THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY O'PAKE, LOGAN, MUSTO, STOUT, WASHINGTON, FONTANA, KASUNIC AND BOSCOLA, FEBRUARY 19, 2009

REFERRED TO FINANCE, FEBRUARY 19, 2009  

AN ACT

Providing for prohibition of levy or collection of tax on

homestead property by school districts, for the School

District Homestead Property Tax Elimination Fund, for

increase in personal income tax and for the Property Tax

Relief Fund; and making a related repeal.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the School

District Homestead Property Tax Elimination Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Fund."  The School District Homestead Property Tax

Elimination Fund established under section 4.

"Homestead property."  The owner-occupied, primary residences

and the parcel of land within this Commonwealth on which the

residence is located and other improvements located on the

parcel. If a portion of the structure is used for a

nonresidential purpose, the homestead is equal to that portion

of the property used as the primary residence of the owner-

occupant. The term "homestead" shall have no effect, evidentiary

or otherwise, concerning the issue of whether property

constitutes a homestead or homestead property under any other

act. The term "homestead" shall include the owner-occupied

primary residence on a farmstead as defined in 53 Pa.C.S. § 8582 

(relating to definitions) but shall not include any other real

property on a farmstead.

"School district."  A school district of the first class,

first class A, second class, third class or fourth class.

Section 3.  Property tax prohibition.

(a)  Levy.--Notwithstanding any other provision of law to the

contrary, no school district may levy or collect any tax on

homestead property for any purpose in any taxable year which

begins after publication of the notice under section 7.

(b)  Collection.--Nothing in this act shall be construed to

prohibit a school district from collecting delinquent taxes on

homestead property levied in any fiscal year preceding the

fiscal year in which the prohibition under subsection (a)

applies.

Section 4.  School District Homestead Property Tax Elimination

Fund.

(a)  Establishment.--There is hereby established in the

Treasury Department a special fund to be known as the School

District Homestead Property Tax Elimination Fund.

(b)  Custodian.--The State Treasurer shall be the custodian

of the fund, which shall be subject to the provisions of law

applicable to funds listed in section 302 of the act of April 9,

1929 (P.L.343, No.176), known as The Fiscal Code.

(c)  Roles of Department of Revenue and State Treasurer.--

Taxes imposed under section 5 shall be received by the

Department of Revenue and paid to the State Treasurer and, along

with interest and penalties and any refunds and credits paid,

shall be credited to the fund no less frequently than quarterly.

(d)  Interest.--During any period prior to the credit of

moneys to the fund, interest earned on moneys received by the

Department of Revenue and paid to the State Treasurer under this

act shall be deposited into the fund.

(e)  Money in the fund.--All money in the fund, including,

but not limited to, money credited to the fund under this

section, prior year encumbrances and interest earned thereon

shall not lapse or be transferred to any other fund but shall

remain in the fund and be used exclusively as provided in this

act.

(f)  Investment of funds.--Pending disbursement, money

received on behalf of or deposited into the fund shall be

invested or reinvested as are other funds in the custody of the

State Treasurer in the manner provided by law. All earnings

received from the investment or deposit of such funds shall be

credited to the fund.

(g)  Borrowing of funds.--The State Treasurer shall be

authorized to borrow money from the General Fund in the event

the money in the fund is insufficient to make the distribution

required under section 6. Such borrowing shall be repaid with

interest to the General Fund at the earliest practicable date.

(h)  Use of funds.--The Department of Revenue and the State

Treasurer may use a portion of the revenues in the fund for

costs associated with administering this act.

Section 5.  Personal income tax.

(a)  Additional income tax.--In addition to any other tax

currently levied by the Commonwealth under section 302 of the

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code

of 1971, there is levied a tax on each class of income as

defined in Article III of the Tax Reform Code of 1971 as

follows:

(1)  For income greater than $100,000 but not greater

than $150,000, 0.5%.

(2)  For income greater than $150,000 but not greater

than $200,000, 1%.

(3)  For income greater than $200,000 but not greater

than $250,000, 1.5%.

(4)  For income greater than $250,000 but not greater

than $300,000, 2%.

(5)  For income greater than $300,000 but not greater

than $350,000, 2.5%.

(6)  For income greater than $350,000 but not greater

than $400,000, 3%.

(7)  For income greater than $400,000, 3.5%.

(b)  Applicability.--The provisions of Article III of the Tax

Reform Code of 1971 shall apply to the personal income tax

levied pursuant to this section.

(c)  Deposit of revenue.--The revenue generated through the

tax levied under this section shall be deposited into the fund

established under section 4 for purposes of replacing the

revenues lost by all school districts based on the property tax

prohibition set forth in section 3.

Section 6.  Disbursements from fund.

(a)  Certifications by school districts.--By June 30 of the

fiscal year in which the notice under section 7 is published,

each school district shall calculate the amount of revenue the

school district will lose in the upcoming fiscal year based on

the homestead property tax prohibition under section 3 and

certify the amount to the State Treasurer. The calculation shall

be based on the amount of homestead property tax levied as of

the date the certification is made.

(b)  Duties of State Treasurer.--

(1)  Each year the State Treasurer shall adjust the

calculation originally certified under subsection (a) by the

percentage change in the Statewide average weekly wage as

calculated by the Department of Labor and Industry under

section 404(e)(2) of the act of December 5, 1936 (2nd

Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment

Compensation Law.

(2)  The Treasury Department shall reimburse each school

district for the total amount of revenue lost by the school

district based on the property tax prohibition under section

3.

(i)  For a school district with a fiscal year

concurrent with the calendar year, in two installments to

be paid on February 1 and April 1.

(ii)  For any other school district, in two

installments to be paid on the fourth Thursday of August

and the fourth Thursday of October.

Section 7.  Notice.

If a constitutional amendment prohibiting any school district

from levying a tax on homestead real property and authorizing a

graduated income tax is ratified by the electorate, the

Secretary of the Commonwealth shall transmit notice of the

ratification to the Legislative Reference Bureau for publication

in the Pennsylvania Bulletin.

Section 8.  Local ordinances.

(a)  Invalidation.--Ordinances or resolutions imposing an

earned income and net profits tax or a personal income tax under

provisions repealed in section 19 shall be invalid in any

taxable year which begins after publication of the notice under

section 7.

(b)  Revenue.--Revenue collected under ordinances or

resolutions invalidated in subsection (a) shall be calculated in

the certification under section 6(a).

Section 9.  Slot machine gaming revenue.

Revenue deposited into the Property Tax Relief Fund under 4

Pa.C.S. § 1409 (relating to Property Tax Relief Fund) shall be

transferred annually to the fund to replace revenue lost by all

school districts based on the property tax prohibition under

section 3.

Section 19.  Repeals.

(a)  Specific.--Repeals are as follows:

(1)  The General Assembly declares that the repeal under

paragraph (2) is necessary to effectuate section 3.

(2)  Chapters 3, 5, 7, 9 and 15 of the act of June 27,

2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer

Relief Act, are repealed.

(b)  Inconsistent.--All acts and parts of acts are repealed

insofar as they are inconsistent with this act.

Section 20.  Effective date.

This act shall take effect as follows:

(1)  The following provisions shall take effect

immediately:

(i)  Section 1.

(ii)  Section 3.

(iii)  Section 7.

(iv)  This section.

(2)  The remainder of this act shall take effect upon

publication of the notice under section 7.