Homeowner Property Tax Relief Act

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Homeowner Property Tax Relief Act

• Act 72 of 2004
• Pequea Valley School District

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Homeowner Property Tax Relief ActSummary

• Participation is optional.
• If School Board wants to participate, must adopt
  a resolution by May 30, 2005.
• If School Board does not want to participate, no
  action is needed no option to join at a later
  date.

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If Pequea Valley School Board Adopts Act 72
Resolution

• The District becomes eligible to receive gaming
  revenue (profits from slot machines).
• The District must increase the Earned Income Tax
  rate on residents from 1.0 to 1.1.
• The District must get voter approval (referendum)
  if future millage increases are above the
  index.

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New EIT Receipts and Slot Machine Revenue for
Pequea Valley

• Note 45 of funds represent tax shift

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Financial Impact on Property Owners in Pequea
Valley
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Financial Impact on Property Owners In Pequea
Valley

• Farmstead properties will receive double (235)
  one for home and one for farm
• Amount of credit will vary based on number of
  applications.
• Currently, only 25.8 have been returned and
  approved (1,278).
• 1,278 would divide EIT gaming proceeds
  (581,654) credit of 455.13.

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Financial Impact on Property Owners in Pequea
Valley

• Cost of 3 property tax increase -
  61.41

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Financial Impact on Property Owners in Pequea
Valley
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Profits From Slot Machines

• 34 of slot machine profits go to property tax
  relief.
• Projections shown assume that slot machine
  profits (losses) distributed is 500 million.
• If slot machine losses are 1 billion, tax credit
  will increase to 179.

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Tax Relief from Slot Machines

• Each adult PA resident must lose 259 annually.
• If slot machine losses do not reach 900 million,
  no money is distributed.
• Governor estimates that initial distribution will
  be available in 2007-2008 fiscal year.

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Timeline for Act 72 Districts

• 9/30/05 Deadline for PDE to inform districts of
  the index.
• 1/26/06 Deadline for preliminary 2006-07 budget
  to go on display.
• 2/7/06 Governors budget, including proposed
  school subsidies, is announced.

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Timeline for Act 72 Districts

• 2/15/06 Deadline for boards to adopt
  preliminary 2006-07 budget.
• 2/20/06 Submit proposed tax increase to PDE.
• 2/23/06 Advertise that board is seeking an
  exception from back-end referendum (if increase
  exceeds index).

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Timeline for Act 72 Districts

• 3/2/06 PDE notifies district if proposed tax
  increase complies with or exceeds the index
• and
• Deadline to submit exception filings to court or
  PDE.
• 3/17/06 Deadline for board to submit referendum
  question to county (if exceeds index).

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Timeline for Act 72 Districts

• 3/22/06 Courts / PDE to inform districts if
  exceptions have been granted or denied.
• 4/20/06 Secretary of Budget notifies PDE if
  PTRA allocations are sufficient to be
  distributed.
• 5/1/06 Districts notified of amount of PTRA
  funds they will receive
• and
• Assessors office supplies Homestead information.

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Timeline for Act 72 Districts

• 6/30/06 Deadline for submitting budget to PDE
  that
• includes a millage increase that has been
  certified by PDE to be LESS than the index, or
• includes a millage increase that is greater than
  the index, but has exceptions approved by the
  court or PDE, or
• includes a millage increase that is greater than
  the index, but has been approved by voter
  referendum.

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Timeline for Act 72 Districts

• On November 2007 ballot, must ask voters
• Do they want a further property tax reduction by
  increasing the EIT (minimum 1.43 to maximum
  2.47)
• Do they want to change to a PIT tax (minimum
  1.28 to maximum 2.22)

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Homestead/Farmstead Exemptions

• Amount of exemption can vary from year to year
  depending on
• State funds available from gaming revenue
• Number of submitted approved homestead /
  farmstead applications
• Amount provided is a flat rate, regardless of
  assessed value not a percentage.
• Exemption stays with property owner, not
  property.

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(No Transcript)
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What is the Index?

• Average of
• Statewide Average Weekly Wage (SAWW)
• Employment Cost Index for Elementary and
  Secondary Schools (ECI)
• Districts may increase millage rate to the index
  without the need for voter approval.
• Districts with aid ratios above .4000 may qualify
  for increases above the index (not PV).

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History of Index
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PV Millage Increases vs. Index
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Impact of Index on Future Millage Rates

• Not cumulative use it or lose it
• May need to take full index to hedge against
  future needs
• EIT less reliable range of -6.7 to 8.9
• 5-year projections show higher tax rate under Act
  72 than without (.74 mills)

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Questions the Board Must Consider

• Will the potential savings from Act 72 be
  sufficient to provide property tax relief?
• Will gambling money be available to reduce
  property taxes?
• Can normal cost increases and educational needs
  be met within the annual index?

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TO DO LIST

• Continue to study Act 72.
• Consider long-range planning, especially for
  facility and capital needs.
• Evaluate impact / benefit of EIT vs. PIT.
• Evaluate benefit / consequences to PVSD and
  taxpayers
• Inform community.
• Make decision by May Committee meeting regarding
  resolution.