PRINTER'S NO. 389
No. 343 Session of 2003
INTRODUCED BY YUDICHAK, COSTA, FRANKEL, HENNESSEY, BELFANTI, BUXTON, CORRIGAN, CRUZ, FREEMAN, HORSEY, KOTIK, LEACH, McCALL, MELIO, SANTONI, SURRA, TIGUE, YOUNGBLOOD, BROWNE, CAPPELLI, CREIGHTON, FAIRCHILD, GRUCELA, KELLER, LAUGHLIN, MANN, McILHATTAN, PETRONE, SOLOBAY, THOMAS, WANSACZ, ROBERTS AND HARPER, FEBRUARY 18, 2003
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 18, 2003
AN ACT 1 Establishing the Regional Efficiency Aid Program; providing for 2 powers and duties of the Department of Community and Economic 3 Development and the Department of Revenue; and creating the 4 Regional Efficiency Aid Program Fund. 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 Regional 9 Efficiency Aid Program Act. 10 Section 2. Declaration of policy. 11 The General Assembly finds and declares as follows: 12 (1) One of the most effective ways to reduce property 13 taxes is through the regionalization, consolidation or 14 sharing of services by political subdivisions. 15 (2) Because of institutional and financial limitations 16 on political subdivisions, regionalized, consolidated and 17 shared alternatives have not been widely adopted, resulting
1 in duplication of services and excess costs for taxpayers. 2 (3) A program of providing State aid to political 3 subdivisions that successfully implement strategies to 4 regionalize, consolidate and share services is an innovative 5 and important means of providing a financial incentive to 6 overcome the institutional limitations on political 7 subdivisions. 8 (4) To overcome these institutional limitations and to 9 ensure property tax relief, the Commonwealth should provide 10 State aid to political subdivisions that realize budgetary 11 savings from shared, regionalized or consolidated services 12 and pass these savings on to taxpayers through a reduction in 13 property tax obligations. 14 (5) Combining State-funded property tax relief with 15 fiscal assistance for the planning and start-up costs 16 associated with entering into new shared, regionalized or 17 consolidated service agreements will serve as additional 18 incentives for political subdivisions to take advantage of 19 potential savings provided by way of such agreements. 20 Section 3. Definitions. 21 The following words and phrases when used in this act shall 22 have the meanings given to them in this section unless the 23 context clearly indicates otherwise: 24 "Department." The Department of Community and Economic 25 Development of the Commonwealth. 26 "Political subdivision." A county, city, borough, 27 incorporated town, township, school district, vocational school 28 district and county institution district. 29 "Program." The Regional Efficiency Aid Program (REAP) 30 established under section 4. 20030H0343B0389 - 2 -
1 "REAP aid." State aid provided to political subdivisions 2 under the Regional Efficiency Aid Program established in section 3 4. 4 "Regional service agreement." An agreement entered into by a 5 political subdivision in accordance with 53 Pa.C.S. Pt. III 6 Subpt. D (relating to area government and intergovernmental 7 cooperation) or any other agreement between political 8 subdivisions that is permitted by law. 9 "Residential property." A "homestead" as defined in 53 10 Pa.C.S. § 8401 (relating to definitions). 11 "Secretary." The Secretary of Community and Economic 12 Development of the Commonwealth. 13 Section 4. Regional Efficiency Aid Program established. 14 There is hereby established the Regional Efficiency Aid 15 Program in the department. A political subdivision that enters 16 into a regional service agreement, either as a provider or 17 receiver of services, may apply for State aid for the purpose of 18 providing tax exclusions for residential property within the 19 political subdivision. State aid shall be granted for each 20 calendar year during which a regional service agreement is in 21 effect. 22 Section 5. Formula for calculation of REAP aid. 23 (a) General rule.--The annual amount of State aid a 24 political subdivision is eligible to receive under the program 25 shall be the total of the number of points accumulated for the 26 regional service agreements of the political subdivision 27 multiplied by $1 per point, multiplied by the latest population 28 of the political subdivision using the most recent State 29 population estimates provided by the United States Bureau of the 30 Census, multiplied by the weighting factor of fiscal stress of 20030H0343B0389 - 3 -
1 the political subdivision. 2 (b) Determination of variables.--A system for determining 3 the number of points and weighting of fiscal stress used in the 4 formula for allocating State aid shall be determined by the 5 department within six months of enactment of this act. The 6 system shall include: 7 (1) A schedule of the number of points for each type of 8 regional service agreement. 9 (2) The assignment of the number of points based on the 10 percentage of the cost of the regional service in the current 11 budget of the political subdivision, a relative value scale 12 of the importance of the service, a combination of the two or 13 such other criteria as designated by the department to 14 provide incentives deemed necessary or appropriate. 15 (3) An increase in the number of points by an amount not 16 to exceed 25% of the number provided to the recipient, to be 17 granted to the provider of the regional service. 18 (4) A formula for weighting points based on a political 19 subdivision's degree of fiscal stress. 20 (c) Program administration.--The secretary shall consult 21 with the Secretary of Education with regard to school districts 22 and vocational school districts in the administration of the 23 program. 24 Section 6. Application and award process. 25 (a) General rule.--The department shall establish procedures 26 for the administration of REAP aid and provide for an 27 application and award process that: 28 (1) Is consistent with the timetable and process of 29 fixing property tax rates. 30 (2) Ensures that a political subdivision is providing or 20030H0343B0389 - 4 -
