Today is the municipal primary election, when voters select nominees for county, municipal, and school board offices. There are no statewide ballot questions for voters to consider, so let’s take a look back ten years to the municipal primary of May 2007 when voters were first asked whether they wanted to reduce school property taxes via a higher income tax or the creation of a personal income tax for school finance purposes.
That question was part of Act 1 of 2006, which provided homestead exemptions funded by slot machine gaming, a cap for annual growth in school property tax that could be exceeded by either an exemption from the state or a ballot question to be approved by the voters of the school district, and a chance to expand a district’s property tax relief via approval of a tax shift.
As pointed out in the Department of Education’s FAQ document on the law, at the “May 2007 (primary) election – Every school district, except Philadelphia, Pittsburgh and Scranton, will give voters the opportunity to approve local property tax relief by increasing the local income tax.”. Every two years thereafter all districts except Philly would get the ability to bring the question up again. As our 2008 report on Act 1 noted, the question was rejected in the 42 districts in Allegheny County in May of 2007. None have approved since, even if a district brought up the question after 2007. The Governor at the time noted ““I am not surprised by the resounding defeat of the Act 1 tax shifting proposals. Unfortunately, in many cases, the full value of the property tax relief that the shift would have provided was not clear to the voters. I believe this contributed to the lackluster voter support.” Our 2014 report revisited tax relief from gaming and the tax actions districts had taken in the years since the law went into effect.
So how many districts, if any, took up the offer to net greater school property tax relief by shifting to another tax via referendum? By 2015-16’s count in the Department of Education’s data 13 districts (2.6% of the 500 in the state) are collecting an earned income under Act 1. There are none in southwestern PA; three are in Bedford County, two in Huntington County, and the rest in other counties in central and eastern PA. In terms of dollar value generated, the district collecting the most money through Act 1 earned income tax is Central Dauphin School District, with $36 million in 2015-16. It is not clear from the data if these districts took the opportunity to shift ten years ago of did it in a subsequent election.
