HB 1220 — An Act amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act, in taxation by school districts, repealing provisions relating to local tax study commission and to adoption of further referendum.

PRINTER'S NO.   1368

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1220
                                               Session of
                                                 2025

     INTRODUCED BY GROVE AND PICKETT, APRIL 15, 2025

     REFERRED TO COMMITTEE ON EDUCATION, APRIL 15, 2025


                                    AN ACT
 1   Amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873,
 2      No.1), entitled "An act providing for taxation by school
 3      districts, for the State funds formula, for tax relief in
 4      first class cities, for school district choice and voter
 5      participation, for other school district options and for a
 6      task force on school cost reduction; making an appropriation;
 7      prohibiting prior authorized taxation; providing for
 8      installment payment of taxes; restricting the power of
 9      certain school districts to levy, assess and collect taxes;
10      and making related repeals," in taxation by school districts,
11      repealing provisions relating to local tax study commission
12      and to adoption of further referendum.
13      The General Assembly of the Commonwealth of Pennsylvania
14   hereby enacts as follows:
15      Section 1.    Sections 331 and 332 of the act of June 27, 2006
16   (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief
17   Act, are repealed:
18   [Section 331.    Local tax study commission.
19      (a)   Appointment.--A board of school directors shall appoint
20   a local tax study commission prior to adopting a resolution
21   under section 331.2(b) or 332(b)(1). The local tax study
22   commission shall be appointed no later than 180 days prior to
23   the date on which the board of school directors is required to
 1   adopt a resolution under section 331.2(b) or 332(b)(1).
 2      (b)   Membership.--The local tax study commission shall
 3   consist of five, seven or nine members who are resident
 4   individuals or taxpayers of the school district and shall
 5   reflect the socioeconomic, age and occupational diversity of the
 6   school district to the extent possible, except that one member
 7   of the local tax study commission may be a member of the board
 8   of school directors and no member shall be an official or
 9   employee or a relative thereof of the school district.
10      (c)   Staff and expenses.--The school district shall provide
11   necessary and reasonable support staff and shall reimburse the
12   members of the local tax study commission for necessary and
13   reasonable expenses in the discharge of their duties. Receipts
14   shall be required for all reimbursable expenses under this
15   subsection.
16      (d)   Contents of study.--The local tax study commission shall
17   study the existing taxes levied, assessed and collected by the
18   school district and the effect of any county or municipal taxes
19   imposed concurrently with the school district. The local tax
20   study commission shall determine how the tax policies of the
21   school district could be improved by the levy, assessment and
22   collection of the taxes authorized under section 321. The study
23   shall include consideration of all of the following:
24            (1)   Historic and present rates of and revenue from taxes
25      currently levied, assessed and collected.
26            (2)   The percentage of total revenues provided by taxes
27      currently levied, assessed and collected.
28            (3)   The age, income, employment and property use
29      characteristics of the existing tax base.
30            (4)   Projected revenues of taxes currently levied,

20250HB1220PN1368                    - 2 -
 1      assessed and collected, including taxes authorized and taxes
 2      not levied under this chapter.
 3      (e)     Recommendation.--Within 90 days of its appointment, the
 4   local tax study commission shall make a nonbinding
 5   recommendation to the board of school directors regarding the
 6   imposition of the taxes authorized under section 321, commencing
 7   in the subsequent fiscal year. Prior to making its
 8   recommendation, the local tax study commission shall hold at
 9   least one public hearing. The recommendation of the local tax
10   study commission shall be presented at a public meeting of the
11   board of school directors. The board of school directors shall
12   make such recommendation available to interested persons upon
13   request.
14      (f)      Failure to issue a recommendation.--If the local tax
15   study commission fails to make a recommendation under subsection
16   (e), the board of school directors shall discharge the local tax
17   study commission.
18      (g)     Adoption of recommendation.--The board of school
19   directors shall accept or reject the recommendation of the local
20   tax study commission prior to adopting a resolution under
21   section 331.2(b) or section 332(b)(1).
22      (h)     Materials.--All records of the local tax study
23   commission, including receipts, tapes, minutes of meetings and
24   written communications, for public inspection during the regular
25   business hours of the school district.
26   Section 332.    Adoption of further referendum.
27      (a)     General rule.--In addition to the provisions of section
28   331.2, a board of school directors may:
29            (1)   Levy, assess and collect an earned income and net
30      profits tax authorized under section 321(b)(2) only after

20250HB1220PN1368                    - 3 -
 1    obtaining the approval of the electorate of the school
 2    district in a public referendum at a municipal election. The
 3    first such public referendum must be conducted no earlier
 4    than the municipal election of 2009.
 5          (2)   Levy, assess and collect a personal income tax
 6    authorized under section 321(c) only after obtaining the
 7    approval of the electorate of the school district in a public
 8    referendum at a municipal election. The first such public
 9    referendum must be conducted no earlier than the municipal
10    election of 2009, and no such public referendum may be
11    conducted until the Department of Revenue receives final
12    approval of regulations governing the collection of a
13    personal income tax.
14    (b)   Submittal of referendum.--
15          (1)   A board of school directors may submit, at a
16    municipal election, a referendum question to the electors of
17    the school district seeking voter approval allowing the
18    school district to levy, assess and collect an earned income
19    and net profits tax or a personal income tax for the purpose
20    of annually funding homestead and farmstead exclusions or
21    millage reductions in certain circumstances. Prior to placing
22    a referendum question on the ballot, the board of school
23    directors must adopt a resolution pursuant to this section.
24    The board of school directors must give public notice of its
25    intent to adopt the resolution in the manner provided by
26    section 306 of the Local Tax Enabling Act and must conduct at
27    least one public hearing on the resolution.
28          (2)   The board of school directors shall submit the
29    referendum question required under this section to the
30    election officials of each county in which the school

