BETHLEHEM AREA SCHOOL DISTRICT OCTOBER 11, 2006

2006 TAX STUDY COMMISSION

The first meeting of the Bethlehem Area School District Tax Study Commission was held on Wednesday, October 11, 2006, beginning at 6:10 p.m. at the Education Center, 1516 Sycamore Street, Bethlehem, Pennsylvania.

FIRST MEETING

Stanley J. Majewski, Jr., opened the meeting and called the roll: Members present: James Disario, Lynn Glancy, Donald Hoffman, Robert Pfenning, and Camilla Stemrich - 5. Members absent: Donald Doland and Director Charlene Koch - 2.

MEMBERS PRESENT

Others present: Dr. Joseph A. Lewis, Bethlehem Area School District Superintendent; Stanley J. Majewski, Jr., Bethlehem Area School District Assistant to the Superintendent for Finance and Administration; Jeffrey T. Tucker, Bethlehem Area School District Solicitor, and interested citizens.	OTHERS PRESENT
At this point in the meeting, the Pledge of Allegiance was recited.	PLEDGE OF ALLEGIANCE

Mr. Majewski requested that the audience observe a moment of silent meditation.

SILENT MEDITATION

Mr. Majewski announced that members and others present would introduce themselves. Mr. Stanley J. Majewski, Jr., stated that he has the position of the assistant to the superintendent for finance and administration and is also board secretary. Mr. Donald Hoffman stated that he works for the Bethlehem Police Department as a sergeant and is supervisor of half of the community services division. He supervises the DARE officers and the school resource officers. He is president of the board of trustees for Lehigh Valley Academy Regional Charter School. He commented that it is nice to be able to do something to benefit the school district. Mr. Lynn Glancy stated he is executive director of operations for the Springfield School District which is also going through this process. He does operations as well as finance for the district. He was a Bethlehem Area School District board member for 12 years. Mrs. Camilla Stemrich said she is a 10-year resident of Bethlehem. She has three stepchildren who are Bethlehem Area School District graduates. She works as a telecommunications specialist for Comcast. Mr. Robert Pfenning stated he has been in Bethlehem since 1969. He is a retired accountant and has also worked for Lehigh University teaching and in the computing center. He has gotten concerned about some of the things going on in the state such as Act 71 and Act 72. The commission is a natural extension of that. Mr. James Disario said he is retired from Bethlehem Steel for a number of years. He worked in marketing and, for a period of time, in the plant. He has lived here for over four years. He has two children who went through Bethlehem’s school system. He is interested in our community, the school system, and our taxes. Mr. Majewski stated that two other important people are attending this commission meeting. He introduced Dr. Lewis. Dr. Lewis stated he is superintendent of schools. He and the solicitor will not be participating in the tax study commission, but will be present to aid the commission informationally. He extended his thanks. This is a required commission, by law. Many districts were unable to fill the seats, not having interested community people. Mr. Jeffrey Tucker explained that his law firm is solicitor to the school district. He has been asked to attend, at least the first meeting. The solicitor is not part of the commission but is a resource to it.

INTRODUC-TIONS

Mr. Majewski offered courtesy of the floor to visitors. The following persons addressed the Tax Study Commission: 1. Bill Scheirer, 1890 Eaton Avenue, Bethlehem, said he noticed that a customary provision is missing from the bylaws presented in the meeting agenda. Usually at the end of bylaws it says that in all other matters Roberts Rules of Order will prevail.

COURTESY OF THE FLOOR TO VISITORS

Dr. Lewis commented to the commission that two board members, Vice President Diane Rowe and Director Judy Dexter, are present, strictly as observers. He also suggested that Mr. McKeon introduce himself.

Mr. Gene McKeon stated that he was an applicant for the commission and is an interested supporter.

Mr. Majewski introduced the topic of electing a chairperson. Mr. Pfenning volunteered for the position. There were no other nominees.

