- Background
Before the introduction of Act 1, the school boards approved preliminary budgets twice in a year. After the passage of the Act, Pennsylvania school districts must approve their budgets once every year. Gibbs (2007) says that Governor ED Rendell signs the special Act I in June 2006. This Act has the specification to assist the school district in Pennsylvania in reducing their taxes by shifting the burden to the gaming revenue. This legislation empowers the electorate in participating in the formation of the public schools budget.
The Act of 2006 regulates the alteration of the property taxes within the school districts in Pennsylvania. According to Cuyler (2011), schools in the district cannot raise the tax above a specified index. This legislation has an exception of voters’ engagement in a referendum or an exception by the Department of Education. This Act has other exceptions such as pension costs, special education costs, natural disaster, and the fluctuation of taxes in the Federal government. In the election of 2007, Cuyler (2011) elucidate that voters in every district have the option of raising the EIT or the PIT to reduce the property tax. Property tax will permit half of homestead and farmstead exclusion. Act 1 states that no state can increase the EIT more than 1 percent. This is not an optional Act since all the districts have the requirement of abiding by the legislation in accepting revenue from gambling activity.
According to Gibbs (2007), the new property tax relief requires all the school districts to establish a local tax commission. Pikulsky (2011) explains that each public school in the district must have non-school board members. The local study commission will make an appropriate recommendation to the school board to serve the interest of the community.
According to Pikulsky (2011), voters, as from 2007, will have the power to affect the property taxes by shifting it to the local income taxes. Youker (2008) find that the Assessment Office has a duty of providing information to each district. This information includes the median values, average values, Information on the land use and the assessment of the number of eligible properties in every district. This information provided to the Assessment Office is crucial to the commission. This is because the commission relies on the information in making recommendations during the school boards. The information on the study commission is obtainable from the business office of the local district.
Cuyler (2011) give an explanation that a district can lower its property tax by claiming farms and homes exclusion. A home exclusion lowers the property tax by affecting the value of home during the assessment process. A homestead has the limitation of a permanent Pennsylvanian citizen only. This citizen pays property taxes on assessed value of the home.
The clause on farms applies to agricultural purpose infrastructures used mainly for farming activities. The farm must have more than 10 acres in size to enable a reduction in the property taxes. The owner must reside in the farm permanently to claim this exclusion. The property tax formula in Act 72 will distribute gaming revenues for the property tax payments. For a Pennsylvanian citizen to receive a farm or homestead exclusion one must do the following: Apply and submit a form to the county assessor. The school district has the responsibility of sending out applications. An approved application offsets the loss on property tax revenue.
Gibbs (2007) give details that Act 1 has provision to increase a person’s Earned Income Tax to Personal Income Tax during the primary election. The homeowner tax relief permits schools in a district to reduce the property tax by claiming the exclusion of the homestead. The state revenue, which emanates from gaming and the local income taxes funds the property tax relief. Youker (2008) gives evidence that 1.4 percent is the base index of Act 1 in 2011-2012.
Positive Aspects of Act1
Dwellers in Pennsylvania reap benefits of Act 1 at the occurrence of the first reduction in property taxes. Pennsylvania is the only state where school districts have the unregulated ability in taxing and spending. The homestead and farmstead exclusions reduce the assessed value of an eligible property. This leads to property tax savings towards the homeowners. The Act 1 empowers the voters to assess various ways of affecting the property tax. Act 1 has achieved the objective it was set for. In light of this, this tax has expanded the tax and the Rent Rebate Program (Pikulsky, 2011). Act 1 creates an installment payment plan where one can pay property tax in installments instead of lump sum. The Pennsylvania slot machines ensure some savings to the taxpayer since it reduces their property tax bills.
Negative Aspects of Act 1
The issue of Act 1 fails to provide property tax to all the dwellers of Pennsylvanians. Taxes in Pennsylvania burden the taxpayers since the property tax accounts for a high percentage of revenue. Act 1 requires voter approval in future tax increases that exceed inflationary index. At the event a back-end referendum fails, the school board cannot raise the tax above the index. In some ways, the tax relief works as a tax shift to offset property taxes (Cuyler, 2011). The high-income people, property owners, and tenants that exceed the index do not qualify for homestead exclusion. Act1 does not benefit taxpayers who fail to apply for the specific exclusion.
2. Problem Statement
Act 1 remains controversial in the contractual negotiations between school districts and the unions. This process of negotiation entails school boards agreeing to contracts whose costs require a tax increase. This often leads to voters rejecting the proposal to increase taxes. This can lead to a situation where a district has unpaid obligations without cutting programs or failing to pay the staff. Act 1 has difficulties in predicting the future obligations, revenue and lowering the pay for teachers.
Pikulsky (2011) asserts that, in the event, the Pennsylvania school districts fail to adopt their preliminary budget, the preceding year fails to attract a tax rate increase. The Pennsylvania Act of 2006 apportions some of the revenues from the gambling in state casinos to the education system. Act 1 neutralizes the revenue in the state where gambling revenue reduces property tax on the local public schools.
Benefits
Act 1 ensures that the dwellers in every school district can benefit from property tax relief from the state. This legislation protects the taxpayers in Pennsylvania from any future tax excesses in the district. This legislation ensures voter power in controlling severe tax excesses through a referendum process. Act 1 provides extra property tax relief to the old people by expanding the state property tax and rent program.
