PRINTER'S NO. 1715
No. 1451 Session of 1999
INTRODUCED BY GRUCELA, DeWEESE, VEON, M. COHEN, COY, BELARDI,
LESCOVITZ, EVANS, COSTA, FRANKEL, FREEMAN, MANN, RUFFING,
SAMUELSON, SOLOBAY, YUDICHAK, BATTISTO, BEBKO-JONES,
BELFANTI, BISHOP, BLAUM, BUXTON, CALTAGIRONE, CAPPABIANCA,
CARN, CASORIO, CAWLEY, COLAFELLA, CORRIGAN, CURRY, DALEY,
DeLUCA, DERMODY, DONATUCCI, EACHUS, GEORGE, GIGLIOTTI,
GORDNER, GRUITZA, HALUSKA, HANNA, HARHAI, HORSEY, JAMES,
JOSEPHS, KIRKLAND, LaGROTTA, LAUGHLIN, LEVDANSKY, LUCYK,
MANDERINO, MARKOSEK, McCALL, MELIO, MICHLOVIC, MUNDY, MYERS,
OLIVER, PESCI, PETRARCA, PETRONE, PISTELLA, PRESTON, RAMOS,
READSHAW, RIEGER, ROBERTS, ROBINSON, ROEBUCK, ROONEY,
SAINATO, SANTONI, SCRIMENTI, SHANER, STABACK, STEELMAN,
STETLER, STURLA, SURRA, TANGRETTI, THOMAS, TIGUE, TRAVAGLIO,
TRELLO, TRICH, VAN HORNE, VITALI, WALKO, WASHINGTON,
WILLIAMS, WOJNAROSKI, YEWCIC AND YOUNGBLOOD, MAY 5, 1999
REFERRED TO COMMITTEE ON APPROPRIATIONS, MAY 5, 1999
AN ACT
1 Providing for the establishment of the School Real Property Tax
2 Reduction Fund in the Treasury Department to be used for
3 reducing school district real property taxes; and imposing
4 powers and duties on the Department of Education.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Short title.
8 This act shall be known and may be cited as the School Real
9 Property Tax Reduction Act.
10 Section 2. Findings and purpose.
11 (a) Legislative findings.--The General Assembly finds that:
12 (1) The Commonwealth's proportionate share of funding
1 for public education has significantly declined over the last
2 two decades.
3 (2) During the same period, the costs and demands of
4 public education have substantially increased.
5 (3) This trend is causing escalation in the expenditure
6 of local public funds, which are primarily derived from real
7 property taxes.
8 (4) As a result, the average Commonwealth family has to
9 shoulder an ever-increasing property tax burden.
10 (b) Purpose.--The General Assembly declares that:
11 (1) It is a valid and appropriate public purpose to
12 reduce the school real property tax burden on homeowners.
13 (2) The goal of this reduction is to reduce residential
14 school property taxes Statewide by 50% over a five-year
15 period.
16 Section 3. Definitions.
17 The following words and phrases when used in this act shall
18 have the meanings given to them in this section unless the
19 context clearly indicates otherwise:
20 "Allowable inflation adjustment factor." The product of:
21 (1) the school real property tax equivalent for the
22 immediate prior year; and
23 (2) the established growth factor.
24 "Base year tax." The total districtwide property tax
25 billings in a school district for a school district fiscal year
26 beginning after June 30, 1999, and before July 1, 2000.
27 "Department." The Department of Education of the
28 Commonwealth.
29 "Domicile." The place where one lives and has his permanent
30 home and to which he has the intention of returning whenever he
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1 is absent. Actual residence is not necessarily domicile, for
2 domicile is the fixed place of abode which, in the intention of
3 the taxpayer, is permanent rather than transitory. Domicile is
4 the voluntarily fixed place of habitation of a person, not for a
5 mere special or limited purpose, but with the present intention
6 of making a permanent home, until some event occurs to induce
7 him to adopt some other permanent home.
8 "Established growth factor." The lesser of:
9 (1) the annual percentage change in the Statewide
10 average weekly wage as determined by the Department of Labor
11 and Industry under section 105.1 of the act of June 2, 1915
12 (P.L.736, No.338), known as the Workers' Compensation Act; or
13 (2) five percent.
14 "Farm residence." The structure on the farm that is used as
15 a primary residence.
16 "Fund." The School Real Property Tax Reduction Fund
17 established in section 4.
18 "Homestead." Real property which meets one or more of the
19 following:
20 (1) Is the parcel containing the structure used as the
21 domicile of the owner.
22 (2) Is the portion of a multiple-use property which is
23 used as the domicile of the owner.
24 (3) Is the parcel containing the farm residence which is
25 used as the domicile of the owner or of an immediate family
26 member.
27 (4) Is a unit in a condominium as the term is defined in
28 68 Pa.C.S. § 3103 (relating to definitions) and the unit is
29 primarily used as the domicile of a natural person who is an
30 owner of the unit; or is a unit in a cooperative as the term
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1 is defined in 68 Pa.C.S. § 4103 (relating to definitions) and
2 the unit is primarily used as the domicile of a natural
3 person who is an owner of the unit. The homestead for a unit
4 in a condominium or a cooperative shall be limited to the
5 assessed value of the unit, which shall be determined in a
6 manner consistent with the assessment of real property taxes
7 on those units under 68 Pa.C.S. (relating to real and
8 personal property) or as otherwise provided by law. If the
9 unit is not separately assessed for real property taxes, the
10 homestead shall be a pro rata share of the real property.
11 "Property tax billings." The property tax liability at the
12 flat rate for the school district's current year appearing on
13 the tax notices mailed to the owners of real property who are
14 listed on the assessment rolls of the school district. For
15 purposes of this definition the term "flat rate" shall mean the
16 amount of property tax billed before any penalty or discount is
17 applied.
