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Act 72 Information Meeting

This meeting of the Manheim Township School District Board of School Directors, held on October 7, 2004, focuses on Act 72, also known as the Homeowner Tax Relief Act. Introduced by Governor Rendell, Act 72 enables school districts to offer lower property taxes to homeowners through alternative tax measures. The agenda includes an introduction to the act, discussions on key issues, and a Q&A session with board members and the audience. The act aims to provide tax relief but also presents challenges, such as administrative impacts and changes in budgeting and tax authority.

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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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