Regular Session 2015-2016 Senate Bill 0422 P.N. 0338

PRINTER'S NO. 338

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

422

Session of

2015

INTRODUCED BY YUDICHAK, GREENLEAF, VOGEL, FONTANA, ARGALL,

COSTA, BREWSTER, BOSCOLA, SCHWANK, WHITE AND BROWNE,

FEBRUARY 9, 2015

REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,

FEBRUARY 9, 2015

AN ACT

Establishing the Regional Efficiency Aid Program; providing for

powers and duties of the Department of Community and Economic

Development and the Department of Revenue; and establishing

the Regional Efficiency Aid Program Fund.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Regional

Efficiency Aid Program Act.

Section 2. Declaration of policy.

The General Assembly finds and declares as follows:

(1) One of the most effective ways to reduce property

taxes is through the regionalization, consolidation or

sharing of services by political subdivisions.

(2) Because of institutional and financial limitations

on political subdivisions, regionalized, consolidated and

shared alternatives have not been widely adopted, resulting

in duplication of services and excess costs for taxpayers.

(3) A program of providing State aid to political

subdivisions that successfully implement strategies to

regionalize, consolidate and share services is an innovative

and important means of providing a financial incentive to

overcome the institutional limitations on political

subdivisions.

(4) To overcome these institutional limitations and to

ensure property tax relief, the Commonwealth should provide

State aid to political subdivisions that realize budgetary

savings from shared, regionalized or consolidated services

and pass these savings on to taxpayers through a reduction in

property tax obligations.

(5) Combining State-funded property tax relief with

fiscal assistance for the planning and start-up costs

associated with entering into new shared, regionalized or

consolidated service agreements will serve as additional

incentives for political subdivisions to take advantage of

potential savings provided by way of such agreements.

Section 3. 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:

"Department." The Department of Community and Economic

Development of the Commonwealth.

"Political subdivision." A county, city, borough,

incorporated town, township, school district, vocational school

district and county institution district.

"Program" or "REAP." The Regional Efficiency Aid Program

established under section 4.

"REAP aid." State aid provided to political subdivisions

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under the Regional Efficiency Aid Program established in section

"Regional service agreement." An agreement entered into by a

political subdivision in accordance with 53 Pa.C.S. Pt. III

Subpt. D (relating to area government and intergovernmental

cooperation) or any other agreement between political

subdivisions that is permitted by law.

"Residential property." A "homestead" as defined in 53

Pa.C.S. § 8401 (relating to definitions).

"Secretary." The Secretary of Community and Economic

Development of the Commonwealth.

Section 4. Regional Efficiency Aid Program.

The Regional Efficiency Aid Program is established in the

department. A political subdivision that enters into a regional

service agreement, either as a provider or receiver of services,

may apply for State aid for the purpose of providing tax

exclusions for residential property within the political

subdivision. State aid shall be granted for each calendar year

during which a regional service agreement is in effect.

Section 5. Formula for calculation of REAP aid.

(a) General rule.--The annual amount of State aid a

political subdivision is eligible to receive under the program

shall be the total of the number of points accumulated for the

regional service agreements of the political subdivision

multiplied by $1 per point, multiplied by the latest population

of the political subdivision using the most recent State

population estimates provided by the United States Bureau of the

Census and multiplied by the weighting factor of fiscal stress

of the political subdivision.

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

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the number of points and weighting of fiscal stress used in the

formula for allocating State aid shall be determined by the

department within six months of the effective date of this

section. The system shall include:

(1) A schedule of the number of points for each type of

regional service agreement.

(2) The assignment of the number of points based on the

percentage of the cost of the regional service in the current

budget of the political subdivision, a relative value scale

of the importance of the regional service, a combination of

the two or such other criteria as designated by the

department to provide incentives deemed necessary or

appropriate.

(3) An increase in the number of points by an amount not

to exceed 25% of the number provided to the recipient, to be

granted to the provider of the regional service.

(4) A formula for weighting points based on a political

subdivision's degree of fiscal stress.

with the Secretary of Education with regard to school districts

and vocational school districts in the administration of the

program.

Section 6. Application and award process.

