The point of the post title is to get your attention.
There is a primary election scheduled for Tuesday, May 15. Several School Board and Commissioner seats are being contested. The most important question on the ballot, however, doesn't have to do with your elected representatives. It doesn't have to do with the TIF, or with deer. It has to do with your taxes, and specifically with the thing known as "Act 1."
"Act 1" is shorthand for the Special Session Act 1 of 2006, the Taxpayer Relief Act, which was passed by the state legislature and signed by the Governor on June 27, 2006. The purpose of the Act is to provide property owners with property tax relief -- by shifting some of their property tax burden onto those who pay Earned Income Tax.
Act 1 is implemented voluntarily, via referendum, on a school district-by-school district basis. Mt. Lebanon will vote on Act 1 on May 15. Vote "yes" if you want to approve Act 1; vote "no" otherwise.
The basic proposition behind Act 1 is that overall funding for schools will remain the same. The source of that funding, however, is supposed to shift: Real estate taxes go down; local income taxes go up.
As a matter of general purpose tax policy, Act 1 has a lot to recommend it. Inequities in public education funding between wealthy towns such as Mt. Lebanon and poor towns such as (take your pick; there are lots of candidates nearby) can be pretty striking. Reducing school districts' reliance on real estate taxes as a principal source of funds is designed to reduce those inequities over the long run. For example, this was the theory behind California's property tax reform in 1978.
Mt. Lebanon voters, however, may want to skip the lesson on theory. Most people want to know how this will affect them personally. And how Act 1 would affect you, the individual taxpayer, depends on a number of things. First, it depends on whether you pay real estate taxes at all. If you're a renter, property tax relief via Act 1 doesn't do you much good. Second, it depends on whether you have much earned income. If you don't (i.e., if you live on passive or government income), then Act 1 is great. Third, as I understand it, when you trade off the average amount of real estate tax reduction involved against the increase in Earned Income Tax, your overall tax bill will go down if your household income is below a certain threshold, or it may go up, if your household income is above that threshold. And that threshold is, apparently, somewhere just north of $100,000.
Finally, the tax tradeoff that Act 1 represents may be only a one-time thing. Even if you vote "yes" and Act 1 passes, your real estate tax reduction may be only temporary. Mt. Lebanon is not among the
districts that committed to capping increases in its real estate tax rate, which Act 1 encouraged. Real estate taxes may go down this year -- but they may head upward again, a year from now.
The Mt. Lebanon School Board recently passed a resolution opposing Act 1.A report from a Mt. Lebanon School District Local Tax Study Commission has some helpful detail.
The Post-Gazette ran this feature on the mechanics of the legislation and what it might mean for certain school districts.I haven't had time to collect a lot of information about this. If you have corrections to what I've written or more specifics, particularly as to how Act 1 would impact Mt. Lebanon, please post it in the Comments, or email me for posting in the blog. Thanks.
UPDATED 7:50 p.m. 5/03/07:
From the School District:
For additional information on Act 1 and its impact on the District, including the investment income shortfall the District will experience with its passage:
http://www.mtlsd.org/district/stuff/07-08budgetreport.pdfAdditional information on Act 1’s impact on renters and homeowners in Mt. Lebanon:
http://www.mtlsd.org/district/stuff/act1%20mt%20%20lebanon%20sd%2010-27.pdfLabels: Act 1, school district, taxes