CHAIRPERSON

The question was called on the election of Robert Pfenning as chairperson and roll call was as follows: Yea, Mr. Disario, Mr. Glancy, Mr. Hoffman, Mr. Pfenning, and Mrs. Stemrich - 5. Motion passed 5 - 0.

ROLL CALL ELECT R. PFENNING AS CHAIRPERSON

Mr. Majewski congratulated Mr. Pfenning. Mr. Pfenning presided over the remainder of the meeting.

Mr. Pfenning announced that the next item of business is the adoption of a charter as distributed to the commission members. Mr. Disario had a question regarding the timing. The charter says the Commission is to complete its recommendation within 90 days of their appointment, which he believes was September 25. On the following page it says the Commission is to report out on December 14. Mr. Majewski explained that the board had appointed seven members of the Commission initially at the special board meeting on September 11. Their commission was to take effect September 14. It was regrettable that one of the members had to withdraw her name. Mr. Disario was then recommended for that position and retroactively appointed. The Commission has been in place effective September 14 and will have 90 days to take action, until December 13. The Commission will be in existence either until December 13 or until a recommendation is made to the Board of School Directors.

CHARTER

Mrs. Stemrich made a motion to adopt the charter as presented. Mr. Hoffman seconded the motion. The question was called and roll call was as follows: Yea, Mr. Disario, Mr. Glancy, Mr. Hoffman, Mr. Pfenning, and Mrs. Stemrich - 5. Motion passed 5 - 0.

ROLL CALL ADOPT CHARTER

Mr. Pfenning asked if anyone had comments or amendments as proposed by Mr. Scheirer of having the Robert’s Rules of Order Newly Revised be the final arbiter of instances not covered otherwise. Mr. Tucker said that under the law that created the Commission, the legislature gave absolutely no guidance upon how these meetings are to be run. It only required that the Commission hold one public hearing and that a recommendation be made no later than December 13. There is a strong suggestion that the Commission is subject to the Sunshine Law, so it must be advertised like any other governmental meeting. Having said that, the Commission is free to have whatever rules, if any, it wishes to have. If the Commission wants to have Robert’s Rules, that is fine. There are succeeding editions of Robert’s Rules. He suggested that if members have never seen Robert’s Rules, he doesn’t know that they would want to get into trying to follow every aspect of it. He cautioned that, if the Commission adopts Robert’s Rules of Order, it should know what it is adopting. It is incredibly detailed in terms of procedures. He suggested that the Commission’s function is a lot simpler than that and is better served by focusing on its task than worrying about parliamentary procedures. In the end there is only one act the Commission must take. That is the recommendation to be made to the school board. Mr. Tucker said he is not sure the Commission really wants to impose Robert’s Rules of Order on itself. Mr. Glancy moved that the Commission adopt the bylaws as presented. Mrs. Stemrich seconded the motion. Mr. Tucker explained that the Bylaws and the Charter were prepared by his office which they borrowed from other sources. Again, Act One does not require any of this. As a governmental body, Mr. Tucker believes the Commission should have some procedures. The school board is not required to have a motion by the School Code or to follow any parliamentary procedures. All they need to do is vote on their actions. The Commission doesn’t have to have bylaws, but it has been suggested, mainly through PSBA and attorneys who do this a lot, to have some orderly process.

BYLAWS

Dr. Lewis announced that

FEDERAL PROGRAMS UPDATE

The question of adopting the Bylaws was called and roll call was as follows: Yea, Mr. Disario, Mr. Glancy, Mr. Hoffman, Mr. Pfenning, and Mrs. Stemrich - 5. Motion passed 5 - 0.

ROLL CALL ADOPT BYLAWS

Mrs. Stemrich made a motion to adopt the Operating Procedures as presented. Mr. Hoffman seconded the motion. The question was called and roll call was as follows: Yea, Mr. Disario, Mr. Glancy, Mr. Hoffman, Mr. Pfenning, and Mrs. Stemrich - 5. Motion passed 5 - 0.

