PRINTER'S NO. 937
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
118
Session of
2015
INTRODUCED BY HUGHES, BREWSTER, TARTAGLIONE, FONTANA, COSTA,
WILEY, YUDICHAK AND HAYWOOD, MAY 15, 2015
REFERRED TO FINANCE, MAY 15, 2015
AN ACT
Providing for school district real property tax relief through
distributions to school districts and for supplemental rent
rebate relief.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. School Property Tax Reductions
Section 301. Distributions to school districts.
Section 302. Homestead and farmstead exclusions.
Section 303. Additional limits on future property tax
increases.
Chapter 5. Relief For Renters
Section 501. Definitions.
Section 502. Supplemental rent rebate relief.
Section 503. Filing of claim.
Section 504. Proof of claim.
Section 505. Incorrect claim.
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Section 506. Claim forms.
Section 507. Fraudulent claims.
Section 508. Applicability.
Section 509. Regulations.
Chapter 7. Miscellaneous Provisions
Section 701. Applicability to school districts of the first
class.
Section 702. Additional provisions.
Section 703. Repeals.
Section 704. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the School
District Real Property Tax Relief Act.
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Allocation minimum." A numerical value of 0.2.
"Average daily membership." The term shall have the same
usage as in the Public School Code.
"Department." The Department of Education of the
Commonwealth.
"Earned income." As defined in section 501 of The Local Tax
Enabling Act.
"Equalized millage." As defined in section 2501(9.2) of the
Public School Code.
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"Estimated local revenue calculation." The compensation and
net profits component of the 2012 personal income valuation
certified by the Secretary of Revenue as in section 2501(9.1) of
the Public School Code, multiplied by 0.1%.
"Farmstead." As defined in 53 Pa.C.S. § 8582 (relating to
definitions).
"Farmstead property." As defined in 53 Pa.C.S. § 8582.
"Fund." The Property Tax Relief Fund established under 4
Pa.C.S. § 1409 (relating to Property Tax Relief Fund).
"Homestead." As defined in 53 Pa.C.S. § 8401 (relating to
definitions).
"Homestead property." As defined in 53 Pa.C.S. § 8401.
"Local tax revenue." The revenue from taxes actually levied
and assessed by a school district, including delinquent taxes.
The term does not include interest or dividend earnings, Federal
or State grants, contracts or appropriations, income generated
from operations or any other source which is not derived from
taxes levied and assessed by a school district.
"Market value/income aid ratio." As defined in section
2501(14.1) of the Public School Code.
"Net profits." As defined in section 501 of The Local Tax
Enabling Act.
"Personal income." Income enumerated in section 303 of the
act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971, as determined by the Department of Revenue, subject to
any correction thereof for fraud, evasion or error as finally
determined by the Commonwealth.
"Personal income valuation." As defined in section 2501(9.1)
of the Public School Code.
"Property tax reduction index." A quotient equal to the sum
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of the numerical rank of a school district's personal income
valuation per average daily membership, the numerical rank of
its market value or income aid ratio, the numerical rank of its
equalized millage and the numerical rank of its school tax
ratio, divided by 1,000.
"Public School Code." The act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
"Residential property tax." The dollar value of real
property taxes paid by residential property owners in a school
district, determined by multiplying the real property taxes
collected by the school district by the percentage of the total
property value in the school district classified as residential
by the State Tax Equalization Board and including any property
tax reduction allocation under Chapter 5 of the Taxpayer Relief
Act.
"Secretary." The Secretary of the Budget.
"School district." A school district of the first class,
first class A, second class, third class or fourth class.
"School tax ratio." The dollar value of local taxes
collected by the school district or by a city of the first class
for a school district of the first class divided by the personal
income valuation of the school district.
"Taxpayer Relief Act." The act of June 27, 2006 (1st
Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act.
"The Local Tax Enabling Act." The act of December 31, 1965
(P.L.1257, No.511), known as The Local Tax Enabling Act.
