1Establishing the Regional Efficiency Aid Program; providing for
2powers and duties of the Department of Community and Economic
3Development and the Department of Revenue; and establishing
4the Regional Efficiency Aid Program Fund.

5The General Assembly of the Commonwealth of Pennsylvania 
6hereby enacts as follows:

7Section 1.  Short title.

8This act shall be known and may be cited as the Regional
9Efficiency Aid Program Act.

10Section 2.  Declaration of policy.

11The General Assembly finds and declares as follows:

12(1)  One of the most effective ways to reduce property
13taxes is through the regionalization, consolidation or
14sharing of services by political subdivisions.

15(2)  Because of institutional and financial limitations
16on political subdivisions, regionalized, consolidated and
17shared alternatives have not been widely adopted, resulting
18in duplication of services and excess costs for taxpayers.

1(3)  A program of providing State aid to political
2subdivisions that successfully implement strategies to
3regionalize, consolidate and share services is an innovative
4and important means of providing a financial incentive to
5overcome the institutional limitations on political
6subdivisions.

7(4)  To overcome these institutional limitations and to
8ensure property tax relief, the Commonwealth should provide
9State aid to political subdivisions that realize budgetary
10savings from shared, regionalized or consolidated services
11and pass these savings on to taxpayers through a reduction in
12property tax obligations.

13(5)  Combining State-funded property tax relief with
14fiscal assistance for the planning and start-up costs
15associated with entering into new shared, regionalized or
16consolidated service agreements will serve as additional
17incentives for political subdivisions to take advantage of
18potential savings provided by way of such agreements.

19Section 3.  Definitions.

20The following words and phrases when used in this act shall
21have the meanings given to them in this section unless the
22context clearly indicates otherwise:

23"Department."  The Department of Community and Economic 
24Development of the Commonwealth.

25"Political subdivision."  A county, city, borough, 
26incorporated town, township, school district, vocational school 
27district and county institution district.

28"Program" or "REAP."  The Regional Efficiency Aid Program 
29established under section 4.

30"REAP aid."  State aid provided to political subdivisions 

1under the Regional Efficiency Aid Program established in section 
24.

3"Regional service agreement."  An agreement entered into by a 
4political subdivision in accordance with 53 Pa.C.S. Pt. III 
5Subpt. D (relating to area government and intergovernmental 
6cooperation) or any other agreement between political 
7subdivisions that is permitted by law.

8"Residential property."  A "homestead" as defined in 53 
9Pa.C.S. § 8401 (relating to definitions).

10"Secretary."  The Secretary of Community and Economic 
11Development of the Commonwealth.

12Section 4.  Regional Efficiency Aid Program.

13The Regional Efficiency Aid Program is established in the
14department. A political subdivision that enters into a regional
15service agreement, either as a provider or receiver of services,
16may apply for State aid for the purpose of providing tax
17exclusions for residential property within the political
18subdivision. State aid shall be granted for each calendar year
19during which a regional service agreement is in effect.

20Section 5.  Formula for calculation of REAP aid.

21(a)  General rule.--The annual amount of State aid a
22political subdivision is eligible to receive under the program
23shall be the total of the number of points accumulated for the
24regional service agreements of the political subdivision
25multiplied by $1 per point, multiplied by the latest population
26of the political subdivision using the most recent State
27population estimates provided by the United States Bureau of the
28Census and multiplied by the weighting factor of fiscal stress
29of the political subdivision.

30(b)  Determination of variables.--A system for determining

1the number of points and weighting of fiscal stress used in the
2formula for allocating State aid shall be determined by the
3department within six months of the effective date of this
4section. The system shall include:

5(1)  A schedule of the number of points for each type of
6regional service agreement.

7(2)  The assignment of the number of points based on the
8percentage of the cost of the regional service in the current
9budget of the political subdivision, a relative value scale
10of the importance of the regional service, a combination of
11the two or such other criteria as designated by the
12department to provide incentives deemed necessary or
13appropriate.

14(3)  An increase in the number of points by an amount not
15to exceed 25% of the number provided to the recipient, to be
16granted to the provider of the regional service.

17(4)  A formula for weighting points based on a political
18subdivision's degree of fiscal stress.

19(c)  Program administration.--The secretary shall consult
20with the Secretary of Education with regard to school districts
21and vocational school districts in the administration of the
22program.

23Section 6.  Application and award process.

24(a)  General rule.--The department shall establish procedures
25for the administration of REAP aid and provide for an
26application and award process that:

27(1)  Is consistent with the timetable and process of
28fixing property tax rates.

29(2)  Ensures that a political subdivision provides or
30receives bona fide regional services.

