It's being hailed as the largest property tax cut in Pennsylvania history, but as the details continue pouring in, the ability for school districts to exercise spending controls on the local level becomes more and more difficult.
Special Session House Bill 39 will place a ceiling on the amount that school districts may annually raise property taxes, creating an index that schools will have to adhere to unless allowed to go over that limit by a public referendum.
The new bill, which states that gaming revenues will be used to offset property taxes, is mandatory for all districts in the state, as opposed to 2004's Act 72, when districts were asked to "opt-in" instead.
According to a conference committee report regarding SSHB 39, the plan will provide property tax reductions in 2007 if local voters approve increases in school district earned income taxes or authorize the district to levy a personal income tax.
It also makes the backend referendum spending controls mandatory for districts and prohibits the districts participating in Act 72 from levying a 0.1 percent earned income tax.
Kennett superintendent Rudy Karkosak said that although he recognizes the need for controls on property tax, he's still uncertain if SSHB 39 would help or hinder that process.
"I still don't know all the details," Karkosak said in a phone interview last week. "I just want to see the language before I say good or bad or whatever."
Karkosak said that the bill, which states that school districts will receive property tax reduction payments from gaming revenues, is relying on funds that as of yet don't exist.
"If they say they have alternative sources of revenue, then they have to have it," Karkosak said. "They haven't issued a single license for slots yet. You're granting property tax relief without the money coming in from another source."
According to the committee report, the amount of gaming revenues required for an initial property tax reduction payment is set at $400 million -- $100 million less than proposed by Act 72.
At a recent Unionville Chadds Ford school board meeting, board president Curt Baker said he was vehemently opposed to the bill and that future projects like the proposed new athletic fields and renovations to Charles F. Patton Middle School may suffer as a result.
"As we move into capital programs, it will likely drive our costs above the index," Baker said.
While the index will allow for inflationary increases, funds for anything other than operational costs will require public approval. Currently the index is set at 3.9 percent, which both districts managed to stay under for the 2006-2007 budgets.
"In general, I think we need to have some controls on property tax, but you can do it two ways," Karkosak said. "First the state needs to provide districts with sufficient funds for education and not rely on property tax as they have in the past. At the same time, the state needs to support public education more than they do. If they start funding some of they programs they're asking us to enforce, that would be great."