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Act 72 Information Meeting

Act 72 Information Meeting. Manheim Township School District Board of School Directors October 7, 2004. Agenda for the Evening. Introduction to Act 72: Mr. Adams Act 72 Issues: Mr. Brubaker Questions from members of the Board of School Directors Questions from the audience

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Act 72 Information Meeting

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  1. Act 72 Information Meeting Manheim Township School District Board of School Directors October 7, 2004

  2. Agenda for the Evening • Introduction to Act 72: Mr. Adams • Act 72 Issues: Mr. Brubaker • Questions from members of the Board of School Directors • Questions from the audience • Closing Remarks: Dr. Singer

  3. Act 72: What is it? • Governor Rendell signed Act 72 of 2004, The Homeowner Tax Relief Act, on July 5, 2004.  • This law provides school districts the opportunity to offer lower property taxes to home owners by implementing an additional earned income and net profits tax or a personal income tax.  • Participating school districts will qualify for a state allocation funded by slot machine revenue. 

  4. Offsetting Tax Provisions A decrease in property taxes through a Homestead and Farmstead Exclusion An equal increase from a combination of the following two sources of money: • Profits from the slot machines • Increase in the rate of the Earned Income Tax (“EIT”)

  5. Offsetting Tax Provisions The Homestead and Farmstead Exclusion • The reduction of property tax would be a flat rate for all affected homesteads and farmsteads. • No property tax relief would be provided to any businesses, including apartment buildings and retirement homes.

  6. Offsetting Tax Provisions Earned Income Tax • An initial increase of 0.1% to the EIT is required of any district that chooses to accept Act 72 -- effective the first year that slots revenue would be available to the district. • A further increase of the EIT would be expected within two years.

  7. Offsetting Tax Provisions: example

  8. Administrative Impact Additional costs and processes for both local districts and state government • Required mailings (approximately $30,000) • Changes in budgeting process • Changes in budget parameters and authority (voter referendum) • Time deadlines • Staff to collect data, calculate rates, indices, etc.

  9. It Is All Contingent: • The district must choose to participate by vote of the School Board. • A reserve fund must first be accumulated in Harrisburg, before any funds from the slot machines are made available for distribution to the school districts. • There may be additional legislative changes needed. • Possible Business Receipts Tax

  10. Act 72: What It Is Not • No new money is being provided for education. • The slot machine money primarily will go to school districts which presently receive larger portions of state funding for their budgets. • The Act will limit the ability of school districts which opt in to the program to increase taxes as needed in the future to meet educational needs. • This does not eliminate property taxes.

  11. Act 72 Issues Mr. George Brubaker • Solicitor for Manheim Township School District • Co-Author of Homeowner Tax Relief Act, Act 72 of 2004, A Comprehensive Outline and Timetable, August 2004

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