CHAPTER 3
SCHOOL PROPERTY TAX REDUCTIONS
Section 301. Distributions to school districts.
(a) General rule.--The Secretary of Education shall make
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distributions to each school district as provided in this
section.
(b) Amount of distributions.--Each school district shall
receive allocations calculated by the department as follows:
(1) Array the 2012 personal income valuation divided by
the 2012-2013 average daily membership, the 2014-2015 market
value/income aid ratio, the 2012-2013 equalized millage and
the 2012-2013 school tax ratio of each school district in
rank order and assign each school district a discreet
numerical rank for its personal income valuation per average
daily membership, its market value/income aid ratio, its
equalized millage and its school tax ratio. For the numerical
rank of a school district's personal income valuation per
average daily membership, the school district with the lowest
personal income valuation per average daily membership shall
have the highest numerical rank. For the numerical rank of a
school district's market value/income aid ratio, the school
district with the highest market value/income aid ratio shall
have the highest numerical rank, provided that all school
districts with a market value/income aid ratio equal to 0.15
shall receive a ranking of 1. For the numerical rank of a
school district's equalized millage, the school district with
the highest equalized millage shall have the highest
numerical rank. For the numerical rank of a school district's
school tax ratio, the school district with the highest school
tax ratio shall have the highest numerical rank.
(2) Assign each school district a property tax reduction
index which shall be the greater of the calculation under
this act or the property tax reduction index under the
Taxpayer Relief Act.
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(3) Calculate the property tax reduction allocation as
follows:
(i) Multiply the school district's 2012-2013 average
daily membership by the school district's property tax
reduction index.
(ii) Multiply the product under subparagraph (i) by
the dollar amount necessary to allocate $3,800,000,000
under this paragraph and paragraphs (4), (5) and (6).
(iii) If applicable, provide for the allocation
minimum under paragraph (4), the amount of taxes credited
under paragraph (5) and any reduction required under
paragraph (6).
(4) If the sum of the allocation under this subsection
and the estimated local revenue calculation is less than the
product of the residential property taxes collected during
the 2012-2013 fiscal year and the allocation minimum for a
school district, the school district shall receive an
additional amount so that the sum of the total allocation
under paragraph (3) and this paragraph and the estimated
local revenue calculation is equal to the product of the
residential property taxes collected during the 2012-2013
fiscal year and the allocation minimum.
(5) Each school district shall receive an allocation in
the amount of any taxes credited under section 324 of the
Taxpayer Relief Act.
(6) A school district may not receive an allocation
under this subsection that exceeds the total amount of
property tax revenue received by the school district for the
2012-2013 fiscal year, including any property tax reduction
allocation under Chapter 5 of the Taxpayer Relief Act.
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(c) Certification.--No later than April 15, 2016, and April
15 of each year thereafter, the secretary shall certify that
there is projected to be sufficient revenue in the fund for
distribution in the following fiscal year and shall notify the
Secretary of Education of the amount available for distribution
to school districts. The Secretary of Education shall notify
each school district of the school district's allocation under
this part no later than May 1 of each year. The secretary shall
publish notification of the certification in the Pennsylvania
Bulletin.
(d) Frequency of distributions.--Distributions to school
districts under this section shall be made in October of each
year in which a distribution occurs.
(e) Use of proceeds.--Except as provided in section 701, the
following shall apply:
(1) A school district shall use the allocation under
subsection (b) to fund exclusions for homestead and farmstead
property.
(2) A school district shall utilize an allocation under
subsection (b) in excess of the revenue required to fund the
maximum homestead and farmstead exclusions authorized under
53 Pa.C.S. § 8586 (relating to limitations) to reduce the
property tax rate on all properties subject to the property
tax in the school district.
Section 302. Homestead and farmstead exclusions.
(a) Homestead and farmstead exclusion process.--Each fiscal
year in which a school district receives an allocation under
section 301, the school district shall calculate a homestead and
farmstead exclusion for the purpose of reducing school district
property taxes. The school district shall adopt a resolution
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implementing the homestead and farmstead exclusion no later than
the last day of the fiscal year immediately preceding the fiscal
year in which the homestead and farmstead exclusions shall take
effect.
