Several PA Bills Focus on Property Taxes

June 2011Newsletters In the Zone

A number of bills moving in the Pennsylvania General Assembly target the Commonwealth’s property tax system.

On May 10, 2011, the Pennsylvania House Finance Committee approved House Bill 1326 , also know as the Taxpayer Relief Act, that would make it more difficult for school districts to raise property taxes without voter approval. Specifically, the bill would remove all exceptions established under Special Session Act 1 of 2006, which allows school districts to increase property taxes above the state-set index in certain situations without seeking such approval.

Act 1 of 2006 was written to protect property owners from large property tax increases year after year. It requires voter approval if school taxes increase beyond state-set limits. However, current law provides districts with 10 legal exceptions to justify a property tax hike above the inflation rate without a referendum. These include special education cost increases, pension costs, health care cost increases under a contract and emergencies and disasters. A district must receive approval from the state Education Department or county court to use an exception.

HB 1326 seeks to eliminate all special exemptions. However, opponents express concerns over a school district’s ability to raise sufficient revenues, particularly in light of anticipated cuts in state education aid.

Meanwhile, in the Pennsylvania Senate, legislators are considering a bill that would require a super-majority vote for a school district to approve any property tax increase. Supporters of Senate Bill 537 argue such protection is needed to shield taxpayers from potentially dramatic hikes to property taxes as districts scramble to cope with budget shortfalls. The legislation was approved by the Senate Education Committee on April 5, 2011.

For more information, please contact Carrie B. Nase at 215.299.2030 or [email protected].

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