ROLL CALL ADOPT OPERATING PROCEDURES

Mr. Pfenning asked for nominations and/or volunteers for the position of vice chairperson. Mr. Disario nominated Camilla Stemrich for vice chairperson of the Commission. The question was called and roll call was as follows: Yea, Mr. Disario, Mr. Glancy, Mr. Hoffman, Mr. Pfenning, and Mrs. Stemrich - 5. Motion passed 5 - 0. Mr. Pfenning remarked that according to what the Commission has adopted the secretary need not be a member of the Commission. Mr. Majewski stated that is his understanding. Mr. Pfenning asked if school district administration is willing to supply a secretary, assuming the Commission does not wish to elect one. Mr. Majewski stated that he will be glad to perform that function. Mr. Pfenning asked for nominations for the position of secretary. None were offered. Mrs. Stemrich made a motion to elect the assistant to the superintendent for finance and administration to the position of secretary to the Tax Study Commission. Mr. Glancy seconded the motion. The question was called and roll call was as follows: Yea, Mr. Disario, Mr. Glancy, Mr. Hoffman, Mr. Pfenning, and Mrs. Stemrich - 5. Motion passed 5 - 0.

ELECTION OF OFFICERS C. STEMRICH, VICE CHAIR S. MAJEWSKI, SECRETARY

Dr. Lewis stated that he wanted to share with the Commission that Act 1 is a complex act that has been oversimplified by many in the media with its intent to take a look at how a redistribution of tax impact might occur should a school district via its board of school directors choose to shift a certain amount of revenue from its property tax assessment on its population to either an earned income or a personal income tax. Act 1 does not create any new money. It does provide for a distribution of a portion of gaming revenue, should that occur, explicitly for the purpose of offsetting property tax. There is some inherent assumption in the act that there would be some reduction of property tax minimally driven by the revenues the district might receive based on the revenues from gaming. There has also been much discussion in the field about this being a very perfunctory committee, that the legislature created this committee as a ruse, as an attempt to validate its efforts. Dr. Lewis stressed that he does not believe that to be so. He believes that this committee is charged with examining everything from revenue sources to potential revenues, from what a shift might look like, who would be impacted by a shift of taxes, if it would be more regressive or progressive in nature and, therefore, make a recommendation by mid December to the Board of School Directors. Within the act, it explicitly states that the Board of School Directors must act on the Commission’s recommendation. The board must either accept it or reject it. They may reject it and alter the content in terms of their next step. Their next step is that they must establish a front-end referendum that becomes mandatory in nature. As Mr. Tucker pointed out, there is a lot of ambiguity in the law. It does not specify how much of a shift must be suggested, if any shift must be suggested, or just a notion of a shift be presented in that referendum question. There are some issues surrounding what that question will look like. Dr. Lewis said that, hopefully, administration will be able to learn from the Commission, as well, as it continues the investigation into Act 1 and attends sessions on Act 1. Our solicitor has also been actively researching. The front-end referendum is required, in which case the public will vote on the question which is asked, which at this point is unclear. What is clear is that the district must have a referendum question on the ballot. Dr. Lewis stated that the administration is present to help the Commission, available to provide the Commission with any and all information. Mr. Majewski has been working very diligently on collecting all of the information relative to the revenue data that will assist the Commission. Dr. Lewis thanked the Commission members for giving their time. Mrs. Stemrich asked what will happen if voters say no. Dr. Lewis replied that nothing will happen. A district might say that it is fine with its current property tax situation and does not wish to alter it. Act 72 gave the district the option that the board could say yea or nay. There would be some property tax reduction anticipated from the gaming base which would just be a calculation. Mrs. Stemrich asked when that would start. Dr. Lewis replied that he can’t answer that. He can only say that they got slot machines in Wilkes Barre as of mid November. He has no idea what their expectation is. Mr. Disario asked Dr. Lewis if this is a “once and done” process or an annual event. Dr. Lewis stated that the Commission is “once and done.” He stated to Mr. Tucker that he believes the referendum can be called at any time. Mr. Tucker stated that he thinks the referendum is to be placed on the ballot in May at the time of the primary election. Dr. Lewis said that a new board can put another referendum out or the same board can put another referendum out. Mrs. Stemrich asked if that requires the front-end referendum to reference a certain percentage of both earned income