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Act 1 a flop: In school districts across Lehigh Valley, voters oppose tax shift. To many, there's no true reform.(Morning Call, The (Allentown, PA) (KRT) Via Thomson Dialog NewsEdge) May 16--The region's voters Tuesday roundly rejected the Act 1 tax shift, an initiative that promised to ease school district property taxes by raising income tax but suffered from misunderstanding and terrible word of mouth. An Allentown voter who said Act 1 "will open the door to a lot of shenanigans" could have been speaking for any number of voters who cold-shouldered the tax shift because they found it inadequate or confusing. Many at Lehigh Valley polls, echoing the argument of taxpayer groups around the state, said Act 1 isn't true reform because it doesn't treat all taxpayers equally. "Right from the start I think there's been an unbelievable amount of confusion about what it was, what it would do and what kind of real impact it would have on individual and family tax burdens," said Christopher Borick, a political science professor and pollster at Muhlenberg College in Allentown who predicted only about a fifth of the 498 districts voting on the measure would adopt it. "Voters weren't ready to commit to something they're unsure about." In Allentown, unofficial results showed 80 percent of voters rejecting the referendum. In Bangor Area, where a taxpayers group campaigned against the act, 81 percent rejected it. Bethlehem Area voters turned it down by 64 percent to 32 percent, and in Easton Area, the vote was 61 percent to 33 percent opposed, according to incomplete returns. "It hurts my wages," said Gary Ruth, 52, a pizza delivery driver and renter from Perkasie who needed little more reason than that to vote "no" on the ballot question. Act 1, the Taxpayer Relief Act, was intended to ease taxes on senior citizens and other fixed-income residents by shifting the burden of taxation to wage earners and by tapping into the revenue stream expected to flow from slot machine casinos. The state has estimated more than $1 billion in gaming revenue will go toward property tax relief each year. Most school districts asked voters to raise the earned income tax, which is levied on wages and other compensation. A few districts asked voters to trade the EIT for a new personal income tax. The PIT is on everything covered by the EIT, as well as on interest, dividends and income from rents, royalties, estates, trusts, gambling or lottery winnings, patents and copyrights. The act also limits annual school budget increases to a certain percentage, which varies by district but is generally around 4 percent. Exceptions are allowed in certain categories, including special education and construction, but districts must request them from the state. If the state refuses exception requests, districts must go to court or ask voters through a referendum. "It's been heralded since its inception as a component of property tax relief, but at least at this point it never materialized as what its designers hoped it would be," Borick said. "They're trying to, in some ways, fiddle at the margins with a system that needs much more significant change. This is not an easy thing by any means, to go in and reallocate tax burden for something as big as paying for the schools in the state. It's a Herculean job." G. Terry Madonna, a professor of public affairs at Franklin and Marshall College in Lancaster, called Act 1 a "cynical shell game" in a newspaper opinion piece this month. Act 1 is the third effort -- following Act 50 in 1998 and Act 72 in 2004 -- to address property taxes, and Madonna said all have been flawed for the same reason: They propose switching one tax for another and capping property tax. He said the approach doesn't work because it doesn't account for vast differences in wealth among districts and expenses, such as health care, that districts can't control. Indeed, nearly half the state's 501 districts have requested and received exceptions to the budget cap this year for health care expenses and other reasons. In districts where the referendum passed, the tax shift will take effect July 1. The school district will collect money from the increased income tax and evenly distribute the money among property owners to reduce property tax. All owners will get the same reduction, no matter the value of the property. In districts where the referendum failed, voters will be asked again in two years. Reporter Brian Callaway contributed to this story. Copyright (c) 2007, The Morning Call, Allentown, Pa. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |