The Tyrone Area Tax Study Commission will present its recommendation on a tax referendum question to the public at a meeting on Wednesday evening.
The nine-member commission was appointed in September by the Tyrone Area School Board and held an initial meeting in early October. It is part of the mandated implementation of a new 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. The move is a result of the Act 1 law passed by the state legislature and signed by the governor earlier this year.
Property taxes are already earmarked to be reduced for homeowners in the state through money expected to be generated by slot machine gambling. According to officials at the latest tax study commission meeting, voters in each district will have to chose to accept or decline revenues from gambling for property tax relief.
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 the public 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 tax study commission can alter its choice on the tax referendum question prior to making a recommendation to the Tyrone Area School Board. However, even if it chooses to alter its choice after hearing from the public, it must still choose one of the six options.
That recommendation is expected to happen at a Dec. 4 school board meeting. District administrators said the school board would likely accept whichever option is presented to them although the tax study commission’s recommendation to the board is nonbinding. The school board must also choose from one of the six options.
Wednesday’s public meeting is scheduled for 7 p.m. in the board room of the administrative suite of the Tyrone Area Elementary building.
The referendum question is expected to be on the ballot in next spring’s primary election.
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.
Regardless of whether an EIT or PIT option is put forth in a referendum question in a given district, the additional amount of property tax relief will be between half of the maximum homestead exclusion (the formula in place for slots-based property tax relief) and the full maximum exclusion allowed, but it does not have to be more than a one percent EIT increase.
The state’s tax relief web site noted “this provision does not apply to Pittsburgh, Philadelphia and Scranton because their wage tax rates are already so high, increasing them even more will further deteriorate the economies of those communities.”
The additional relief could take effect as early as July of next year.
If voters reject an EIT increase or a conversion to a PIT then there would be no additional property tax relief at that point. However, according to the state’s tax relief web site, school boards can also give voters (with the exception of Philadelphia) the choice of further reducing property taxes in the 2009 municipal election or any municipal election after that.
