From: DMBerlin@aol.com [mailto:DMBerlin@aol.com]
(NOTE FROM DIANNE: This is a HUGE VICTORY for the people of PA. They tried to ram so-called property tax "reform" through with the partner to the slots law. That one gave school districts the option to opt in or out for a tax switch & 80% of our 500+ school districts opted OUT. So, Act 1 made it mandator to put an option on the ballot for the people to vote for a tax switch.
We are NOT fooled. This is NOT tax reform. Who knows? MAYBE they will repeal the slots law & do REAL tax reform!!! OK, I am being TOO optimistic!! )
May 16, 2007 - 9:53 AM EDT
With about two-thirds of school districts reporting results of their tax-shift referendums Wednesday morning, voters in only four appeared to accept the trade-off, according to returns posted on a Department of State Web site.
The proposed tax shift was touted by the Rendell administration as a chance for homeowners to increase the size of the property-tax cuts they will receive once the state distributes slot-machine gambling revenue to school districts.
But voters weren't interested.
Chuck Ardo, spokesman for Gov. Ed Rendell, said opposition likely reflected voter confusion.
"The governor believes that voters ought to have local control over the mix of taxes that support their schools," Ardo said. "The dollar-for-dollar exchange (under the tax shifts) was straightforward. Unfortunately, the interpretation, by the time it got to the voters, seemed to be much more complicated."
Some variation of the question was asked in all but three of the state's 501 school districts under a 2006 law that promises to deliver as much as $1 billion a year in slots revenue for tax cuts financed by slot-machine gambling. The questions were not asked in
The ballot questions called for shifting at least 25 percent of the local school-tax burden -- but not more than 50 percent -- to a higher earned income tax, which most school districts already levy on wages and other compensation, or to a new local personal income tax. The personal income tax would apply to both wages and unearned income such as interest and dividends. Pensions and Social Security benefits are not taxed.
If approved, the tax shifts take effect July 1.
Senior citizens on fixed incomes and low-income homeowners would likely receive the greatest benefit from the tax shift because their property-tax reductions would far exceed the local income tax increase. By contrast, renters have the most to lose because they would pay higher income taxes and would not be eligible for any tax relief.
Taxpayer groups around the state campaigned against the tax shifts, saying they would not provide adequate tax cuts to all Pennsylvanians.
Act 1 a flop
In school districts across
By Daniel Patrick Sheehan Of The Morning Call
The region's voters Tuesday roundly rejected the Act 1 tax shift, an initiative that promised to ease school district property taxes by raising income tax but suffered from misunderstanding and terrible word of mouth.
''Right from the start I think there's been an unbelievable amount of confusion about what it was, what it would do and what kind of real impact it would have on individual and family tax burdens,'' said Christopher Borick, a political science professor and pollster at Muhlenberg College in Allentown who predicted only about a fifth of the 498 districts voting on the measure would adopt it. ''Voters weren't ready to commit to something they're unsure about.''
''It hurts my wages,'' said Gary Ruth, 52, a pizza delivery driver and renter from Perkasie who needed little more reason than that to vote ''no'' on the ballot question.
Act 1, the Taxpayer Relief Act, was intended to ease taxes on senior citizens and other fixed-income residents by shifting the burden of taxation to wage earners and by tapping into the revenue stream expected to flow from slot machine casinos. The state has estimated more than $1 billion in gaming revenue will go toward property tax relief each year.
Most school districts asked voters to raise the earned income tax, which is levied on wages and other compensation. A few districts asked voters to trade the EIT for a new personal income tax. The PIT is on everything covered by the EIT, as well as on interest, dividends and income from rents, royalties, estates, trusts, gambling or lottery winnings, patents and copyrights.
The act also limits annual school budget increases to a certain percentage, which varies by district but is generally around 4 percent. Exceptions are allowed in certain categories, including special education and construction, but districts must request them from the state. If the state refuses exception requests, districts must go to court or ask voters through a referendum.
''It's been heralded since its inception as a component of property tax relief, but at least at this point it never materialized as what its designers hoped it would be,'' Borick said. ''They're trying to, in some ways, fiddle at the margins with a system that needs much more significant change. This is not an easy thing by any means, to go in and reallocate tax burden for something as big as paying for the schools in the state. It's a Herculean job.''
G. Terry Madonna, a professor of public affairs at
Act 1 is the third effort -- following Act 50 in 1998 and Act 72 in 2004 -- to address property taxes, and Madonna said all have been flawed for the same reason: They propose switching one tax for another and capping property tax. He said the approach doesn't work because it doesn't account for vast differences in wealth among districts and expenses, such as health care, that districts can't control. Indeed, nearly half the state's 501 districts have requested and received exceptions to the budget cap this year for health care expenses and other reasons.
In districts where the referendum passed, the tax shift will take effect July 1. The school district will collect money from the increased income tax and evenly distribute the money among property owners to reduce property tax. All owners will get the same reduction, no matter the value of the property. In districts where the referendum failed, voters will be asked again in two years.
Reporter Brian Callaway contributed to this story.