On June 27, 2006, Governor Ed Rendell signed into law Special Session Act 1 of 2006, the Taxpayer Relief Act. This law attempts to ease the financial burden of home ownership by providing school districts the means to lower property taxes to homeowners, especially senior citizens.This relief will first come via a tax shift approved by local voters substituting an increase in earned income taxes for a reduction in property taxes. Later, further relief is projected to be provided by gaming revenue from Pennsylvania's slot parlors. It is anticipated that, ultimately, gaming will generate $1 billion each year for local property tax relief.Act 1 is a complex, 100-page law with many provisions that will change the way school districts do business.
The first change is the requirement that schools create a tax study commission to review district finances and taxing structure. The goal of this commission is to suggest to the school board a ballot question which would shift some property taxes into a local income tax.
In September, the school board approved nine Lower Dauphin taxpayers to serve on the commission. Those members included Wesley Ames, Edward Carney, Russel Cassel, Stephen Feathers, Forrest Graeff, Larry Jack, Rodney Nissley, Laurie Reichert and Martin Siegel.
The tax study commission made its recommendation to the school board in early December. The commission's recommendation called for a 1.0 percent increase in the earned income tax of provide property tax relief for qualified homes and farms. In the first year, it is estimated that property tax savings will amount to $417 per approved homestead or farmstead.
The school board accepted and ratified this recommendation on February 5. By mid-March the school board was required to adopt the wording of a ballot question detailing the amount of property taxes to be shifted to local income taxes. Voters rejected this ballot referendum question in May 2007.
Other Provisions of Act 1
Under the new law, districts are also required to seek voter approval for increases in property taxes that exceed an adjusted statewide consumer price index. This vote would take place during the May primary election.
However, in order to determine if a ballot question is needed, school district will need to start their budget process much earlier in the year.
In the case of Lower Dauphin, the administration plans to begin looking at its budget starting in early November to allow the board time to make changes before the preliminary spending plan would need to be submitted to the county for possible inclusion on the ballot. This means that the school district budget will need to be prepared before the state’s education allocation is announced for the upcoming school year and before solid estimates can be made for upcoming class enrollments, utility costs and contractual obligations like health care costs.
Another provision contained in the law allows taxpayers to pay their property tax bill in installments rather than paying all at once. This provision will take effect starting in July 2007 and the district is investigating the best possible way to implement this.
Property holders within the district will be mailed a Homestead/Farmstead Exclusion form to apply for property tax relief. Any reduction in property taxes as a result of Act 1 will only go to those who have filled out these forms with the Dauphin County Office of Taxes Assessment. For more information about the Homestead/Farmstead Exclusion, please contact the county Office of Tax Assessment at e-mail email@example.com or via phone at (717) 780-6101.
For more information about Act 1 and its impact on Lower Dauphin, please call Jim Hazen, district communications coordinator at (717) 566-5307 via e-mail at firstname.lastname@example.org.