PROPERTY TAX REFORM MEASURE ADVANCES

 HARRISBURG, MAY 2 – State Sen. Connie Williams called the Senate vote on property tax reform the beginning of the debate on the school funding issue – not the end.

 “Many seniors in my district are concerned about property taxes,” Williams said. “Property taxes are the number one issue people have talked about in my 10 years in the state legislature.”

 The legislation, which is on its way to the House of Representatives for consideration, was the result of many weeks of negotiations by a conference committee comprised of state Senators and Representatives.

 Under the bill, the Property Tax Rent Rebate Program, which provides rebates on rent and property taxes paid by seniors who qualify, would double in 2007 for the 2006 tax year. The qualifying income for the program would increase from $15,000 to $35,000, allowing not only low-income seniors, but also middle-income seniors to qualify. Additionally, the size of the rebate would increase from up to $500 to $650 for seniors who earn $8,000 or less; $500 for seniors who earn $8,001 to $15,000; $300 for those who earn $15,001 to $18,000; and $250 for those who earn $18,001 to $35,000.

 Initially, surplus Lottery Funds would be used to fund the Property Tax Rent Rebate Program expansion. When proceeds from gaming became available, the Lottery Funds would be replaced and all other homeowners would be eligible for property tax relief.

 The plan would provide property tax reductions to all homeowners in 2007 if local voters approve a May 2007 ballot referendum that increases school district earned income taxes or shifts to a local Personal Income Tax. If approved and when gaming revenue in the state equals $400 million, the average tax bill would be cut by 36 percent. If the local shift were rejected, homeowners still would receive gaming revenues.

 “I think this was a brave move,” Williams said. “It will allow us to begin a new path to fund our schools. We’re not done dealing with inequities in school funding. This gives us the opportunity to talk about school funding issues without worrying that school property taxes will get out of hand. This is not the end of the school funding issue – it is the beginning.”

Williams listened to the concerns raised by a number of constituents and school officials in her district and worked with her colleagues to expand exceptions to the back-end referendum so that property tax would not harm school districts.

 Also, she pointed to the fact that the proposal begins a movement away from funding public education based strictly on property taxes.

 “At the same time, the state is increasing its investment in public education,” Williams said.

 From 2003-04 to 2006-07 a total of $1.7 billion in new pre-K through grade 12 funding will be invested by the state in its public schools. 

• A district can raise its millage rate above the rate of inflation without voter approval if the rate increase is necessary only:

·        To respond to an emergency declared by the Governor;

·        To implement a court or administrative order

·        To pay for costs associated with debt previously incurred.  For Act 72 districts, old debt is debt incurred prior to September 4, 2004.  For non-Act 72 districts, old debt is debt incurred prior to the effective date of this Act.

·        To pay for interest and principal on up to 60% of the costs of a construction project.

·        To respond to threats of conditions that pose a threat to the students, staff or residents of the district

·        To pay for increases in the special education costs that exceed the index. 

·        To pay for costs associated with implementing a school improvement plan under the No Child Left Behind Act, if not already reimbursed

·        To ensure that per student local tax revenue increases by the index

·        To ensure that revenue from the district’s four major revenue sources (i.e., basic education funding, special ed. funding, property taxes, and earned income taxes) increase by the index.

·        To provide health care benefits for collective bargaining agreements in effect as of January 1, 2006.

·        To pay for the portion of school district pension costs that exceed the index