This Act enables the people in the local communities to choose favorable mixes of local tax to fund the district schools. This Act permits the dwellers to collect and make installments on the school district property taxes. Act 1 has the establishment on a price ceiling that increases the property tax upon the approval of the board. Any proposal to increase the tax above the percentage can work upon the approval of the voters in a district.
This Act permits the provision of mentally gifted programs for students with special needs in the state. Teachers and parents initiate this program in the district schools to promote the welfare of children with learning disabilities. Pennsylvania is one of the best states in America that have good packages to compensate the teachers (Cuyler, 2011).
Some of the packages include health insurance, reimbursement, and professional development. These packages are courtesy of the Act that ensures teachers align with the cost of living. The school district can petition the county courts to claim for an additional necessary increase in the individual budgets. All the school districts receive their tax deduction benefits from the gaming revenues.
Once the gaming revenues are, each district has the option of receiving or rejecting the state allocation of gaming revenues. Voters, in a district, can opt out and approve a mandatory referendum to claim for a rise in the revenues. The municipal election in every school district can propose a referendum to request voters to authorize an increase in the EIT or PIT to the maximum exclusion as pertains the law.
2. Opinion
In my opinion, The Tax Payer Relief Act has utilized the money properly from the gaming machine just like the tax reform initiative. This Act will benefit the aged people in the state as does the Senior Citizens Property Tax and Rent programs in Pennsylvania. The home dwellers can benefit from the revenues emanating from the gaming department. The backend referendum ensures controlled expenditure for all the schools in the district. The referendum authorizes property tax reductions and homeowners’ property tax reductions. The backend referendum will ensure that schools do not raise taxes to surpass the index. This program will ensure that spending keeps up with inflation and the special education does not increase more than the index.
I think this Act has provided schools with enough money to cater for development and expansion programs. This Act will ensure the improvement of students in their academics since teachers are to work. This act will provide money to offer extensive training programs for teachers to ensure they perform even better in the schools. This Act will ensure the impoverished can access schools and get education as well as a benefit from free lunches. This is because the school district engages in identification programs to identify the low-income people in the state. The poor families can access schools and get free services that stand to benefit the students. This program has enabled the high school to offer a dual enrollment program. This program will permit high school students to access institutions of higher learning locally. This enables students to earn credits as they continue pursuing their college degree. This Act enables students to have full access to activities and programs at discounted rates. I think that the state has more than enough money to support students in their tuition, as well as other school related expenditures.
I think Act 1 has fulfilled most of the objectives it was set for. For instance, the Senior Citizens Rebate Program has expanded. The income eligibility for homeowners has doubled and the dwellers have increased amount of saving. In the past, the maximum tax rebate applied using a percentage of taxes paid that were dependant on the income. A household income of $5,499 received the total sum while a household income of $13000 to $15000 received 10 percent (Cuyler, 2011).The expansion of the Rebate Program stands to benefit most aged citizens in the state. Currently more than 1 million citizens are eligible for rebate assistance (Gibbs, 2007). The renters and homeowners benefit from an increase in the maximum rebate amount that rises from $500 to $650. The passage of Act 1 has seen an increase in property tax rebate claims. In this view of the expanded rebate program more than $300 million, get paid out that equal 100 percent of the property tax bills (Gibbs, 2007).More than $350 million get paid out on property tax and tax rebate in 2007 (Cuyler, 2011). The passage of this bill ensures an increase in eligible applicants’ as well large rebates. Dwellers in Philadelphia, Pittsburg, and Scranton benefit from additional relief. In this case, households with income of $30000 or less receive an additional property tax rebate that is equal to half of the base rebate (Gibbs, 2007). A supplement amount is available to senior homeowners. A household that has $30000 or lass receives a tax bill of more than 15 percent of the income (Gibbs, 2007).According to Youker (2008) the state provides more than $800 million in its program of property tax relief that reduces the tax bills from their income. It is the duty of the budget secretary in every district to certify the revenue in the property tax relief fund every year. In 2009, the saving receivable to the homeowners are approximately $ 770 million and an additional $105 million in reserve funds. Act 1 enables the school residents to manage their own spending that is subject to voter approval as well as the process of referendum. This occurs once the taxpayers favor an increase in income taxes. The state has legalized the creation of new funding sources such as the slot machines in casinos as well as other initiatives. For example, the Sands Resort Casino has generated more than $4 million during the first months of operation (Gibbs, 2007). The casinos provide employment to more than 900 people and this reduces unemployment (Cuyler, 2011). The gaming money promotes tourism and economic development within the state.
In conclusion, the property taxes in Pennsylvania have a substantial portion of the tax bill that can easily pose as a substantial burden to the homeowners. This is because an enormous portion on education fund comes from the property tax. The lawmakers in this state have made a major contribution to balance the lower taxes with the quality of education. Act 1 offers tax relief to homeowners and additional incentives to the aged people in the state.
References
Gibbs, D. J. (2007). School counseling practices in alternative schools of Pennsylvania. Lancaster, PA: Lancaster Bible College.
Youker, D. (2008, July 1). Vote on school scheduled for today: Residents in the Wyomissing district will head to the polls to decide whether it should borrow $37 million for a new building in West Reading. Reading Eagle (PA).
Cuyler, G. (2011, January 20). Approvals rare on referendums to hike school taxes. Reading Eagle (PA).
Pikulsky, J. (2011, January 25). Belle Vernon Area seeks state approval to increase taxes. Valley Independent (Monessen, PA).
