School Property Tax Elimination Bill SB 76 was defeated in 2015 by one vote

School Property Tax Elimination Bill $14 billion raised annually in local school property taxes The plan calls for an: Increase in income tax from 3.07% to 4.95% Increase in sales tax from 6% to 7% Increase in the number of items taxable such as groceries, clothing, beer, liquor, non-prescription drugs, as well as financial, funeral and salon services

School Property Tax Elimination Bill More details: Maintain school property taxes for school district debt only Property taxes for township and county remain in place School taxes will end on June 30, 2017 Starting on July 1, 2017, districts will receive quarterly payments with an annual COLA Next year’s payment wouldn’t be less than this year’s***

School Property Tax Elimination Bill More details: To exceed COLA, a public referendum would be required To add debt outside budget, a public referendum would be required An affirmative vote would raise income and/or sales tax within the district

Drawbacks to the Proposed Bill School property taxes don’t disappear on July 1 Poorest citizens would be hurt the most with double taxation New basic education funding formula would be abandoned Disparity in education funding will grow $2 billion in taxes shift from businesses to individuals Six counties win!

Six counties have an inflow of money while all others see an outflow

Drawbacks to the Proposed Bill Facilities will deteriorate causing health and safety issues PSERS and other costs will be more than COLA causing budget cuts to staffing and programs Individuals will pay $600 million more to the federal gov’t (loss of deduction on federal income taxes) No plan in SB 76 for collection of delinquent taxes A recession would spell major trouble (unstable revenues)

Income and Sales Taxes Are Unstable Personal Income Tax Revenue from 2007-08 to 2009-10 ↓9% Sales/Use Tax Revenue from 2007-08 to 2009-10 ↓6% If both revenues go down in a recession, how will PA be able to give 500 districts the same or more $?

How does this impact DV? Loss of local control Punished for having NO tax increases in 7 of last 10 years $14 million (30%) lost from out-of-state property owners’ taxes Could cause enrollment boom – no extra $ to pay for it Still have property tax of about 8 mills (current = 108 mills) Will our new $10 million debt count? Loss of revenue/use of reserves/need for short-term borrowing A recession will cause massive cuts and/or depletion of reserves

What can we do? Contact our legislators and the Governor Inform/educate our community about the bill Consider additional borrowing if deadline is June 30 For more information, see: http://www.pasbo.org/propertytax