Chapter 5.7


5.7 - What was the local income tax referendum option for property tax relief?

Over the past several days, we've covered the multiple components of Act 1 of 2006, including the property tax relief directed to homestead and farmstead properties. Another taxpayer-focused component of Act 1 provided the option for school districts to levy or increase a local earned income tax or levy a personal income tax for the purpose of providing additional relief to homestead and farmstead property owners. 

The law required school districts to appoint a local tax study commission, made up of 5, 7 or 9 members residents or taxpayers of the school district in September 2006. The local tax study commission in each school district was charged with studying the existing taxes levied by the school district and how the tax policies could be improved by the levy of a local income tax. The study had to include consideration of past and present revenue from taxes levied by the district, examination of the existing tax base and projected revenues from a potential local income tax.

Act 1 required each local tax study commission to make recommendations about the implementation of a local income tax to the school board by mid-December 2006, and the school board had to adopt or reject the recommendations of the commission.

After the work of the local tax study commissions, Act 1 required school districts to put a question on the ballot at the primary election in 2007 asking voters if they would allow the school district to levy and collect a local income tax for the purpose of providing property tax relief to residential taxpayers. School districts had to determine a proposed rate for a potential local income tax, which was included in the ballot question along with the proposed amount of property tax relief.

Every school district (except Philadelphia, Pittsburgh and Scranton) had this local option referendum on the ballot in May 2007. The ballot question was approved by voters in the following eight school districts, which increased their local earned income tax to provide property tax relief to residential taxpayers:

  • Bald Eagle Area School District (Centre)
  • Bedford Area School District (Bedford)
  • Chambersburg Area School District (Franklin)
  • Everett Area School District (Bedford)
  • Huntingdon Area School District (Huntingdon)
  • Juniata Valley School District (Huntingdon)
  • Kane Area School District (McKean)
  • Reading School District (Berks)
Click on the image link below to view our interactive map illustrating the 8 school districts which passed the Act 1 local income tax voter referendum option for property tax relief, the amount of revenue generated in for each of those school districts, the magnitude of property tax relief that approval provided relative to property tax revenue, and the Act 1 Local EIT Rate used to levy the property tax relief revenue for the fiscal year.