(b) Tax notice.--A school district shall itemize the
homestead and farmstead exclusion on tax bills sent to homestead
and farmstead owners indicating the original amount of tax
liability, the amount of any reduction in the property tax rate
on all properties of the exclusion and the net amount of tax due
after the exclusion and any reduction on all properties are
applied. The tax bill shall be easily understandable and include
a notice under subsection (c).
(c) Notice of property tax relief.--A school district shall
include with the homestead or farmstead owner's tax bill a
notice that the tax bill includes a homestead or farmstead
exclusion. The notice shall at a minimum take the following
form:
NOTICE OF PROPERTY TAX RELIEF
Your enclosed tax bill includes a tax reduction for your
homestead and/or farmstead property. You have received
tax relief through a homestead and/or farmstead exclusion
which has been provided under the School District Tax
Relief Act, a law passed by the Pennsylvania General
Assembly designed to reduce your property taxes.
If the school district has reduced the property tax rate on all
properties subject to the property tax in the school district
under section 301(e)(2):
(1) The notice included with the homestead or farmstead
owner's tax bill shall at a minimum take the following form:
NOTICE OF PROPERTY TAX RELIEF
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Your enclosed tax bill includes a tax reduction. You
have received tax relief through a homestead and/or
farmstead exclusion and additional tax relief through
a reduction in your property tax rate, which have
been provided under the School District Tax Relief
Act, a law passed by the Pennsylvania General
Assembly designed to reduce your property taxes.
(2) A school district shall include with all property
tax bills other than those for a homestead or farmstead owner
a notice that the tax bill includes a property tax reduction.
The notice shall at a minimum take the following form:
NOTICE OF PROPERTY TAX RELIEF
Your enclosed tax bill includes a tax reduction. You
have received tax relief through a reduction in your
property tax rate, which has been provided under the
School District Tax Relief Act, a law passed by the
Pennsylvania General Assembly designed to reduce your
property taxes.
Section 303. Additional limits on future property tax
increases.
(a) Restrictions.--Notwithstanding section 688(a) of the
Public School Code, no school district may approve an increase
in real property taxes unless the school district has adopted a
budget that includes an estimated ending unassigned fund balance
equal to or less than 4% of its total budgeted expenditures.
(b) Continuation of prohibitions.--Section 333 of the
Taxpayer Relief Act, as amended, shall remain in effect.
CHAPTER 5
RELIEF FOR RENTERS
Section 501. Definitions.
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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:
"Claimant." A person who files a claim for supplemental rent
rebate relief.
"Department." The Department of Revenue of the Commonwealth.
"Homestead." A rented dwelling and as much of the land
surrounding the rental dwelling as is reasonably necessary for
the use of the dwelling as a renter-occupied primary residence
by a claimant. The term includes:
(1) Premises occupied by reason of a lease in a
cooperative housing corporation.
(2) Mobile homes which are assessed as realty for local
property tax purposes and the land, if rented by the
claimant, upon which the mobile home is situated and other
similar living accommodations.
(3) A part of a multidwelling or multipurpose building
and a part of the land upon which the building is built.
(4) Premises occupied by reason of the claimant's rental
of a dwelling located on land owned by a nonprofit
incorporated association, of which the claimant is a member,
if the claimant is required to pay a pro rata share of the
property taxes levied against the association's land.
(5) Premises occupied by a claimant if the claimant is
required by law to pay a property tax by reason of the
claimant's rental, including a possessory interest, in the
dwelling, the land or both.
"Household income." Income received by a claimant and each
other individual residing in the homestead during the calendar
year for which a rebate is claimed.
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"Income." As defined in Chapter 13 of the Taxpayer Relief
Act.
"Supplemental rent rebate relief." Amounts actually paid in
cash or its equivalent in any calendar year to a landlord in
connection with the occupancy of a homestead by a claimant,
irrespective of whether the amount constitutes payment solely
for the right of occupancy.
