PAESSP Political Notes
The Pennsylvania State Legislature worked through the weekend and sent to Governor Rendell a budget, property tax legislation and gaming legislation. The Governor has signed all of which into law.
The budget will provide additional monies to education. According to Pennsylvania Department of Education (PDE) numbers, this will reflect an 11% increase in monies overall to school districts over 2003-04. The Basic Education Subsidy will increase 3.57%, with every school district receiving at least a 2% increase in state subsidy, which is more than they received last year. Every school district will receive, as a minimum, a 2% increase for special education over last year’s monies. However, the overall increase to the budget is just 2.7% for special education, which is less than the 4.5% received last year. Some of the particulars are $17 million additional monies for the very poorest districts, $25 million for districts to recoup lost revenue from charter school costs and $200 million for the Accountability Block Grant programs. The Governor wanted $250 million for his block grants, but settled for the $200 million. This money will allow more pre-school and full-day kindergarten programs to be funded. Districts will have flexibility on how they use these monies, including teacher training, tutoring and K-3 class size.
Another piece of legislation passed is a Homeowner Tax Relief Bill. In all counties, except Philadelphia, this legislation is intended to reduce local property taxes for education. Philadelphia will receive a decrease in wage tax. Property taxes will be reduced in a couple of ways: School boards will be able to enact an Earned Income Tax or a Personal Earned Income Tax Act, but not both, to reduce reliance on property taxes. School districts will have to allow the electorate to determine if they want property tax reform in the 2005 election. In turn, by the school district participating with the state program, they will be eligible for property tax monies generated by the new gaming legislation. How much a district will get is based on aid ratio, personal income calculation, equalized mileage and local taxes as a percent of personal income. PDE estimates using this formula, the average property owner will receive a $333 decrease in property taxes. Estimates from other sources have calculated the amount in some districts to be around $100 to as high as $800 in others, all based on the formula.
The second part of this legislation is of more concern to school principals and that is school districts will be under a back-end referendum probably occurring in the 2006 primary. School districts will be able to raise property taxes by the rate of inflation without going to the voters each year. This inflation factor is calculated using the statewide average weekly wage and the cost of salaries and benefits of educators nationally and comparing this information to the previous year. Contrary to popular belief, the Consumer Price Index is not used in this formula. There are some allowances for the very poorest districts, those with the highest aid ratios, to receive an adjustment to their inflation formula. Before, they would have had to use the referendum.
This legislation does allow for exceptions under which a district would not have to use the referendum. These include paying monies resulting from a court order, a disaster or declared emergency, debt service incurred for previous construction projects, special education costs (if they increased more than 10% over the previous year) and costs to implement AYP, if they failed. If all subsidy money does not equal the grown rate of the index, the district may be exempt from the referendum. This may help rapidly growing districts, as well as districts that do not receive monies anticipated from taxes, basic and special education subsidy money. If the PSERS contribution rate is greater than 7.5%, and also if during the life of current collective bargaining agreements, health care increases are more than the index, then the district can apply for referendum exception. To receive an exemption, the school district will be required to get approval form PDE or the local courts.
The other component to this legislation is the gaming or slots provision, which will put up to 14 slot machine-only casinos across the state. Some of the casinos will be at proposed racetracks, one at each of the current tracks and the remainder at locations to be determined. A regulatory commission will be established to control and work out many of the yet to be determined details. The revenue percentages from slots will be distributed with 45% to racetrack/casino owners; 43% to state and local governments; and 12% to the horse owners. It is predicted by the Governor that this will result in one billion dollars in revenues that will be available for property tax relief from school taxes. Many of the details of how this will finally be implemented remain to be worked out over the next 12 months. This makes Pennsylvania one of 18 states to have slots, not including states with Native American reservation casinos.
With the prospect of more than 61,000 slot machines in the Commonwealth within the next two years, it is estimated that the state will become second in the number of slots with only Nevada having more. The bill passed the House on a mostly party vote of 113-88.