tax (EIT) or personal income tax (PIT). Dr. Lewis replied that the shift in taxes requires a front-end referendum involving either EIT or PIT. You can’t assume that the board will agree with the Commission’s recommendation. It may approve something different for the referendum vote. Mrs. Stemrich questioned that the board still needs to do a front-end referendum if it raises property taxes above a certain percent. Dr. Lewis and Mr. Majewski both replied that that is a back-end referendum. Dr. Lewis stated that happens at the end of the budget process. This happened at the front end of the budget. He told her that she is correct that it is an index. If you are exceeding an index it is calculated on a host of economic factors from the state average minimum wage, the educational cost index. Now, our index stands at 4.1 percent. We will be ok if our history holds out. Mr. Pfenning said that in the letter from Zahorchak it states “School boards will be required to seek voter approval for future tax increases.” That is at the end, after the board imposes it. Then, the following year, as the board prepares the budget, if he understands it correctly. Dr. Lewis replied that it is this year. If the district goes above the index, it would be required to run a referendum question in May. Mr. Tucker explained that the referendum the Commission is dealing with is, “What is the source of revenue?” The other referendum is how the revenue is spent, the size of the budget. One is the revenue side. The other is the expense side, two referendums. Mrs. Stemich stated another issue she remembers of Act 72 was who was to collect the tax – the PIT or EIT. Dr. Lewis replied that the collector would be the district or the district’s delegated tax collector. Mr. Majewski added that the law requires a shift or a consideration of a shift from real estate taxes to income taxes and identifies earned income tax and personal income tax. At the next meeting he will go into more detail of the differences between the two. The option of a personal income tax shift is not available as yet. It requires the Department of Revenue to change some of their collection regulations. He knows that they have been drafted. They have not been acted upon. Until they have been acted upon, personal income tax assessment and collection by a local school district is not an option. He does not know when or if they will take action on some of those regulations. He will make the Commission aware of any changes within its 90-day process. Mr. Disario asked, since the personal income tax is not an option to use, if it is possible that the Commission might also make other recommendations that are not currently part of the law that might help the district’s funding situation. Mr. Majewski replied that the existence of the Commission and its purpose is to decide if there will be a shift from real estate taxes to an end income tax. Personal income tax is an option, just not one that can be implemented right now. Mr. Tucker stated that the law itself authorizes a school board to either adopt for the first time, if it doesn’t have it already, or to increase its earned income tax. If it already had an EIT, the district can go to PIT if the collection law is changed. The Commission’s job is to recommend to the board whether it adopt one of those taxes. They can have the power to increase the PIT for an EIT. It now gives them that authority. The Commission’s job is to tell the district if it thinks it should do one or the other or stand pat with the existing real estate taxes, earned income taxes, and other taxes that are currently used. That is the guidance that the law is looking for the Commission to give to the school board. Mr. Majewski told the Commission that the decision it is making, for the most part, if it recommends raising an income tax, it does not provide additional funding for the school district. It will be a shift to reduce dollar per dollar real estate taxes. Mr. Tucker stated that, to his knowledge, the Commission is a unique entity in the Commonwealth of Pennsylvania. To his knowledge, this has never existed before. The legislature created this Commission as new entity. The Commission is, in fact, part of the state government. It is a governmental body. Many districts have citizen committees, task forces. They are a creation of their school board. The Tax Study Commission is a creation of the legislature. The Commission is part of the legislature’s job, its constitutional duty to provide an education to the students of this state. Part of that duty is funding it. The legislature has created the Commission to deal with that part of that constitutional requirement that the legislature has. Although the Commission has a limited life, it has a very important function. In his view, the Commission members are fiduciaries. Government officials are fiduciaries of the governmental duties that they are from. That means that the members are not present as individuals on their own behalves, but as a group on behalf of the school district. All decisions should be driven by the Commission’s fiduciary duty which is to give guidance and recommendations to the school board on how to fund education