In anticipation of raising taxes, two school districts in Washington County have applied to the state Department of Education for exceptions to the tax inflation index.
Burgettstown Area and Washington school districts are both seeking approval to raise real estate taxes above their inflation index of 2.4 percent in order to balance their budgets and fund their pension obligations for the school year.
Washington has a preliminary budget of $25 million for the 2013-14 school year. Burgettstown’s proposed budget won’t be presented to the school board until its May 13 meeting, said business manager Jamie O’Donnell.
However, the Department of Education has approved an increase of 1.920 mills for Burgettstown and 1.88 mills for Washington should the districts determine they need that additional tax money. Burgettstown’s current tax rate is 117 mills, and Washington’s is 130.
School districts can apply for exceptions to cover past and current construction, special education and pensions costs.
There are 500 school districts in the state. Tim Eller, the Education Department’s press secretary, said 311 of them passed resolutions they would not increase taxes over the index. One hundred seventy-one districts applied for exceptions. No school districts in Greene County applied.
The biggest request this year, said Eller, was for pension costs. Of the 171 districts, 159 sought exceptions for pension costs.
Eller expects the numbers of school districts requesting exceptions for pension funding to rise unless action is taken by the state Legislature. In February, Gov. Tom Corbett proposed a budget with changes in the state employee pension system.
Richard Mancini, Washington’s business manager, said if there is an increase, this would be the second year in a row the district would raise taxes, although for the three years prior to that there were no increases.
The district’s preliminary budget is expected to be approved at the school board’s June meeting. Between the construction and pension exceptions, Washington could raise taxes as much as 5 mills without a referendum. But while the preliminary budget is based on that 5-mill increase, Mancini noted the figure could be reduced when the final budget is adopted.
“I don’t know if the board is going to use it, but we have it in case we need it,” he said.
The school district’s preliminary budget is $116,422 over the index.
Washington also applied for a pension exception, and Mancini expressed surprise that more districts in this area had not done so, because liabilities had increased this year.
Washington’s pension obligation request was $221,140. Of that, it was awarded $175,671. Burgettstown received $120,148 of the $187,805 the district asked for.
The districts were listed in the department’s Report on Referendum Exceptions for School Year 2013-2014. They apply under the Taxpayers Relief Act of 2006, also known as Act 1, which sets an annual inflation index that serves as a cap on a school district’s allowable real estate tax increase, unless a district obtains approval from voters or is granted an exception by the Department of Education.
Prior to being amended in June 2011, Act 1 permitted 10 referendum exceptions. Now there are just the four exceptions, including two under construction, one for past construction and the other for current projects.
Each September, the department calculates a school district’s Act 1 index. The state’s inflation index rate under Act 1 is 1.7 percent, meaning that school districts can raise their real estate taxes that much without an exception. Index rates also are adjusted for each school district.