20250HB1220PN1368                  - 4 -
 1    district is situate no later than 60 days prior to a
 2    municipal election. The election officials shall cause the
 3    referendum question to be submitted to the electors of the
 4    school district.
 5        (3)   The referendum question shall state the rate of the
 6    proposed earned income and net profits tax or personal income
 7    tax to be levied, the reason for the tax, the estimated per
 8    homestead tax reduction and the current rate of earned income
 9    and net profits or personal income tax levied by the school
10    district. The question shall be clear and in language that is
11    readily understandable by a layperson and shall be framed in
12    one of the following forms with the school district
13    resolution enumerating the variable amounts represented by
14    the terms X, Y and Z:
15              (i)    Do you favor imposing an additional X% (insert
16        name of tax)? The revenue generated from the increased
17        tax rate will be used to reduce taxes on qualified
18        residential property by an estimated amount of $Y. The
19        current (insert name of tax) rate for the school district
20        is Z%.
21              (ii)    Do you favor imposing a personal income tax at
22        X%? The revenue generated from the tax will be used to
23        reduce taxes on qualified residential properties by
24        (insert amount of reduction).
25              (iii)   Do you favor converting the school district's
26        current earned income and net profits tax into a personal
27        income tax at X%? The revenue generated from the personal
28        income tax will be used to reduce taxes on qualified
29        residential property by an estimated amount of (insert
30        amount of reduction) and to replace the revenue from the

20250HB1220PN1368                   - 5 -
 1            current school district's earned income tax. The current
 2            earned income tax rate is Z%.
 3            (4)   The election officials of each county shall, in
 4      consultation with the board of school directors, draft a
 5      nonlegal interpretative statement which shall accompany the
 6      referendum question in accordance with section 201.1 of the
 7      act of June 3, 1937 (P.L.1333, No.320), known as the
 8      Pennsylvania Election Code. The nonlegal interpretative
 9      statement shall inform the voters of:
10                  (i)    the reason for the tax;
11                  (ii)    the estimated increase in revenue which the
12            board of school directors has included in the proposed
13            tax rate as authorized under section 321(b)(4) or section
14            321(c)(6);
15                  (iii)    the estimated per homestead tax reduction; and
16                  (iv)    the current rate of earned income and net
17            profits tax or, if applicable, personal income tax levied
18            by the school district.
19      (c)   Proposed tax rate.--The proposed rate of the earned
20   income and net profits tax or personal income tax shall be
21   established by the board of school directors of the school
22   district and shall not exceed the rate, when combined with the
23   tax rate authorized under section 331.2, required to provide an
24   exclusion for homestead property and farmstead property equal to
25   the maximum exclusion under 53 Pa.C.S. § 8586 (relating to
26   limitations).
27      (d)   Effective date.--If the referendum question under this
28   section is approved, the new rate of the earned income and net
29   profits tax or personal income tax shall take effect pursuant to
30   section 321(d).

20250HB1220PN1368                       - 6 -
 1      (e)   Majority approval.--Approval of the referendum required
 2   under this subsection shall be by a majority of the electors
 3   voting on the question in the school district.
 4      (f)   (Reserved).
 5      (g)   Effect on certain school districts.--This section shall
 6   not apply to a school district of the first class.
 7      (h)   School districts operating under 53 Pa.C.S. Ch. 87.--
 8            (1)   (Reserved).
 9            (2)   (Reserved).
10            (2.1)   This subsection shall apply to a school district
11      which is subject to 53 Pa.C.S. Ch. 87 (relating to other
12      subjects of taxation).
13            (3)   A school district under this subsection shall
14      convert its earned income and net profits tax authorized
15      under 53 Pa.C.S. § 8703 (relating to adoption of referendum)
16      to an earned income and net profits tax authorized under this
17      subsection at the same rate as the tax was levied under 53
18      Pa.C.S. § 8703 on the date of conversion. The tax authorized
19      under this subsection shall be subject to the provisions of
20      sections 323, 324, 325 and 326.
21            (4)   A school district under this subsection shall
22      combine all revenue generated for funding homestead and
23      farmstead exclusions under 53 Pa.C.S. § 8703 with any revenue
24      collected for the purposes of funding homestead and farmstead
25      exclusions under this chapter.
26      (i)   Pennsylvania Election Code provisions.--Proceedings
27   under this section shall be in accordance with the provisions of
28   the Pennsylvania Election Code.]
29      Section 2.    This act shall take effect in 60 days.



20250HB1220PN1368                    - 7 -