in Bethlehem Area School District. The Commission functions as a body, has no power as individuals, has power as a body. The Commission is subject to the Sunshine Act because it is a governmental body, an agency of the state, just as the school district is an agency of the state. This is Act 1. The legislature dedicated less than one page to the Commission and how it should function. They did not give much thought as to how this operates. Unfortunately, Commission members may very well have questions because there already have been a number of questions asked across the commonwealth that there are no answers for because the legislation didn’t give them. In other situations the legislature has the luxury of amending laws and providing that guidance later. That guidance will not be forthcoming in less than 90 days. Some of the answers will evolve while going through this time period. Solicitors across the state are attending a conference today on one part of this. Mr. Tucker commented that, as Dr. Lewis already mentioned, there are two board members present and there may be others. It is not the Commission’s job to listen to them or what they want. It is the board’s job to listen to the Commission. A commission is a form of governmental body that is appointed by, in this case, the school board, not elected by the public. Mr. Tucker told the Commission members that they are public officials and have been given great responsibility with a special, unique status for the next several months. A number of school districts have had problems getting people to come forward to serve. He congratulated Commission members for volunteering. Mr. Pfenning stated that in procedures there is a comment about not making individual comments or assessment about the Commission’s activity. It may be good to review how to handle comments of personal observations. Mr. Tucker replied that members can speak individually but should remember that their power is as a body. If you want to speak officially, on behalf of the Commission, that must be a decision of the Commission. If a member speaks individually, he should make it clear that he is speaking on his own, so as not to have the public think that opinion is the opinion of the Commission. There is a general operating rule that the chairperson can, in fact, speak of his own volition but must remember that he is functioning in that role and not as an individual. Mrs. Stemrich stated she assumes that the Commission members are covered under the school district from a legal perspective and a liability perspective. Mr. Tucker stated that Commission members don’t get their protection from the district, but get protection by being a Commission. There is something called the political subdivision tort claims act which is a state law that says all government bodies are immune from lawsuit, basically. There are things they can be sued for. All members of those bodies and their employees, if any, are likewise immune from liability. In the very remote chance that it would happen, members of the Commission have immunity under state law, the same as the school district. Because the Commission is legally separate, the school district’s insurance policy would not apply. He also does not think the Commission needs it because if something would happen to somebody, physically in this room, that is the school district’s liability and not Commission members.’ Commission members are only responsible for the decisions it makes. If someone wants to sue because they think a member has done something wrong, this immunity will protect Commission members. Mr. Majewski stated that taxes are one of those topics that very few people are neutral about. There is no doubt that Commission members can anticipate having some neighbors or friends approaching about this issue because the Tax Study Commission, in this advisory role, is one of the very first steps of creating local public awareness of the impact of a shift in taxes to the community. Whatever decision is made or lack of a decision, there are winners and losers in varying degrees. If the Commission would recommend no change, those who believe the current system is equitable would be happy. Those who believe the current system of taxation is inequitable would not be. If the Commission decides to make a recommendation to shift to a higher earned income tax and lower real estate taxes, again, there are some clear winners and losers. The clear winners, when it comes to an increase in earned income tax, will be senior citizens since they, typically, do not pay earned income tax. Any reduction in the real estate taxes would all be savings to them. It was not the intent to have individuals in the community who are wealthy enough to be able to live off of their interest and dividends and own a home. They, too, would be a clear winner, because they would pay less in taxes. Some of the losers with a shift to earned income tax would be renters. If they have a job and are earning income and their income taxes go up, they would pay more tax but do not have real estate tax to offset. Somewhere in between there will be a break-even point. When income taxes are increased and real estate taxes are