Is Act 1 Temporizing School Taxes?

With all the tax talk of late-a possible boost in the state income tax, extending an extra percentage point on the sales tax to counties, etc.-the school tax provisions of Act 1 are slipping under the radar. Schools start their fiscal year on Wednesday and districts in Allegheny County are finalizing their budgets.

Recall that Act 1 utilizes gaming money to target tax relief to homeowners through an expanded homestead exemption and sets a cap on how high school taxes can go on an annual basis. It is this second component, the Act 1 index, that warrants scrutiny. It protects property owners from so-called "extraordinary" tax increases through setting a cap each year. This does not prevent a school district from enacting a tax increase-it just tries to control the size. For instance, Upper St. Clair’s 4.1 percent Act 1 index allowed them to adopt a 4 percent increase, going from 22.45 mills to 23.37 mills this year. Avonworth, Bethel Park, Fox Chapel, and Woodland Hills also plan to increase millage rates within the allowable index for this coming fiscal year.

Failing to live within the tax cap does not mean the matter goes to the voters, either. That’s because the law allows for ten possible exceptions by which a district can exceed its cap without putting it to a referendum.

In fact, it is fair to say that few voters across the state have had a referendum question on school taxes and spending come before them at the ballot box. That’s a far cry from the type of control voters in other states have and probably not what the voters of this state were thinking they would get when the Legislature went into special session on school taxes.