The Tyrone Area School District Tax Study Commission presented its recommendation on a tax referendum question to the Tyrone Area School Board on Monday evening.
The Commission held a meeting last week where it presented its recommendation to the public and decided on a statement it would present to the school board. The commission then voted by motion to present its recommendation to the school board.
The nine-member commission was appointed in September by the Tyrone Area School Board. It is part of the mandated implementation of Act 1 tax law enacted in Pennsylvania. The appointment of the commission and its work are part of the development of a referendum question to allow voters to decide if they want to further reduce property taxes by switching a portion of the local property tax to a local income tax.
Property taxes are already earmarked to be reduced for homeowners in the state through money expected to be generated by slot machine gambling. Voters in each district will have to choose to accept or decline revenues from gambling for property tax relief. School officials indicated the soonest it might see money from slots is 2009.
The commission had to choose from one of six options it was presented with as part of Act 1. Three of the options are for an increase in the earned income tax. The other three options are for a personal income tax to replace the earned income tax. The EIT options list three levels of increase in the earned income tax. The level of increase were listed at .30, .40 and .50 percent. The current EIT is .65 percent. The personal income tax options also list three levels of taxation The options are .90, 1.0 and 1.1 percent.
At its Nov. 4 meeting, commission member Bill Hoover recommended the EIT minimum option be presented at last week’s meeting. His motion was seconded and passed by the commission.
The referendum question would read as follows under that option: “Do you favor imposing an additional .30 percent income earned income tax. The revenue generated for the increased tax rate will be used to reduce taxes on qualified residential properties by $138. The current earned income tax rate is .65 percent.”
The commission voted unanimously to recommend the referendum question as stated above at Monday’s school board meeting. The commission let it be known that although it was required to choose one of the six options and the school board is required to put forth a referendum question from those options, the commission does not favor passage of the referendum question when it is put before the voters next spring.
The commission’s recommendation is nonbinding and the school board is free to choose one of the other six options. School administrators have indicated the board is expected to accept the commission’s recommendation. That thought was expressed once again at last night’s school board meeting.
The statement presented to the school board last night concluded as follows: “Because we believe tax shifting, through the Homestead/ Farmstead exclusion, by imposing an EIT increase will not improve the tax policies of the Tyrone Area School District, we recommend voters vote “NO” on the referendum question.”
Commission Chairman Bill Fink make the commission’s presentation, which included the recommendation on the referendum question and the commission’s statement. He was also joined by a most of the commission members.
The school board’s agenda did not list any action was scheduled to be taken at last night’s meeting regarding the recommendation. School board administrators verified no action on the referendum question was scheduled last night.
By Feb. 26 of next year, districts have to begin advertising its intent to adopt a resolution regarding allowing voters the option of approving further property tax relief through a referendum. Schools are required to adopt a resolution authorizing a referendum question by March 13.
If approved by the voters, the addition EIT tax and property tax reduction would take effect as early as July of next year.
If voters reject an EIT increase or a conversion to a PIT then things would stay the same. However, according to the state’s tax relief web site, school boards can also give voters (with the exception of Philadelphia) the choice again in the 2009 municipal election or any municipal election after that.