decreased, there is going to be a point where folks will break even. Below that, low-income folks will have savings. Those who are making above that level will be paying more in taxes. Personal income tax, if the district were able to move in that direction, is somewhat more complicated. Because personal income taxes include interest and dividends and other unearned income plus earned income, senior citizens may not benefit as much if they have interest and dividends. As the Commission goes through this process, it needs to keep in mind the decision it wants to recommend to the school board will be including some who will benefit and others who will not, even if the Commission decides to do nothing. There is a weight on the shoulders of the Commission. The Commission will consider the impact in the Bethlehem Area School District and its community of either staying with the same type of taxation system or shifting to another type of system. The other concern is the impact on the school district. A number of considerations will be presented to the Commission so that it can make a decision as to what it believes is in the best interests of this community and its citizens. Mr. Disario commented that they are trying to get the universe laid out. Maybe some of these questions are looking more forward than they should be at this time. The information packet was very well done and gave a very nice overview. He asked if he is correct in saying that the upper limit that this Commission can recommend on an earned income tax is one percent. Mr. Majewski said, potentially, that is correct. There are other factors that may influence that decision. Mr. Hoffman asked if there was a lower limit. Dr. Lewis said that it could be in increments of .1. We already levy .5, so it could be taken to .6, .8, .9, 10. You couldn’t take it to .75. It has to be increments of a tenth. Mr. Majewski stated that it is already at .5. There is a one percent earned income tax that is taken out of paychecks. That one percent is split between municipalities and the school district. Mr. Disario said that what is called the municipal income tax is actually a half a percent. Mr. Disario added that it is half a percent district, half a percent municipality. The district may levy the one percent tax. The municipality does not levy the tax. One or the other can have the tax or not at all. If a municipality opts not to have EIT, the full one percent comes to the district. That is pre Act 1. Dr. Lewis stated that Act 1 allows another .5 to go to the school district in the event that the city is still taking their .5. Some districts could legally go to 1.5 if the municipality is not collecting. We are not in that situation. The total tax could be 1.5 percent maximum with a .5 going to the municipality and 1.0 going to the school district. That is the way the law is written. Mr. Tucker said he sees it a little bit different. Mr. Majewski agreed. Mr. Tucker said that you can place a one percent on top of the .5 percent the district now receives. There is a one percent maximum. There can be a combined two percent EIT. Mr. Majewski said there has been discussion at the state level during which they say one percent but it has never been clearly defined. He believes that right now there is a preponderance of individuals believing it is one percent in addition to what taxpayers are paying now. Until it is challenged, until the court takes action to identify exactly what that one percent is intended to mean, the district will be subject to interpretation and need to act upon it in that manner. Mr. Majewski stated it is ambiguous and they have been saying it is ambiguous. Right now, most folks are leaning in the direction that it is an additional one percent. Mr. Tucker said that is what they are trying to sort out. He thinks the secretary put it well. If you move to increase EIT, that is the money that is used to reduce the real estate taxes dollar per dollar. The existing half percent that our district now collects stays as it is now and is not used to reduce real estate taxes. Even though it would be one tax in the end, it would be in two pieces. The piece the Commission is to deal with is how big that piece would be and that amount must reduce real estate taxes. Mr. Majewski commented that there are other factors that will probably create confusion in the future. It will all become clear by the time the Commission is done. Mr. Pfenning stated that prior to the next meeting’s presentation, he has some things on his mind that don’t need to be answered tonight, but Mr. Majewski could meld them in, when appropriate, to the presentation. One item missing from the fact sheet received by the Commission is the median assessed value of a residence in our district. Mr. Majewski stated the reason it was not included is because it is a part of a larger presentation of numbers that will flow into the median assessed value. Mr. Pfenning said that another thing that may or may not be germane in working numbers and looking to the future is the impact on the revenue stream, if any, of Act 4. Mr. Majewski stated that is not part of the discussion of the Tax Study Commission nor would it enter into any of