Agenda: Brief Presentation - 15 minutes Public Comment and Questions - 45 minutes

1. CRSD Public Hearing: Should CRSD Board Ask Voters to Authorize a Revenue-Neutral Replacement of the Occupation Tax with Earned Income Tax (EIT)? Agenda: Brief Presentation - 15 minutes Public Comment and Questions - 45 minutes CRSD Board Meeting Follows - Discussion and Vote

2. CRSD Taxes to Residents • Real Estate Tax - $132MM in revenue • 28,000 tax bills, $70K cost to collect (0.06%) • Earned Income Tax (EIT) - $13.5 MM in revenue • Flat rate tax (1 tax bracket) on earned income (not retirement, not dividends, not capital gains) • City wage taxes are deducted (e.g. New York, Philadelphia) • $190K cost to collect (1.39% fee to Keystone Collections) • Occupation Tax - $4.5MM in revenue • $40 to $320 fee for each occupation (12 tax brackets) • 32,630 tax bills, $82K cost to collect (2%) • Per Capita Tax - $460K in revenue • $10 to each adult resident • 21,300 per capita only bills, $53K cost (25% cost per bill)

3. Occupation and Per Capita Tax • Occupation Tax • 12 tax brackets, $40 to $320 per occupation • Millage is set by CRSD board but assessed value of occupations is frozen in time • CRSD maintains the tax rolls, trouble shoots issues, verifies occupations • Adult children must prove they are students to avoid the tax • Unemployment must be documented to avoid the tax • Per Capita • Paid by all adult residents including students and retired

4. Taxing Authority of CRSD Board • Real Estate ($132 MM revenue) • Can decrease. Increases < Act 1 Index, Exceptions for Pension. • Earned Income Tax ($13.5 MM revenue) • Can decrease. Increases in the maximum rate must be approved by voters. • Occupation Tax ($4.5 MM revenue) • Can increase or decrease millage, subject to Act 1 Index • Must eliminate and replace with EIT if voters asked and say yes • Per Capita ($460K revenue) • Can eliminate

5. Proposed Path to EliminatingOccupation and Per Capita • Ask voters to allow elimination of the Occupation Tax by Increasing the Earned Income Tax by 0.17% (revenue neutral) • If approved • Occupation tax is eliminated • CRSD Board must decide if it is worth collecting Per Capita tax (25% cost revenue to collect when not bundled together with occupation tax bills)

6. Results of Tax Change (2012-2013 Estimates) Currently If Occupation Eliminated, Replaced by EIT, and Per Capita Eliminated Households Receive 1 Bill Each Year 28,000 Tax Bills Per Year Occupation Tax Brackets: 0 EIT Tax Brackets: 1 (1.17%) Revenue EIT: $17.7 MM Cost of Collection EIT: $261K • Households Receive Three Bills Each Year • 82,000 Tax Bills Per Year • Occupation Tax Brackets: 12 • EIT Tax Brackets: 1 (1.0%) • Revenue EIT + Occ + Per Capita : $18. 1MM • Cost of Collection EIT + Occ + Per Capita: $413K

7. Example Impacts By Occupation CRSD Median EIT ~$30,000 and Mean ~ $70,000

8. What Would Happen to Your Taxes? Tax Calculator Placed on CRSD Web Site www.crsd.org

9. PA School Districts With the Occupation Tax • Act 511, LOCAL TAX ENABLING ACT was originally enacted into law in Pennsylvania on December 31, 1965. • In 1993 there were 110 school districts collecting • In 2011 there were 50 school districts collecting • In Bucks County: We are the only one of the thirteen school districts that continues to levy the tax

10. Additional Information

11. Facts Concerning the Occupation Tax • The amount of the tax liability for each person is determined by the job title and millage rate…it is not determined by income. • Typically paid in a lump sum in the fall of each year. • Receive the most complaints concerning the “fairness” of the tax. • Difficult to administer: • Identifying residents/verifying job titles. • Consistency of assigning job titles. • Proper reporting of job titles.

12. Use of 2008-09 for Calculation(State Law Requires ‘08-09 or ’01-02) 2009 with Occ and 1% EIT 2009 with 1.17% EIT Occupation Taxes (Current and Delinquent) $0 Earned Income Tax (1/2 of 1% and 0.17%) $17,408,229 Total $17,408,229 Law Requires EIT Increase be Rounded to Nearest 0.1% to Match Occ • Occupation Taxes (Current and Delinquent) • $4,506,592 • Earned Income Tax (½ 0f 1%) • $12,991,216 • Total • $17,497, 808

13. History of the Occupation Assessment Tax • The Occupation Assessment Tax was enacted by the district on June 26, 1973. • Millage Rate increased from 250 mils to 500 mils from the original enactment through 1986. • June of 1997 the millage rate was reduced to 400 mils with the intent to eliminate the tax over time. • On November 7, 2007 the community voted down a referendum question by the count of 5,026 in favor of the change and 7,306 against the change.

14. Considerations Currently After Board Actions and Voter Approval 0 Per Capita Only Bills ($0 to collect $0) 0 Occ + Per Capita Bills Students will not pay tax until employed Retired, no EIT: $0 Tax Just lost job: $0 Tax, No Calls to CRSD No need for refund • 21,200 Per Capita Only Bills ($2.50 to collect each $10) • 53,900 Occ + Per Capita Bills • 18 Year old graduating from High School must pay $10. • Retired, no EIT: $10 Tax • Just lost job: $10 Tax, Call CRSD to Change Occupation • Wait for refund until loss of job is documented.