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created: 2024-01-09T15:59:52 (UTC -05:00)
tags: []
source: https://www.mcall.com/2012/09/06/high-court-ruling-creates-uncertainty-over-school-tax-collection/
author: Morning Call
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# High court ruling creates uncertainty over school tax collection – The Morning Call

> ## Excerpt
> As school officials across Pennsylvania work to stretch limited funding, a decision from the state Supreme Court has created uncertainty about their power to control the cost of collecting tax mone…

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As school officials across Pennsylvania work to stretch limited funding, a decision from the state Supreme Court has created uncertainty about their power to control the cost of collecting tax money.

In a reversal of nearly three decades’ worth of rulings, the court ruled that two Bucks County school boards overstepped their authority by slashing tax collectors’ compensation so much that they couldn’t do the jobs they were elected to do.

Some say the court’s decision takes away school officials’ ability to use the most efficient tax collection methods available.

“Our concern these days is balancing a budget, and any time we can either improve a system or make it cost less, we almost feel obligated,” said John Vignone, the Parkland School District business administrator. “I do believe that this took an option out of the school districts’ arsenal and will hurt school districts that are looking to save some money.”

But tax collectors contend that only they can provide the level of customer service and attention to detail the job requires.

“A lot of people think all you do is sit here and collect money. There’s a whole lot more to it than that,” said William Beardsley, president of the Pennsylvania State Tax Collectors Association, which has more than 2,600 members.

Under the state Local Tax Collection Law, collecting school real estate taxes is the job of an elected tax collector.

But about one in five school districts across the state – including Bethlehem Area – collects property taxes in-house or uses private companies, Beardsley said.

The Pennridge and Central Bucks school districts didn’t get rid of elected tax collectors. But in 2009, their school boards voted to reduce the amount they pay elected tax collectors to match the cost of using private companies or banks to collect and process property tax payments.

A group of tax collectors in the municipalities that make up the districts sued to stop the change, and the case found its way to the Pennsylvania Supreme Court last year

Although Pennsylvania courts have said for nearly three decades that it’s legal for school districts to use the most cost-effective tax collection available, even if it’s not the local elected tax collector, the Bucks County case gave the Supreme Court a fresh opportunity to examine the issue.

In an Aug. 20 decision, the justices ruled the reductions were so severe – nearly 70 percent in the case of Pennridge and nearly 80 percent in the case of Central Bucks – that the tax collectors would not be able to perform the duties required of them under state law.

Furthermore, the court said in a unanimous opinion, there is no guarantee that private companies would perform all of the duties required of tax collectors, such as certifying that property taxes have been paid or filing liens against properties when they are not.

“We recognize the difficulties faced by the school boards in periods of financial uncertainty,” Justice Thomas G. Saylor wrote for the court. “But it is beyond the boards’ power to transform the local tax collection system … \[because\] such a systemic change must come from the Legislature.”

Beardsley, a tax collector in Northeast, Erie County, said the Supreme Court decision will help tax collectors hang on to their work, but he said it’s unclear how it will affect school districts that do not employ elected local tax collectors.

Tax collectors who have opted out of collecting school taxes in their districts could now approach school boards and insist on reasonable compensation to begin doing the work, Beardsley said.

“It’s going to be up to the tax collectors how much they want that back,” he said.

Education experts said the decision leaves school districts without guidance on how to proceed. Bethlehem attorney John Freund, who serves as Pennridge’s solicitor, said the school boards could ask the court to reconsider, but a more likely option is to set a new compensation rate for the tax collectors and see how they respond.

The problem, Freund said, is that the Supreme Court’s decision says only that the rate must be reasonable but offers no guidance on how to determine what’s reasonable. Further complicating matters is the fact the tax collectors and school districts in the case disagree on what services they must provide.

A 2011 bill introduced by state Sen. Chuck McIlhinney, R-Bucks, proposed amending the law in part to specify what tax collectors must be paid for, but the bill never moved out of the Senate Education Committee.

Stuart Knade, an attorney for the Pennsylvania School Boards Association, said the high court’s decision highlights the archaic nature of Pennsylvania’s property tax system.

“It illustrates how much more efficiently this job could be done,” Knade said.

Although a 2008 law modernized collection of the state’s earned income tax by requiring municipalities and school districts to agree on a single collector for each county, efforts like McIlhinney’s to enact similar reform for property tax collection have failed to gain traction.

Beardsley said the tax collectors association has been able to defeat bills proposing tax collection reform largely on the strength of a 2011 report by the state Legislative Budget and Finance Committee. It found elected tax collectors are more cost-effective on a per-property basis than school districts that collect their own taxes.

State Rep. Bob Freeman, D-Northampton, the minority chairman of the House local government committee, said that reforming how property taxes are collected would require a careful analysis of the pros and cons of each approach.

While third-party tax administrators can often dramatically reduce the expense of collecting real estate taxes, they don’t offer the accessibility and personal service that elected tax collectors provide, Freeman said.

Vignone, of the Parkland School District, said that relationship among the school district, its taxpayers and tax collectors is valued. But it comes at a premium.

Parkland pays its three municipal tax collectors more than $90,000 in salaries and benefits to collect tax on nearly 38,000 properties. Bethlehem Area School District, by comparison, budgeted $43,000 when it began collecting its own property tax on nearly 39,000 properties this year, business administrator Stacy Gober said.

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