1 receiving bona fide regional services. 2 (3) Ensures that to qualify for the receipt of REAP aid 3 a regional service agreement results in: 4 (i) savings of the cost of services, including any 5 new capital expenditures, reflected as current or future 6 budget reductions; 7 (ii) limits on future costs increases; 8 (iii) minimizing the costs of a new service; or 9 (iv) other criteria as the department may deem 10 relevant. 11 (4) Provides for monitoring, oversight and enforcement. 12 (b) Department review.--Each year the department shall 13 review applications and determine the amount of REAP aid for 14 which each political subdivision is eligible. The department 15 shall allocate aid to ensure that school districts and 16 vocational school districts receive their share of aid based on 17 proportion of taxes or other appropriate measure. 18 Section 7. Exemption from certain limitations. 19 Political subdivision appropriations for regional services 20 for which REAP aid is provided shall be exempt from the 21 limitations on appropriations under any law limiting political 22 subdivision expenditures. 23 Section 8. Duties of county tax assessment offices. 24 (a) General rule.--The county assessment office in which a 25 political subdivision or subdivisions have applied to receive 26 REAP aid shall identify property that qualifies as residential 27 property. 28 (b) Information and certification provided by taxpayers.--As 29 a condition of eligibility under the program, taxpayers may be 30 required to provide information and certify that the property 20030H0343B0389 - 5 -
1 for which an exclusion is sought is residential property. The 2 information and certification shall be in a form to be adopted 3 by the Department of Revenue. County assessment offices may use 4 any other informational resources to determine whether a parcel 5 qualifies as residential property. The determination of the 6 county assessment office as to whether a parcel qualifies as 7 residential property may be appealed to a court of common pleas. 8 (c) Explanation.--Each county assessment office shall 9 provide to political subdivisions within the county an 10 explanation of the manner in which residential properties shall 11 be identified. The explanation shall be included in the 12 application. 13 (d) List to department.--By March 31 of each year, the 14 county assessment office shall provide to the department a list 15 of those properties identified as residential property, together 16 with a certification that the county assessment office has made 17 a good faith effort in identifying the properties. 18 Section 9. Exclusion from taxation. 19 (a) General rule.--A political subdivision shall exclude 20 from taxation a portion of the assessed value of residential 21 property identified under section 8 as follows: 22 (1) The department shall certify to each board of county 23 commissioners, the Local Government Commission, the 24 Department of Revenue, the Majority Leader and the Minority 25 Leader of the Senate and the Majority Leader and the Minority 26 Leader of the House of Representatives, by April 30 of each 27 year, the amount of REAP aid due to each political 28 subdivision for that tax year. 29 (2) The department shall calculate a tax exclusion rate 30 by dividing total REAP aid by the total taxable value of 20030H0343B0389 - 6 -
1 residential property in qualifying political subdivisions. 2 (3) The tax exclusion rate shall be multiplied by the 3 taxable value for each residential property, the product of 4 which shall be deducted from the total taxes due, before 5 deductions, on each residential property for the tax year. 6 The tax exclusion rate and amount of the exclusion shall be 7 displayed on a taxpayer's tax bill. 8 (b) Limitations.--The tax exclusions provided under 9 subsection (a) shall not exceed one-half of the median assessed 10 value of all homestead property within a local taxing 11 jurisdiction. A local taxing authority may not increase the 12 millage rate of its tax on real property to pay for these 13 exclusions. 14 Section 10. Payment of REAP aid. 15 The total amount of REAP aid shall be paid by the State 16 Treasurer as State aid to each political subdivision in two 17 equal installments payable on August 1 and November 1 of each 18 year. 19 Section 11. Administration. 20 The department shall establish a procedure for providing 21 information to taxpayers about the REAP aid program and the 22 amount of REAP aid for which each taxing district is eligible. 23 Section 12. Duties of Department of Revenue. 24 (a) General rule.--The Department of Revenue shall assist in 25 identifying residential properties and may make any additions to 26 notices of assessments or to other forms or notices as the 27 Department of Revenue deems appropriate. 28 (b) Sharing of information.--Notwithstanding any other 29 provision of law to the contrary, the Department of Revenue may 30 provide such information as it deems necessary to the department 20030H0343B0389 - 7 -
1 or to the county assessment offices in order to implement this 2 act. 3 (c) Regulations.--The Department of Revenue may promulgate 4 rules to effectuate the purposes of this act, including 5 regulations for the identification of residential property and a 6 requirement that taxpayers timely complete certifications or 7 applications in order to be eligible for a tax exclusion under 8 this act. 9 Section 13. Regional Efficiency Aid Program Fund. 10 (a) Fund created.--There is created the Regional Efficiency 11 Aid Program Fund within the State Treasury which shall be a 12 nonlapsing revolving account. The fund shall receive 13 appropriations and repayments of loans as may be determined 14 necessary by the State Treasurer. 15 (b) Administration.--Upon request of the Governor, the 16 General Assembly shall appropriate the necessary funds to the 17 Regional Efficiency Aid Program Fund for purposes of the 18 program. The fund shall be administered by the department. 19 Section 14. Effective date. 20 This act shall take effect in 60 days. A15L53BIL/20030H0343B0389 - 8 -