his presentations. It is a completely separate consideration with the school board, not the Tax Study Commission. Mr. Pfenning questioned the impact of a reassessment by either one or both of the counties in which the district exists. Mr. Majewski said that is also not part of the discussion. Mr. Pfenning asked, since consideration is being given to benefiting senior citizens, if anything is going to be presented about the rebate program and the impact that has already been achieved in lowering certain property taxes for those people. Mr. Majewski replied that it will not be a consideration. Part of the presentation will be the potential gaming revenue and how that may impact the homestead/farmstead exemptions. Mr. Pfenning said that from what he has read, if the Commission decided to recommend a PIT, that would eliminate the .5 percent EIT currently collected. Would it remain? Mr. Majewski said he has not seen anything in Act 1 that would eliminate it. The current EIT assessment comes under Act 511. Nowhere in Act 1 is it seen that Act 511 would be rescinded. He believes the assessment of the PIT would be in addition to the EIT. Dr. Lewis stated he believes that the act calls for conversion of the EIT should the district be permitted to go to a PIT. In other words, it doesn’t go away, but both forms of tax will not be levied, as stated on page 14. The .5 percent would be converted and the PIT raised accordingly. Mr. Pfenning asked if he is correct that if the Commission recommends to the board and the board follows through and passes the referendum, the increased taxes will go only toward homestead exemptions. Mr. Majewski said that is correct; it will go only toward homestead/farmstead exemptions, except for two percent that can be retained. Dr. Lewis commented that it is an important point to make. If people do not apply, they do not receive the relief. It is not automatic. It retains the Act 72 homestead provision almost verbatim. Mr. Majewski said that is why the Tax Study Commission right now is the first public discussion about what is going to be accomplished. During Act 1 and Act 72 discussion, when the homestead/farmstead mailings were sent out as required, no one saw gambling revenue coming in for years. So, the response was rather poor. About 6,000 folks were approved of about 28,000 potential. The word needs to get out that this is not Act 72. This is not maybe you will see revenue in 2008-2009. If a shift occurs and they do not have their homestead applications in and approved, there are no savings for that household. Potentially, only an additional tax. Mr. Majewski commented that if the Tax Study Commission is wondering why it exists, it is because there needs to be public discussion, there needs to be a public presentation of information and an awareness acquired so that when those mailings begin to go out, shortly, individuals must respond. If they do not, they will not be able to take advantage of any shift. The more information that is out for the public, the better off all will be. If nothing is done and the tax structure stays the way it is now, there wouldn’t be any individuals who would lose out on an exemption. However, in May, if the front-end referendum voters adopt to shift to income taxes, then individuals who did not apply will lose. That information needs to get out to the public. This process will help. Mrs. Stemrich questioned that the last round of homestead applications are now irrelevant. Mr. Majewski said that is correct. Mr. Disario commented that he is not sure Dr. Lewis and Mr. Tucker will attend every meeting. He referred to page six of a handout stating that the Commission is to be evaluating if different forms of tax would provide for natural growth that would increase classroom resources without the need for an increase in tax rate. In other words, in looking forward, the Commission must anticipate how earned income tax would increase, how property values would be anticipated to increase. They may not increase at the same rate. The Commission must examine implications on insuring that the schools have sufficient revenue. That also might take a look at a forecast on budget. A logical question would be, “Where do we see our budgets going?” That is an annual process, but there are certain factors already built in since benefits and wages are the great preponderance of the budget. He asked if the Commission will see that as part of a presentation. Mr. Majewski replied that part of his presentation will be to try to go out five years in the future. His focus was going to be just on real estate and earned income taxes. If he can show the difference between collections under the current system and make assumptions that the maximum increase in real estate, the percentage tax of this year, will be the same over the next five years, because he doesn’t know what inflation will be, but he knows what the index is right now. He will assume there will be an increase and that will be it. He will compare that to a tax shift at different levels. The Commission can then see the total amount of revenue generated with those two taxes.	ACT 1 OVERVIEW
