Tax limits for all school districts under new law

Pennsylvania’s Act 1 requires all to comply HARRISBURG - Next year, all of Pennsylvania’s school boards will have to seek voters’ permission to raise property taxes beyond the rate of inflation under a new law that tries to accomplish what an earlier one failed to do _ cut taxes statewide with $1 billion in annual slot-machine gambling revenue. Yet many voters could still be left on the sidelines, if the experience of school boards that limited their 2006-07 property tax increases under a similar 2004 law is any indication. Operating under the taxing constraints set by the law known as Act 72 was voluntary, and only 111 of Pennsylvania’s 501 school districts signed on last year. About three-quarters of the 111 districts kept their property tax increases at or below the rate of inflation, avoiding a school budget referendum in the spring, according to the state Education Department. The failure of most school boards to embrace Act 72 prompted Gov. Ed Rendell to call the Legislature into a special session on property taxes in September. That session produced Act 1, the law Rendell signed in June to force all school districts to accept the gambling revenue and live within the new taxing limits. But the new law also allows the same exceptions permitted under Act 72, and makes a few of them less strict. For example, school districts can avoid a referendum under the new law if their special-education costs rise by more than the rate of inflation; under Act 72, special-education increases had to exceed 10 percent. Nathan Benefield, policy analyst for the conservative Commonwealth Foundation, dismissed the voter-approval provisions of both laws as a “referendum in name only” that denies taxpayers meaningful control over school spending. “We think there should be a referendum on any tax increase,” Benefield said. Rendell’s spokeswoman, Kate Philips, said the administration has tried to strike a balance between the concerns of taxpayers and school boards in crafting both Act 72 and the new law. “We think the exceptions are fair enough to allow school boards to do their jobs, but narrow enough to give voters a say,” Philips said. “It brings us in line with what other states have been doing for years.” The Tuscarora Area School District _ where property taxes are increasing 9 percent, above the district’s cap of 5.1 percent _ was among the school districts benefiting from Act 72’s exceptions. Superintendent Thomas Stapleford said the Franklin County district won exceptions for school construction debt and special education. “I would say the criticisms (of the new law) are true in that the exceptions are more flexible,” Stapleford said. “My greater sense is that all this is moot if it doesn’t provide the level of tax relief people are looking for.” It’s unclear what the average school property tax increase will be for 2006-07. The Pennsylvania School Boards Association found in a survey completed last month by 205 school districts who opted out of Act 72 that 50 of them expected to impose tax increases above the rate of inflation. “The bottom line for that is, school boards have always been prudent fiscal managers,” said Scott Shewell, the association’s spokesman. Some taxpayers will see double-digit tax increases. George Longridge, business manager for the Elizabethtown Area School District in Lancaster County, said he has received angry phone calls from residents now that tax bills with an 18 percent rate increase have been mailed out. The district did not operate under the Act 72 tax-increase restrictions, and Longridge attributed the higher rate to the growing cost of utilities, health insurance, and pension contributions. “It’s not a case of us being wasteful and profligate with our spending,” Longridge said. “We’re really paying for the status quo.” School property taxes by the numbers A summary of how school districts handled property-tax increases under Act 72 for 2006-07: Number of participating districts: 111 Districts that limited tax increases in preliminary budgets to the rate of inflation: 84 Districts allowed to exceed inflation because of exceptions: 26 Districts that sought voter approval for tax increases: 1 Source: Pa. Department of Education.