Act 1 requires all school districts to place a question on next spring's primary election ballot asking voters if they want to increase or implement a school district Earned Income and Net Profits Tax (EIT), implement an EIT or a Personal Income Tax (PIT) or shift the current EIT to a PIT, all for the purpose of generating revenues that can be used to replace a portion of the district's property tax revenues. This shift in taxes would then allow school districts to reduce property tax rates for those who own eligible homestead or farmstead property.

This referendum question, known as the “front-end” referendum, must contain a rate or an increase in the rate of taxation that is sufficient to generate enough revenues to allow the school district to provide property tax relief that is equal to at least 50% of the maximum permissible homestead/farmstead exclusion. (The maximum permissible homestead/farmstead exclusion in any school district is equal to 50% of the median assessed value of eligible homestead/farmstead property in the district.) However, a district is not required to propose an EIT rate greater than 1%.

Act 1 requires all school boards to appoint a Local Tax Study Commission (LTSC) by Sept. 14, 2006, to make a nonbinding recommendation to school boards about this front-end referendum question.

Makeup of LTSC
Act 1 authorizes boards to appoint an LTSC of five, seven or nine members who are resident individuals or taxpayers of the school district. The appointees must reflect the socioeconomic, age and occupational diversity of the district to the extent possible. One member of the LTSC may be a member of the school board; however, no school district officials, employees or their relatives can be appointed.

Duties of LTSC
The LTSC must study the existing taxes levied, assessed, and collected by the school district and the effect of any county or municipal taxes imposed concurrently with the school district. The LTSC must determine how the tax policies of the school district could be improved by the levy, assessment, and collection of any tax authorized by Act 1 (earned or personal income taxes). The study must include all of the following:

* Historic and present rates of and revenue from taxes currently levied, assessed, and collected.
* The percentage of total revenues provided by taxes currently levied, assessed, and collected.
* The age, income, employment, and property use characteristics of the existing tax base.
* Projected revenues of taxes currently levied, assessed, and collected, including taxes authorized and taxes not levied under Act 1.

Within 90 days of its appointment (deadline Dec. 13, 2006), the LTSC must make a nonbinding recommendation to the school board regarding the imposition and the rate of an EIT or PIT to be placed on the question at the May 2007 election. If the question is approved, the tax and the rate appearing on the question are levied beginning in the 2007-08 fiscal year. Prior to making this recommendation, the LTSC must hold at least one public hearing. The commission's recommendation must be presented at a public meeting of the school board, and the board must make the commission's recommendation available to interested persons upon request. If the LTSC fails to make a recommendation within 90 days of its appointment, the school board must discharge it. The school board must accept or reject the recommendation of the LTSC before it adopts a resolution notifying the public of its intent to place a front-end referendum question on the ballot. The deadline for the board to adopt this resolution is March 13, 2007, although the practical deadline will be earlier because of advertising requirements.

At their meeting on September 11, the board of school directors will appoint a study commission that is representative and comprised of individuals with a genuine interest in providing this important service. Because of the law's requirement for diversity, there will be a screening process to ensure the commission's composition reflects the socioeconomic, age, and occupational diversity of the school district."


Q: Are school districts that participated in Act 72 required to set up local tax study commissions?
A: Yes. Because Act 1 repeals Act 72, all districts are now operating under the provisions of the new act, including appointing a Local Tax Study Commission.

Q: Is there any appeal available if the board does not accept the commission's recommendation?
A: No. Act 1 contains no such appeal provision.

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MISSION STATEMENT

“The continuing mission of the Tussey Mountain School District

 is to provide a safe, stimulating, and challenging environment where every person has an

equal opportunity to attain the knowledge and skills necessary to become

lifelong learners who contribute positively to society."