California residents get to review proposal duing public hearing
CALIFORNIA – Voters in the California Area School District get a chance to look over the Act 1 study commission’s proposal to increase the earned income tax in order to fund homestead exemptions for property tax during a public hearing set for March 12. The school board must vote by March 13 on the referendum question to be placed on the May primary ballot regarding Act 1. The tax study commission recommended funding the minimum homestead exemption by increasing the earned income tax collected by the district to 1 percent, bringing the total earned income tax paid to the school district and to the municipalities in the district to 1.5 percent.
According to Lee Price, the district’s solicitor, the average reduction in property taxes for eligible owner-occupied homes would be $165.
“Some people will save $165, but it’s going to cost other people significantly more,” said school Director John Bayer.
According to statistics prepared by the tax study commission, a household with $10,000 in earned income would pay an additional $50 in income tax, while receiving the maximum property tax will be $165.47, for a net savings of $115.47.
“As the committee, we had been charged with making a recommendation to the Board of School Directors regarding two types of taxes,” the commission stated in its final document to the school board. “The first fallacy with the legislation is that this is tax relief. In reality, this is only tax shifting.
“If a family earned over $35,000 and owns property, they will pay about $10 more per year. However, a senior citizen that owns property with no earned income will save about $165,” the study commission stated in the document.
It is difficult to determine the number of households in the district that may benefit from the tax shift. According to the tax commission document, which according to the district’s business manager Tracy Harris used U.S. Census Bureau statistics, 42 percent of the district residents are between the ages of 25-64. In addition, 59 percent of households and 43 percent of families earned less than $34,999. Seventy two percent of the property in the district is residential and 62 percent of the housing units are owner-occupied. The statistics do not make a connection between the number of owner-occupied properties and the number of households earning less than $35,000.
According to Price, if the voters reject the referendum to shift taxes to an income tax instead of a property tax, the issue is finished and property taxes and the earned income tax would remain the same. Price said the district would be eligible for state gaming funds for the homestead exemption once the state starts receiving gaming revenue, but no local funds from the earned income tax would be used to offset the property tax if the referendum is rejected.
Price said property owners have until March 1 to apply for the homestead exemption through the county in order to be eligible for any tax shift that may occur. Homeowners who do not apply for the exemption will not receive the property tax reduction regardless of which tax plan is adopted.