Issue: Tax Reform, Act 1, SB 911

Identifying the issues, influencing legislation and shaping the debate on key education issues

A Blueprint for Comprehensive Local Tax Reform pdf PDF

Act 25 sets Act 1 Restrictions (June 2011)

In June of 2011, the General Assembly approved SB 330, now Act 25 of 2011. The law removes a majority of the backend referendum exceptions under Act 1 of Special Session 2006.  The act retains the following exceptions, with some modifications: 

Special Education:  The exception adds language that requires costs incurred to be netted against state special education payments. That means that districts may only seek a tax hike to cover the portion of a special education cost increase that exceeds the district’s special education state funding. 

Electoral Debt:  Existing language is retained related to payment of interest and principal on any voter-approved debt.  

Grandfathered Debt:  Existing language is retained related to payment of current outstanding debt.

Pension:  The pension exception freezes the wage base at 2011-12 levels, such that the exception cannot be used to cover any increases in these costs above the base, even if a school district hires new employees and the total salary costs exceed the 2011-12 levels. Under the language, the exception applies to a school district’s share of payments to the PSERS’ system if the increase in the amount of the estimated payments between the current year and the upcoming year, as determined by the department, is greater than the index.  The district’s share of payments of PSERS for the current year is determined by the department using the lesser of the school district’s total compensation for the current year or the school district’s total compensation for the 2011-12 school year.


Act 32 of 2008

This new law amends the Local Tax Enabling Act to require the county-wide consolidated collection of earned income tax (EIT) by 2012. Political subdivisions levying an EIT will be represented on a county-based committee that appoints a single tax collector to administer and collect local income taxes.

  • Act 32 of 2008: Earned Income Tax Consolidated Collection FAQs

    This new law amends the Local Tax Enabling Act to require the county-wide consolidated collection of earned income tax (EIT) by 2012, excluding Philadelphia (which does not levy an EIT). Each political subdivision levying an EIT will be represented on a county-based committee that appoints a single tax collector to administer and collect local income taxes within the tax collection district.  (Allegheny County will have up to four sub-districts, each of which can have its own collector or merge with other sub-districts or counties.) Each tax collector will be a nonresident collector and collect employer withholding taxes owed to the employee’s place of residence, for redistribution to other counties within 30 days. Employers with multiple worksites across Pennsylvania would be permitted to remit local income taxes to just one collector.

Act 1 of 2006