Section 502. Supplemental rent rebate relief.
(a) Schedule.--The amount of any claim for supplemental rent
rebate relief for rent due and payable during calendar year 2015
and each calendar year thereafter shall be determined in
accordance with the following:
Household Income
Amount of Rent Rebate in
Lieu of Property Taxes
Allowed as Rebate
$0 - $50,000 $500
(b) Limitations on claims.--
(1) No claim under subsection (a) shall be allowed if
the claimant obtains rent rebate in lieu of property tax
relief under Chapter 13 of the Taxpayer Relief Act.
(2) No claim under subsection (a) shall be allowed if
the claimant is a child who is a dependent for purposes of
section 151 of the Internal Revenue Code of 1986 (Public Law
99-514, 26 U.S.C. § 151).
(3) Only one resident of a homestead occupied by
multiple residents may apply for supplemental rent rebate
relief under subsection (a). If two or more residents are
able to meet the qualification for a claimant, the residents
may determine who the claimant shall be and, in the absence
of a determination, the department shall determine to whom
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the rebate is to be paid.
(4) No claim under subsection (a) shall be allowed if
the claimant is a tenant of an owner of real property which
is exempt from real property taxes.
(c) Apportionment and public assistance.--
(1) If any of the following exist relating to a claim:
(i) a homestead is owned or rented and occupied for
only a portion of a year or is owned or rented in part by
a person who does not meet the qualifications for a
claimant, exclusive of any interest owned or leased by a
claimant's spouse;
(ii) the claimant is a widow or widower who
remarries; or
(iii) the claimant is a formerly disabled person who
is no longer disabled,
the department shall apportion the real property taxes or
rent in accordance with the period or degree of ownership or
leasehold or eligibility of the claimant in determining the
amount of rebate for which a claimant is eligible.
(2) A claimant who receives public assistance from the
Department of Public Welfare shall not be eligible for rent
rebate in lieu of property taxes during those months within
which the claimant receives public assistance.
(d) Government subsidy.--Rent may not include a subsidy
provided by or through a governmental agency.
Section 503. Filing of claim.
(a) General rule.--Except as provided in subsection (b), a
claim for supplemental rent rebate relief must be filed with the
department on or before June 30 of the year next succeeding the
end of the calendar year in which the rent was due and payable.
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(b) Exception.--A claim filed after the June 30 deadline
until December 31 of that year shall be accepted by the
department if funds are available to pay the benefits to the
late-filing claimant.
Section 504. Proof of claim.
(a) Contents.--Each claim shall include:
(1) Reasonable proof of household income.
(2) The size and nature of the property claimed as a
homestead.
(3) The rent receipt or other proof that rent in
connection with the occupancy of the homestead has been paid.
(4) Other information required by the department.
(b) Direct payment of rent.--The department may not require
that rent was paid directly by the claimant if the rent has been
paid when the claim is filed.
Section 505. Incorrect claim.
If an audit of a claim finds the claim to have been
incorrectly determined, the department shall redetermine the
correct amount of the claim and notify the claimant of the
reason for the redetermination and the amount of the corrected
claim.
Section 506. Claim forms.
The department shall:
(1) Receive all applications.
(2) Determine the eligibility of claimants.
(3) Hear appeals.
(4) Disburse payments.
(5) Make available suitable forms for the filing of
claims.
Section 507. Fraudulent claims.
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(a) Civil penalty.--If a claim is excessive and was filed
with fraudulent intent, the claim shall be disallowed in full,
and a penalty of 25% of the amount claimed shall be imposed. The
penalty and the amount of the disallowed claim, if the claim has
been paid, shall bear interest at the rate of 1.5% per month
from the date of the claim until the penalty is paid and the
amount of the disallowed claim is repaid.
(b) Criminal penalty.--The claimant and any person who
assisted in the preparation of filing a fraudulent claim commits
a misdemeanor of the third degree and, upon conviction, shall be
sentenced to pay a fine not exceeding $1,000 or to imprisonment
not exceeding one year or both.
Section 508. Applicability.
Sections 1311, 1312 and 1313 of the Taxpayer Relief Act,
shall apply to claims filed under this chapter.
Section 509. Regulations.
The department may promulgate regulations to implement this
chapter.
CHAPTER 7
MISCELLANEOUS PROVISIONS
Section 701. Applicability to school districts of the first
class.
(a) School districts of the first class.--The allocation
under section 301 for a school district of the first class shall
be paid by the department to a city of the first class.
(b) Reduction of taxes in a city of the first class.--
Notwithstanding the provisions of section 301(e), an allocation
under section 301(b) for a school district of the first class
shall be used as follows:
(1) The governing body of a city of the first class
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shall repeal and fully offset the elimination of the local
option cigarette tax established under 53 Pa.C.S. § 8722
(relating to local option cigarette tax in school districts
of the first class), based on the total annualized revenue
received from the tax in the first full fiscal year in which
it was levied.
(2) Notwithstanding Article II-B of the act of March 4,
1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, the
governing body of a city of the first class shall reduce and
fully offset the reduction from 1% to 0.4% in the rate of a
sales and use tax imposed by a city of the first class under
Article II-B of the Tax Reform Code, based on the total
revenue projected to be received from the tax in the 2016-
2017 fiscal year. Article II-B of the Tax Reform Code shall
apply to the receipt and use of the funds as if the funds
were generated by the sales and use tax imposed by a city of
the first class.
(3) The governing body of a city of the first class
shall reduce any tax imposed on the wages of residents and
nonresidents under the authority of the act of August 5, 1932
(Sp.Sess., P.L.45, No.45), referred to as the Sterling Act,
in accordance with the following:
(i) For residents, by an amount equal to the amount
of the property tax reduction allocation that would be
calculated for a school district of the first class under
section 301(b), excluding the allocation in section
301(b)(5), if:
(A) The total amount available for distribution
was $2,000,000,000.
(B) The maximum modifier and minimum modifier
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are applied as defined in the Taxpayer Relief Act.
(C) The limitation set forth in section 505(a)
(3)(iii) of the Taxpayer Relief Act had applied.
(ii) For nonresidents, by an amount in excess of the
limitations set forth in section 505(a)(3)(iii) of the
Taxpayer Relief Act had the limitations applied to the
property tax reduction allocation that would be
calculated for a school district of the first class under
section 301(b), excluding the allocation in section
301(b)(5), if the total amount available for distribution
was $2,000,000,000 and the maximum modifier and minimum
modifier applied as defined in the Taxpayer Relief Act.
(iii) The reductions under this paragraph shall be
in addition to any reductions included in an approved
five-year financial plan of a city of the first class in
effect on January 1, 2015. The reductions shall replace
any reductions under section 505(d) of the Taxpayer
Relief Act. Except as otherwise provided, the reductions
shall be implemented in a manner consistent with Chapter
7 of the Taxpayer Relief Act.
(4) For the remaining allocation, as provided under
section 301(e).
Section 702. Additional provisions.
(a) Other provisions.--Any school district property tax
reduction approved under Subchapter D of Chapter 3 of the
Taxpayer Relief Act shall continue in effect.
(b) Applicability.--Except as otherwise provided, a school
district shall remain subject to the Taxpayer Relief Act.
Section 703. Repeals.--Repeals are as follows:
(1) The General Assembly declares that the repeal under
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paragraph (2) is necessary to effectuate this act.
(2) Section 342, 343, 503(a) and 505(b) of the act of
June 27, 2006 (1st Sp.Sess., P.L.1873, No.1), known as the
Taxpayer Relief Act, are repealed.
Section 704. Effective date.
This act shall take effect as follows:
(1) Sections 302, 303 and 703 shall take effect upon
publication in the Pennsylvania Bulletin of notice that the
secretary has certified the availability of funds under
section 301(c).
(2) The remainder of this act shall take effect
immediately.
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