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School district considers eliminating occupation tax

April 18, 2012

Photo by Gian DeLoia – Ridgway Area School District Finance Manager Brent Rhoads leads a discussion to consider eliminating the occupation tax from the school district.

Dozens of residents gathered at the Francis. S. Grandinetti Elementary School Cafeteria Wednesday night for a public meeting held by the Ridgway Area School District to provide the public with information on Act 130.
Act 130 was signed into law on Oct. 15, 2008, which allows school districts to change from occupation to earned income tax.
"Mr. [Brent] Rhoads has prepared some information for you that will hopefully answer some of your questions about the different taxations and what we are really trying to determine here," said Superintendent Dr. Michael O'Brien. "What we are trying to determine is what the community wishes are and then would have to go on to the ballot for a referendum vote.
"As board members and administrators we are not here to voice our opinion we are here to listen to you and gain the input from the community. This is one of those evenings where our opinion really doesn't matter because our job is to listen and find out what you folks would like."
Following O'Brien's introduction, Finance Manager Brent Rhoads gave a 50-minute presentation on the issue and led an open discussion afterward.
"Some of you were present at a meeting we had in 2009 very similar to this," Rhoads said. "We talked about whether we wanted to make this change or not. Act 130 actually amended Act 24 of 2001, which allowed school districts to change from occupation to earned income tax. The school board looked at it back in that time, we looked at it in 2009 and now we are looking at it again.
"We can eliminate the occupation tax and as you know, it's a relatively big tax for the school district."
According to Rhoads, the District may eliminate occupation tax by imposing an increased rate of earned income tax.
"What Act 130 did was provide an updated calculation," Rhoads said. "So Act 24 had you locked into those years back then. Act 130 allowed us to go up to 2008 to 2009 to do our calculations, but we are locked in to 2008 to 2009 not present dollars."
Rhoads said the District would need to pass a resolution to place a referendum on the November ballot.
Rhoads expects the resolution to be passed during June's regular school board meeting.
If the majority of voters vote yes then occupational tax would be eliminated and the earned income tax would increase, Rhoads said.
"Once we change this and the voters vote yes, we can't go back, it's a one time shot," Rhoads said.
Next Rhoads highlighted the differences between occupation and earned income tax.
With occupation tax:
*A county assessor places a value on each occupation.
*Values range from $0 to $300.
*School District enacts a millage as part of budget.
*Annual tax bill is calculated by taking assessment times millage (Ridgway Area School District millage is 1,100 mills).
*All individuals at same assessment pay same tax.
*Occupation tax has no relation to income except assessed values mirror perception of occupation.
With earned income tax:
*Tax is levied by school district on individual earned income.
*Municipalities by resolution may claim half of tax.
All municipalities in the District have opted in.
*Prior to referendum tax limited to one percent.
*School gets .5 percent and municipality gets .5 percent based on residence.
*Earned income includes wages, salaries, tips, commissions, bonuses, self employment income, etc.
*Earned income does not includes rents, interest, dividends, pensions or capital gains.
*The more you earn the more you pay.
A workshop will be held on Tuesday, May 1 at 6 p.m. in the Francis S. Grandinetti Elementary Library.
The May board meeting will be held on Tuesday, May 8 at 6:30 p.m. in the elementary library.

Pick up a copy of the Thursday, April 19, 2012 edition of The Ridgway Record for more.

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