18 "School district." A school district as defined in section
19 102 of the act of March 10, 1949 (P.L.30, No.14), known as the
20 Public School Code of 1949.
21 "School real property tax equivalent." For any school
22 district, the sum of:
23 (1) the districtwide school property tax billings; and
24 (2) the amount which the Commonwealth distributes to
25 that school district for real property tax reduction under
26 section 5.
27 Section 4. School Real Property Tax Reduction Fund.
28 (a) Establishment.--There is hereby established in the State
29 Treasury a special fund to be known as the School Real Property
30 Tax Reduction Fund to be used solely to make annual payments to
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1 school districts which satisfy the requirements of this act.
2 (b) Utilization of fund.--Funds appropriated to the fund
3 shall be used solely for payments to school districts. School
4 districts shall spend all payments from the fund for the sole
5 purpose of reducing the property tax liability of homestead
6 property owners. School districts shall not use any payments
7 from the fund for expenses related to the administration of the
8 real property tax system.
9 (c) Source of fund.--
10 (1) The State Treasurer shall transfer the sum of
11 $400,000,000 from the General Fund into the fund.
12 (2) The fund shall receive such annual appropriations as
13 may be made by the General Assembly. Any appropriation made
14 to the fund shall not lapse.
15 (d) Insufficient revenue.--If in any year the amount of
16 money in the fund is insufficient to provide full reimbursement
17 to each filing school district, the department shall reduce the
18 amount of payment to each school district on a pro rata basis.
19 Section 5. Distribution and reconciliation.
20 (a) Application procedure and due dates.--
21 (1) For school district fiscal years beginning after
22 June 30, 1999, school districts may apply on a form to the
23 department for reimbursement of the revenue lost from
24 reducing property tax billings under this act. To qualify for
25 the reimbursement, school districts shall timely apply by the
26 last day of their fiscal year upon which the reimbursement is
27 based. An application postmarked on the last day of the
28 school district's fiscal year shall meet a timely
29 application. The department shall reimburse school districts
30 for the reduction in property tax billings permitted under
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1 this act by the last day of the second month after the
2 beginning of the school district's immediately following
3 fiscal year.
4 (2) School districts shall apply for annual
5 distributions on forms to be provided by the department. The
6 department shall promulgate regulations which set forth the
7 information that school districts must provide on the forms
8 in order to qualify under this act.
9 (b) Distribution.--
10 (1) The department shall make disbursements to school
11 districts from the fund for the purpose of reducing total
12 districtwide property tax billings on homesteads by 10% of
13 the base year tax on homesteads. The school district shall
14 apply such disbursement as a credit against property tax
15 billings on homesteads in the school district's immediately
16 following fiscal year.
17 (2) Each year the Governor shall submit as part of the
18 budget request to the General Assembly required under section
19 613 of the act of April 9, 1929 (P.L.177, No.175), known as
20 The Administrative Code of 1929, a maintenance proposal for
21 the fund. The proposal shall reflect the cost necessary for
22 school districts to reduce total districtwide property tax
23 billings on homesteads by:
24 (i) 20% of the base year tax for the first fiscal
25 year beginning after the distribution under paragraph
26 (1);
27 (ii) 30% of the base year tax for the second fiscal
28 year beginning after the distribution under paragraph
29 (1);
30 (iii) 40% of the base year tax for the third fiscal
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1 year beginning after the distribution under paragraph
2 (1); and
3 (iv) 50% of the base year tax for the fourth fiscal
4 year beginning after the distribution under paragraph (1)
5 and for each fiscal year thereafter.
6 For each school district fiscal year, the department shall make
7 disbursements to school districts from the fund for the purpose
8 of reducing total districtwide property tax billings.
9 (c) Property tax reduction.--
10 (1) School districts shall reduce taxes as directed in
11 subsection (b) by exempting from the property tax on
12 homesteads an amount which does not exceed one-half of the
13 median assessed value of all homestead property within the
14 school district.
15 (2) The school district shall separately and clearly
16 state the credit on homestead property tax bills and shall
17 clearly state on such bill that:
18 The Commonwealth of Pennsylvania has provided
19 replacement revenue to your school district for
20 purposes of reducing your school district property
21 taxes.
22 Section 6. Limitations.
23 (a) Limitation of future revenue increases.--A school
24 district shall forfeit the right to receive distributions from
25 the fund in any fiscal year when the school district experiences
26 an increase in property tax revenue which exceeds the allowable
27 inflation adjustment factor because the school district:
28 (1) increases the real property tax rate; or
29 (2) levies taxes on newly established real property
30 values following countywide reassessment.
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1 (b) Exception to limitation of future revenue increases.--
2 The limit on revenue increases under subsection (a) shall not
3 apply to increases in the real property tax rate if the school
4 district raises the tax rate for any of the following reasons:
5 (1) To respond to or recover from an emergency or
6 disaster declared pursuant to 35 Pa.C.S. § 7301 (relating to
7 general authority of Governor or 75 Pa.C.S. § 6108 (relating
8 to power of Governor during emergency), only for the duration
9 of the emergency or disaster and for the costs of the
10 recovery from the emergency or disaster.
11 (2) To implement a court order or an administrative
12 order from a Federal or State agency which requires the
13 expenditure of funds in excess of current available revenues.
14 The rate increase shall be rescinded following fulfillment of
15 the court order or administrative order.
16 (3) To implement any increase in real property tax rates
17 approved by the electorate.
18 Section 7. Regulations.
19 The department shall promulgate regulations necessary to
20 implement this act.
21 Section 8. Repeals.
22 All acts and parts of acts are repealed insofar as they are
23 inconsistent with this act.
24 Section 9. Effective date.
25 This act shall take effect immediately.
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