Balancing Act: ‘Relief’ not applicable to school districts
When Gov. Rendell signed Special Session Act 1 of 2006 into law, the intention was to help Pennsylvania residents in a manner best described by the legislation’s alternate moniker, the Taxpayer Relief Act.
One measure of ostensible relief for property owners is a provision that caps the amount by which school districts can raise real estate taxes without taking the issue to referendum.
Basically, the state department of education assigns each school district an index, representing the maximum percentage for a tax increase over the previous fiscal year. Districts can apply for exceptions to go above the index, to cover increases in three categories: special education costs, retirement payments and debt on construction projects.
Establishing such constraints, though, has resulted in many districts raising taxes on almost an annual basis.
“For a number of years, they might have been able to keep their taxes low, and then they’d get to the point where, fiscally, they had to raise taxes,” Janice Klein, Mt. Lebanon School District director of business, said about the pre-2006 era.
“It might have been a large increase, but it was once. It was over. And then for years, you didn’t have to worry about it again, until you got into a similar situation,” she explained. “Act 1 took that ability away.”
Matthew Howard, Bethel Park School District’s assistant to the superintendent for finance and operations, cited another effect of the legislation.
“The biggest issue is how we forecast not for just one budget year, but a few budget years out, and try to make sure that if we don’t raise taxes in one year, are we going to need more than the index and the exceptions in the following year?” he said. “Because we can’t get it.”
Bethel Park actually held the line on real estate taxes for 2016-17, an occurrence that once was routine in Peters Township School District, which kept the rate steady for a decade and a half during a period of strong local growth.
“That comes back to actually hit us, because we kept the millage rate down,” Thomas McMurray, Peters Township School Board president, said. “And when you restrict it to the index, those districts that just went ahead and raised the millage were able to take a higher increase than we were.”
For the current fiscal year, Upper St. Clair School District raised taxes by the highest percentage allowable, combining the index and exceptions, without going to referendum.
“There was relief to the taxpayer, but there wasn’t relief for the school districts,” Superintendent Patrick O’Toole said about Act 1. “There wasn’t a corresponding reduction of mandated costs. In fact, there is an increase in mandated costs to go along with what we believe, in Upper St. Clair, is a mandate from our community to deliver excellence in education.”