The state House is expected to vote next week on a bill that would restrict school districts' ability to increase taxes above the state limit.
The bill calls for all available exceptions to the Taxpayer Relief Act to be eliminated. House members were to vote Wednesday, but a vote was delayed until after Memorial Day.
Under the Taxpayer Relief Act of 2006, Pennsylvania school districts cannot raise taxes above an annually set, state-governed limit unless school officials applied for one of 10 state-allowed exceptions. The exceptions are designed to account for cost increases beyond school district control, including employee pensions and special education.
If districts need to fill a budget deficit by raising taxes above the state Act 1 index, then school officials must apply for one state-allowed exception. Pension and special education exceptions are the most applied for under the current act.
Even if the bill would become law, school districts could circumvent Act 1 tax limitations with a voter referendum.
The House bill may not have a strong impact on the Altoona Area School District, spokesman Tom Bradley said.
"Altoona Area School District has never applied for any exceptions, so it wouldn't affect us," Bradley said.
Many districts may have used exceptions sparingly or not at all, but those safety nets could meet significant needs within the next five years.
Spring Cove School District officials received an exception only once in order to raise taxes for a building project several years ago, Business Manager John Clark said.
Five-year budget planning models, outlined by Penn State professor William Hartman's consulting firm, Education Finance Positions, project steep increases in public school employee retirement costs.
"The primary way we would be affected by not having the ability to tax above the state index is with the increase in retirement costs," Clark said.
If Act 1 exceptions were to stay intact, Spring Cove could maintain a $3.4 million fund reserve over the next few years. Without Act 1 exceptions to allow sufficient tax raises for covering retirement costs, the district's fund balance could be whittled to $180,000 by 2015, Clark said.
"If we can't apply for exceptions, we will end up with a bare-bones fund balance," Clark said. "Or we'll have to find ways to cut more to keep up the district's operating budget."
Dave Davare, director of research for the Pennsylvania School Boards Association, said increasing taxes are necessary to pay increasing costs for crucial services.
"Tax raises are a symptom of insufficient state funding." Davare said. "Some costs are beyond districts' control; districts can't just not pay pensions."
Mirror Staff Writer Russ O'Reilly is at 946-7435.