Friday, March 5, 2021

Judge orders a Penn. district to revoke a tax hike


A common pleas judge in Pennsylvania ruled that the Lower Merion School District was wrong to raise taxes on residents by 4.4 percent and has ordered the district to revoke part of the tax hike to bring it more in line with what the court said was appropriate.

Lower Merion H.S. (Montgomery County Planning Commission / Flickr CC)

Judge Joseph A Smyth of the Montgomery County Common Pleas Court said in an August 31 ruling that the district overestimated budget deficits in order to justify making an exception to the 2.4 percent annual limit imposed on tax hikes by the state’s Act 1.

Pennsylvania school districts have independent authority to levy taxes and set tax rates, but Act 1 imposes an annual limit of 2.4 percent unless the district can show just cause why they should be allowed to charge more. Judge Smyth said the district’s tax hike could have been even less than the 2.4 percent maximum, given the district’s projected $9.3 million budget shortfall for the 2016-17 school year.

The district serves about 8,300 students and has an annual budget in the neighborhood of $260 million. The Philadelphia Inquirer reported that the district presented budget projections to taxpayers that were pessimistic at least twice in the past.

School Year Projected Deficit Actual Surplus
2009-10 $4.7 million $9.5 million
2011-12 $5.1 million $15.5 million

Arthur Wolk, a lawyer who lives in Gladwyne, and two other plaintiffs filed a class action suit in February to put the matter before a judge. “The evidence was overwhelming. It was indubitable,” the Inquirer quote Mr Wolk as saying. “We knew they were doing it. We just had to stop them.”

The district’s business manager testified in the case, saying the district had between $50 and $60 million in the bank and had raised taxes by 53.3 percent over the last decade, the Inquirer reported.

The school district, which claims special education programs and retirement funds will suffer without the tax hike, plans to appeal the ruling.

When it comes to that appeal, the issue will certainly be whether the court can review the district’s decision to raise taxes. Act 1 gives the Department of Education, part of the Executive Branch, the responsibility—the sole responsibility—to approve exception requests. Some costs incurred by schools can increase at a different rate from others, particularly when it comes to special education programs.

Now, if some information was withheld from the Department of Education in order to allow it to rule in favor of Lower Merion’s exception, courts do have to step in. But a common pleas court may not have the power to review this decision or the rate, as was done in this case.

Paul Katula
Paul Katula is the executive editor of the Voxitatis Research Foundation, which publishes this blog. For more information, see the About page.

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