RASD proposes to eliminate the Occupation tax with a General Election referendum
RIDGWAY--The Ridgway Area School District (RASD) Governing Board is announcing their plan to place a referendum question on the fall general election ballot to eliminate the occupation tax in the District.
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. under the current structure, a skilled laborer making $70,000 a year pays the same amount as a newly hired laborer making $29,000.
RASD is one of few districts in the area that currently has the occupation tax. Other district taxpayers eliminated the occupation tax a few years back, and state-wide, the majority of districts have eliminated the occupation tax.
"The Occupational Tax Elimination Act," said Aimee Kemick, RASD Board President, "provides an option for school districts to allow voters to replace the school occupation assessment tax with revenue from an increased earned income tax rate."
The current earned income tax rate is 1.0% shared equally by the school district (0.5%) and the municipalities located within the district (0.5%). The referendum question proposed for the general election ballot in November would replace the lost revenue from the occupation tax with a new earned income tax rate (EIT) rate that would be determined by increasing it to a level that would replace revenues lost from eliminated tax. This determination would be based on the 20082009 actual revenues because the legislation that allows this option was passed in that fiscal year. The revenue replacement is on a dollar-for-dollar basis and cannot result in an increase or decrease in revenue for the school district at the time of the change.
The RASD estimates that the new earned income tax amount would increase to a total of about 1.23%. This new rate would be split by the school district (.73%) and the municipalities (0.5%). Once approved, the school board could not change the District's portion of the rate in the future except through new bills passed by the PA Legislature. If needed, additional tax revenue could be acquired only through an increase in the real estate millage.
What would this change mean for most taxpayers in the District? For the same laborer making $40,000 a year, their tax bill would drop from $137.50/year to $92.00/year, a savings of $45.50. Most other taxpayers making under $250,000 a year would also see a similar reduction in their tax burdens.
"The EIT is a fairer tax," said Kemmick, "and paid based on income, deducted from a worker's paycheck each week, which will lessen the shock of writing out that check once a year to the tax collector." With the year-round automatic collection, the RASD believes that the revenue gained should equal the amount that the occupation tax brought in and ease the school district and tax collectors' burden to chase down those people they normally miss each year.
The RASD School Board is beginning the process of distributing information to ensure the voters are well informed in advance of the first public hearing scheduled before the board work session meeting on May 6, at the FSG Elementary School cafeteria beginning at 6:30 p.m. A zoom meeting interface will be provided on the RASD website and Facebook pages to allow participation during the COVID-19 crisis. After the public meeting, the District would then provide public notice of the board's intent to act on a resolution approving the placement of the referendum question on the ballot of the November 2, 2021 election on the possible elimination of the occupation tax under the Occupational Assessment Tax Elimination Act. It is anticipated the Board of Directors will consider and act on that resolution at the public board meeting on June 8. If the voters approve the ballot question, the new tax structure will go into place the following year, effective July 1, 2022.
The RASD has sent out a letter to all taxpayers in the District and welcomes public comment on the issue by calling the District offices at (814) 776-4299 during normal school hours.