30 days shall appoint a local tax study
11 commission in accordance with this act.
12 Section 7. Repeals.
13 All acts and parts of acts are repealed insofar as they are
14 inconsistent with this act.
15 Section 8. Effective date.
16 This act shall take effect in 60 days.
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