Bill would add cash to municipal budgets
In addition to reducing property taxes, House Bill 1858 would allow municipalities to place some revenue from an increased sales tax in their general funds to offset rising costs and help pay for things such as infrastructure projects or police coverage. The proposed legislation, referred to as the County and Municipal Property Tax Relief Act, would give individual counties the authority to levy an optional 1 percent sales tax for property tax relief on the same goods and services subject to the state sales tax.
The 1 percent sales tax would generate $11,237,132 for Fayette County and would reduce municipal property taxes across the county alone by $1.4 million, according to the proposed legislation as written.
David M. Sanko, executive director of the Pennsylvania State Association of Township Supervisors, said House Bill 1858 would allow municipalities to use a portion of sales tax money to pay for crucial infrastructure projects such as improving roads and providing water and sewerage, if needed.
Sanko said other expenses, such as rising electricity and fuel costs, also could be covered with the money. Municipalities, according to the proposed legislation, also have the ability to use the money to help pay employee salaries or fund police if they so desire, he said.
The proposed legislation would require 50 percent of the revenue from the sales tax to be distributed to the school district, 25 percent to the county and 25 percent to the municipalities in the county.
Of the estimated $11 million Fayette County would receive, school districts would receive a combined $5.6 million, the county would receive $2.8 million and all municipalities combined would receive $2.8 million.
School districts, according to the proposed legislation, would be required to use all of their shares to reduce property taxes.
Municipalities would receive a share of money based on a formula that takes population, tax revenue and market value per capita into consideration, and they would be required to use at least 50 percent of the new revenue for property tax reduction or to offset tax-exempt properties.
The other 50 percent, if the municipality chose, could be used to lower property taxes even more or as additional revenue in the municipality’s budget.
Perry Township Supervisor A.J. Boni, who also serves on the executive board of the Pennsylvania State Association of Township Supervisors, said supervisors in his township agree they would use the entire share of the money generated by a 1 percent sales tax increase to reduce property taxes in the township by 50 percent, even though they only would be required to reduce property taxes by 25 percent.
Under the proposed legislation, Perry Township would receive $44,617 in sales tax revenue if House Bill 1858 is enacted. The township currently collects about $85,000 in property taxes – collecting $84,983 in 2006 – and could reduce their millage rate from 1.127 mills to .56 mills.
At 1.167 mills, property owners in Perry Township currently pay $11.67 for every $10,000 in assessed value, or $58.35 for every $50,000 in assessed value.
At .56 mills, property owners would pay $5.83 for every $10,000 in assessed value, or $29.17 for every $50,000 in assessed value.
Perry Township, Boni said, is not willing to use any of the sales tax money to help pay for regional police, although state Rep. Tim Mahoney, D-South Union Township, said he will push for a portion of the sales tax money to be used to help pay for police.
Mahoney said that no one wants to pay for more police protection, but it’s needed, noting that crime rates keep rising.
“I am in support of anything that is going to be good for Fayette County, anything to reduce property taxes and in the meantime help fund regional police,” Mahoney said.
Local officials have argued against Mahoney’s proposal for regional police, saying that it’s the state Legislature’s duty to work within the budget and adequately fund state police.
The state, officials argue, shouldn’t mandate municipalities to pay for police protection when Pennsylvania is not fully funding cadet training for the state police.
Boni said municipal leaders know what is best for their communities and each municipality should decide the best way to use any additional revenue. When municipalities feel additional police are needed, they will take care of the matter on their own, he said.
“Nobody should be mandated. We have enough unfunded mandates already,” Boni said, adding that he doesn’t believe Perry Township needs more police because the state police covering the area do a great job already.
“If the legislation is passed, we would not willingly use any sales tax money to fund a regional police force. The state police do one hell of a job now,” he said.
Sanko said an additional benefit of the proposed County and Municipal Tax Relief Act, aside from reducing property taxes, is that it gives municipal leaders options regarding how to spend a portion of their share of the money.
The proposed legislation, he said, would give more power to local leaders who are closer to the residents and better know their needs.
“If residents want services and demand them, they don’t mind paying for them,” Sanko said.
“What they do mind is sending money to Harrisburg they don’t see a return on.”