Tamaqua Area looks at staying within state property tax index

The Tamaqua Area School District's finance committee recommended staying within the district's maximum allowable property tax rate increase for its 2010-2011 budget preparation.

That does not mean the district will be raising taxes, however.

Business Manager Connie Ligenza told the committee Tuesday evening that the district's index for any potential tax hike under Pennsylvania's Act 1 has been established at 3.9 percent over its current real estate rate of by the Department of Education.

Act 1 of 2006, the Pa. Tax Relief Act, allocated a portion of the State's gaming revenue to offset property taxes through a Homestead/Farmstead exclusion, which is realized through a reduction on tax bills.

Act 1 also establishes a ceiling for how high school districts can raise real estate taxes without adding it as referendum for the voters for the May Primary election. Tamaqua Area's index for the current school year was 5.5 percent, although the school board decided not to raise its taxes for its 2009-2019 budget.

Ligenza said that, should the board decide to stay within the maximum allowable index for 2010-11, it could only go as high as an increase of 1.25 mills, which would be worth $325,000 to the district.

If the board decides to stay within the established index, it also affects the timeline for budget preparation as established by Act 1's predecessor, Act 72..

That means Tamaqua Area must pass a motion it will not raise taxes above the index, which would keep it on track for preliminary budget adoption for May, 2010, or else produce a tentative budget by February, 90 days before the May Primary.

The district could raise property taxes above the index if it qualified for special exceptions, and while Tamaqua Area has qualified for exceptions in retirement funding and special education in the past, Ligenza said the state establishes the formal guidelines in February.

"Last year we passed a motion not the increase taxes more than the index," said Ligenza. "If we go by the normal process (for a preliminary budget in February), we have some time to pursue a referendum or the exceptions. We would have some flexibility."

School boards that do so face a bit of a public relations problem, as any potential tax hikes must then be included in the tentative budget and can get reported in the media, even if the district doesn't plan to follow through with such increases.

"Even if we have no intention to raise real estate taxes, we can end up putting it out in the preliminary budget artificially," stated Ligenza.

Another problem is that districts don't have all the fiscal information needed this early for the budget, such as insurance and workman's compensation rates, which become available closer to June, she added.

"Years ago, the budget was established later," said Superintendent Carol Makuta. "Now if we do it in January, Connie has to plug in guesses and trends."

Board President Larry A. Wittig said the gaming revenue has not been the big windfall for school districts that many thought it could be. He expressed concern that a shortfall in the state's pension fund might not be able to be absorbed by districts. "It's a disturbingly big nut," he stated.

Tamaqua Area has offset the need to raise taxes through prudent spending, relying on growth in the district and the appeal of tax parcels. "Like it or not, the tax appeals keep us from raising taxes every year," he noted.

The committee wants the district to stay within the index, which would keep in on track for the tentative budget in May.

"To me, we should do 3.9 percent maximum," said Board Treasurer Daniel E. Schoener, who chairs the committee. "We hope not to do anything (to raise taxes), but this gives us flexibility."

The board can revisit the matter at its monthly meeting next Tuesday, Dec. 15.

In other business, the board held a special meeting prior to its committee sessions and the oath of office was administered to newly elected school director Mark D. Rother, who was absent for last week's organization meeting due to a work-related commitment.