1(3)  Ensures that to qualify for the receipt of REAP aid,
2a regional service agreement results in:

3(i)  savings of the cost of services, including any
4new capital expenditures, reflected as current or future
5budget reductions;

6(ii)  limits on future costs increases;

7(iii)  minimizing the costs of a new service; or

8(iv)  other criteria as the department may deem
9relevant.

10(4)  Provides for monitoring, oversight and enforcement.

11(b)  Department review.--Each year the department shall
12review applications and determine the amount of REAP aid for
13which each political subdivision is eligible. The department
14shall allocate aid to ensure that school districts and
15vocational school districts receive their share of aid based on
16proportion of taxes or other appropriate measure.

17Section 7.  Exemption from certain limitations.

18Political subdivision appropriations for regional services
19for which REAP aid is provided shall be exempt from the
20limitations on appropriations under any law limiting political
21subdivision expenditures.

22Section 8.  Duties of county tax assessment offices.

23(a)  General rule.--The county assessment office in which a
24political subdivision or subdivisions have applied to receive
25REAP aid shall identify property that qualifies as residential
26property.

27(b)  Information and certification provided by taxpayers.--

28(1)  As a condition of eligibility under the program,
29taxpayers may be required to provide information and certify
30that the property for which an exclusion is sought is

1residential property. The information and certification shall
2be in a form to be adopted by the Department of Revenue.

3(2)  County assessment offices may use any other
4informational resources to determine whether a parcel
5qualifies as residential property.

6(3)  The determination of the county assessment office as
7to whether a parcel qualifies as residential property may be
8appealed to a court of common pleas.

9(c)  Explanation.--Each county assessment office shall
10provide to political subdivisions within the county an
11explanation of the manner in which residential properties shall
12be identified. The explanation shall be included in the
13application.

14(d)  List to department.--By March 31 of each year, the
15county assessment office shall provide to the department a list
16of those properties identified as residential property, together
17with a certification that the county assessment office has made
18a good faith effort in identifying the properties.

19Section 9.  Exclusion from taxation.

20(a)  General rule.--A political subdivision shall exclude
21from taxation a portion of the assessed value of residential
22property identified under section 8 as follows:

23(1)  The department shall certify to each board of county
24commissioners, the Local Government Commission, the
25Department of Revenue, the Majority Leader and the Minority
26Leader of the Senate and the Majority Leader and the Minority
27Leader of the House of Representatives, by April 30 of each
28year, the amount of REAP aid due to each political
29subdivision for that tax year.

30(2)  The department shall calculate a tax exclusion rate

1by dividing total REAP aid by the total taxable value of
2residential property in qualifying political subdivisions.

3(3)  The tax exclusion rate shall be multiplied by the
4taxable value for each residential property, the product of
5which shall be deducted from the total taxes due, before
6deductions, on each residential property for the tax year.
7The tax exclusion rate and amount of the exclusion shall be
8displayed on a taxpayer's tax bill.

9(b)  Limitations.--The tax exclusions provided under
10subsection (a) shall not exceed one-half of the median assessed
11value of all homestead property within a local taxing
12jurisdiction. A local taxing authority may not increase the
13millage rate of its tax on real property to pay for these
14exclusions.

15Section 10.  Payment of REAP aid.

16The total amount of REAP aid shall be paid by the State
17Treasurer as State aid to each political subdivision in two
18equal installments payable on August 1 and November 1 of each
19year.

20Section 11.  Administration.

21The department shall establish a procedure for providing
22information to taxpayers about the REAP aid program and the
23amount of REAP aid for which each taxing district is eligible.

24Section 12.  Duties of Department of Revenue.

25(a)  General rule.--The Department of Revenue shall assist in
26identifying residential properties and may make any additions to
27notices of assessments or to other forms or notices as the
28Department of Revenue deems appropriate.

29(b)  Sharing of information.--Notwithstanding any other
30provision of law to the contrary, the Department of Revenue may

1provide such information as it deems necessary to the department
2or to the county assessment offices in order to implement this
3act.

4(c)  Regulations.--The Department of Revenue may promulgate
5rules to effectuate the purposes of this act, including
6regulations for the identification of residential property and a
7requirement that taxpayers timely complete certifications or
8applications in order to be eligible for a tax exclusion under
9this act.

10Section 13.  Regional Efficiency Aid Program Fund.

11(a)  Establishment.--The Regional Efficiency Aid Program Fund
12is established within the State Treasury and shall be a
13nonlapsing revolving account. The fund shall receive
14appropriations and repayments of loans as may be determined
15necessary by the State Treasurer.

16(b)  Administration.--Upon request of the Governor, the
17General Assembly shall appropriate the necessary funds to the
18fund for purposes of the program. The fund shall be administered
19by the department.

20Section 14.  Effective date.

21This act shall take effect in 60 days.