(a) General rule.--The department shall establish procedures

for the administration of REAP aid and provide for an

application and award process that:

(1) Is consistent with the timetable and process of

fixing property tax rates.

(2) Ensures that a political subdivision provides or

receives bona fide regional services.

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(3) Ensures that to qualify for the receipt of REAP aid,

a regional service agreement results in:

(i) savings of the cost of services, including any

new capital expenditures, reflected as current or future

budget reductions;

(ii) limits on future costs increases;

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

(iv) other criteria as the department may deem

relevant.

(4) Provides for monitoring, oversight and enforcement.

(b) Department review.--

(1) Each year the department shall review applications

and determine the amount of REAP aid for which each political

subdivision is eligible.

(2) The department shall allocate aid to ensure that

school districts and vocational school districts receive

their share of aid based on proportion of taxes or other

appropriate measure.

Section 7. Exemption from certain limitations.

Political subdivision appropriations for regional services

for which REAP aid is provided shall be exempt from the

limitations on appropriations under any law limiting political

subdivision expenditures.

Section 8. Duties of county tax assessment offices.

(a) General rule.--The county assessment office in which a

political subdivision or subdivisions have applied to receive

REAP aid shall identify property that qualifies as residential

property.

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

(1) As a condition of eligibility under the program,

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taxpayers may be required to provide information and certify

that the property for which an exclusion is sought is

residential property. The information and certification shall

be in a form to be adopted by the Department of Revenue.

(2) County assessment offices may use any other

informational resources to determine whether a parcel

qualifies as residential property.

(3) The determination of the county assessment office as

to whether a parcel qualifies as residential property may be

appealed to a court of common pleas.

provide to political subdivisions within the county an

explanation of the manner in which residential properties shall

be identified. The explanation shall be included in the

application.

(d) List to department.--By March 31 of each year, the

county assessment office shall provide to the department a list

of those properties identified as residential property, together

with a certification that the county assessment office has made

a good faith effort in identifying the properties.

Section 9. Exclusion from taxation.

(a) General rule.--A political subdivision shall exclude

from taxation a portion of the assessed value of residential

property identified under section 8 as follows:

(1) The department shall certify to each board of county

commissioners, the Local Government Commission, the

Department of Revenue, the Majority Leader and the Minority

Leader of the Senate and the Majority Leader and the Minority

Leader of the House of Representatives, by April 30 of each

year, the amount of REAP aid due to each political

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subdivision for that tax year.

(2) The department shall calculate a tax exclusion rate

by dividing total REAP aid by the total taxable value of

residential property in qualifying political subdivisions.

(3) The tax exclusion rate shall be multiplied by the

taxable value for each residential property, the product of

which shall be deducted from the total taxes due, before

deductions, on each residential property for the tax year.

The tax exclusion rate and amount of the exclusion shall be

displayed on a taxpayer's tax bill.

(b) Limitations.--

(1) The tax exclusions provided under subsection (a)

shall not exceed one-half of the median assessed value of all

homestead property within a local taxing jurisdiction.

(2) A local taxing authority may not increase the

millage rate of its tax on real property to pay for these

exclusions.

Section 10. Payment of REAP aid.

The total amount of REAP aid shall be paid from the fund to

each political subdivision in two equal installments payable on

August 1 and November 1 of each year.

Section 11. Administration.

The department shall establish a procedure for providing

information to taxpayers about the REAP aid program and the

amount of REAP aid for which each taxing district is eligible.

Section 12. Duties of Department of Revenue.

(a) General rule.--The Department of Revenue shall assist in

identifying residential properties and may make any additions to

notices of assessments or to other forms or notices as the

Department of Revenue deems appropriate.

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(b) Sharing of information.--Notwithstanding any other

provision of law to the contrary, the Department of Revenue may

provide such information as it deems necessary to the department

or to the county assessment offices in order to implement this

act.

rules to effectuate the purposes of this act, including

regulations for the identification of residential property and a

requirement that taxpayers timely complete certifications or

applications in order to be eligible for a tax exclusion under

this act.

Section 13. Regional Efficiency Aid Program Fund.

The Regional Efficiency Aid Program Fund is established

within the State Treasury. The fund shall be used to pay REAP

aid in accordance with this act.

Section 14. Effective date.

This act shall take effect in 60 days.

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