RIDGWAY--The Ridgway Area School District (RASD) Governing Board and Ridgway Borough Council seek to clarify aspects of the Occupational Tax Elimination Act(OT), which will be on the general election ballot on November 2 for voters in the Ridgway Area School District. The Borough of Ridgway is also seeking to eliminate the Occupational Tax with a ballot question, and there has been some confusion about the two initiatives. The RASD and the Ridgway Borough Council take no official stand on the Act and instead have decided to leave the choice up to voters.

The Occupation Tax is billed once a year based upon the self-reported "occupation category." For example, a typical "laborer" making $40,000 per year pays $137.50/year under the current tax structure. The tax uses the occupation category as its sole means of determination as to the amount of tax per taxpayer and only applies to residents in the Ridgway Area School District, which includes the Borough of Ridgway and portions of Ridgway Township and others. Under the current structure, a skilled laborer making $70,000 a year pays the same amount as a newly hired laborer making $29,000.Currently for residents that reside in the Borough of Ridgway pay Occupational Tax for both entities. Along with the Occupational Tax, the Borough and RASD each share equally (50%) of the Earned Income Tax (EIT) currently accessed in the area at 1% (0.5% for each entity.

The referendum question proposed for the general election ballot on November 2 would replace the lost revenue from the Occupation Tax with an EIT rate determined by increasing it to a level that would replace revenues lost from eliminated tax. This determination would be based on the 2008-2009 actual revenues because the legislation that allows this option was passed by the Commonwealth in that fiscal year. The revenue replacement is on a dollar-for-dollar basis and cannot increase or decrease in revenue for the school district or Borough at the time of the change. In addition, this would be the only time that both RASD and Ridgway Borough are able to increase the EITi n this way due to limitations placed on this legislation by the Commonwealth. Any future tax increases, if necessary, would have to be passed on as a real estate millage increase.

Both proposals seek to recoup the income lost by eliminating the OT, with a slight increase in the EIT. Currently, at 1%, the RASD proposal would raise the EIT rate by 0. 23% or up to 0.73% for the Schools. The Ridgway Borough Council likewise would ask for an increase in the EIT of 0.17%, or up to 0.67%. If both ballot initiatives are successful, Ridgway Borough residents will pay an EIT rate of 1.40%. If only one of the initiatives passes, then the voters would only pay the individual increase in EIT, so 0.23-0.17% respectfully.

The EIT is based on a taxpayer "earned-income" and net profits if the residents own a company for both proposals. EIT is not levied on retirement investments or savings accounts, and there is no mechanism in place to allow either entity access to taxpayers' savings or investment accounts. In other words, EIT only is calculated on wages and a net profit from a company. There has been some confusion on this issue, and both RASD and Ridgway Borough want voters to have accurate information before Election Day on November 2. Voters who have requested mail-in-ballots in the RASD and Ridgway Borough will have what is known as a "Plain English" explanation of the ballot initiative included along with their ballot. For those choosing to vote on Election Day, the ballot initiative will each have the "Plain English" explanation to read on their voting machine. Only Ridgway Borough residents will have both initiatives. Residents who reside in the Ridgway Area School District will only have the RASD initiative on their ballots.

The Borough of Ridgway and the RASD welcome questions, comments, and concerns about the Occupational Tax Elimination Act. Please contact the RASD at (814)773-3146 or the Ridgway Borough at (814)776-1125 during regular business hours.

Recommended for you