Mr. Pfenning raised the topic of future meeting dates. Mr. Tucker reminded the members that meetings must be advertised in the newspaper at least 24 hours in advance and the newspapers’ timelines for printing must also be followed. Mr. Majewski stated that because there will be so much information at the next meeting, he would like to make sure every Commission member can be present. The presentation will be fairly lengthy and detailed and extremely important in developing an opinion as to the recommendation. Several dates were suggested. None were agreeable to all members. Mr. Majewski suggested that he would send out a matrix of the next several weeks for members to choose dates they are available. When returned to him, he will confirm the desired dates, and then advertise. Mr. Pfenning stated they must try to schedule it within the next two to three weeks maximum.	FUTURE MEETING DATES
Mr. Pfenning requested that since the Commission has a very limited charge that the remarks made by the public try to remain as close as possible to the Commission’s task of reviewing the shift between real estate and income taxes. If the Commission decides to recommend a change, lots of somebody’s ox will get gored by that. He would like the Commission to get as much input from the various oxes before the Commission makes its decision. Getting public input to the Commission may make the board’s task of dealing with the Commission’s recommendation easier. Mr. Tucker commented that, as the Commission may know, the law requires that the Commission hold a public hearing. That public meeting really is the opportunity for the public although they will be able to speak at each meeting. He often sees some explanation from the Commission or its advisors to the public as to what the options are and then taking testimony from them that the Commission then takes into account. The Act 1 creates a task force at the state level and they have a public hearing. They tell them that their function is to solicit testimony from public and private agencies on the topic of costs to school districts, etc. That guidance was not given for the Tax Study Commission but the way hearings of that nature are generally run is that it is advertised as a public hearing with some explanation as to why they are attending, and the public speaks. Mr. Pfenning commented that, as he sees it, there will be a big presentation at the next meeting. Probably, at the meeting after that, the Commission should begin to see if there is any agreement among the members. Then, a public hearing is needed. Then, the final vote after the public hearing. That all must be done by December 13. The following person addressed the Commission. 1. Bill Scheirer, 1890 Eaton Avenue, Bethlehem, commented about per capita tax. It says that the Commission will study the existing taxes levied, assessed, and collected by the district and the effect, etc. He would recommend the abolition of the per capita tax. It is probably one of the best examples of what is called the nuisance tax. When his mother was still alive, she did the payroll for the Bethlehem Area School District. She worked for Jody McLernon. She recalled how Mr. McClernon used to say that he wished he could abolish that per capita tax. It costs five dollars to collect a ten-dollar tax. He guesses the idea for it is that renters don’t pay property taxes. But actually they do pay property taxes in their rent. If property taxes were to double, rents will go up to compensate for that. He cannot see any reason for keeping that tax. Mr. Scheirer stated that if the Commission recommends a shift from a property tax to either an earned income tax or a personal income tax, the renters, in the short run, will be losers. Even though the landlord will be paying lower property taxes, they won’t see a reduction in the rents. In the meantime, landlords will benefit at the expense of the renters. In the longer run, compensation will eliminate that and the renters will not be shortchanged. The bigger loses are the people who have earned income and income from assets as opposed to those who have the foresight to put their money into housing rather than go to Atlantic City or whatever. It can be argued that property tax is double taxation because when you earned the money you got taxed, put it into property and get taxed again. Mr. Pfenning stated that issue has occurred to him. He asked if the Commission can discuss, under the charter and Act 1, a recommendation to the school district to change other taxes. Mr. Tucker said that he guesses the Commission can make whatever recommendation it wants to the board. But it is not within the Commission’s purview to look at other taxes. Its purview is to look at shifting from real estate tax to income tax. As to the renters, actually their landlords will receive no benefit under the tax shifting. It is only on homeowners and farmstead. Commercial property does not get a tax reduction in this shift. The landlords won’t benefit. The renters may be paying income tax they did not have to pay before.	COURTESY OF THE FLOOR TO VISITORS
The meeting adjourned at 7:27 p.m.	ADJOURNMENT

Attest,

Stanley J. Majewski, Jr.

Tax Study Commission Secretary

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