CRSD Tax Referendum

1. CRSD Tax Referendum Bob Reinhart, Business Administrator CRSD Bill Foster, School Director CRSD Region 1

2. Tax Referendum Question Do you favor eliminating the Occupation Tax by increasing the maximum rate of the Earned Income Tax from 1.00% to 1.17%, with the requirement that the increase be used to eliminate the Occupation Tax? • Result of Yes Vote Majority: • CRSD must eliminate the Occupation Tax forever starting 2014-15 • CRSD may set the Earned Income Tax in any future year • to at most 1.17% (0.67% going to CRSD)

4. CRSD Taxes to Residents • Real Estate Tax - $132MM in revenue • 28,000 tax bills, $70K cost to collect (0.06%) • Earned Income Tax (EIT) - $13.5 MM in revenue • Flat rate tax (1 tax bracket) on earned income (not retirement, not dividends, not capital gains) • City wage taxes are deducted (e.g. New York, Philadelphia) • $190K cost to collect (1.39% fee to Keystone Collections) • Occupation Tax - $4.5MM in revenue • $40 to $320 fee for each occupation (12 tax brackets) • 32,630 tax bills, $82K cost to collect (2%) • Per Capita Tax - $460K in revenue • $10 to each adult resident • 21,300 per capita only bills, $53K cost (25% cost per bill)

5. Occupation Tax EIT Differences Occupation Tax EIT • 1 tax bracket • CRSD can not increase max rate • CRSD can decrease • Paid annually based on income. Lost income reduces tax paid • 6% of budget in 1995-96 • 7% of budget in 2011-12 • Tax administered by Keystone • Cost of collection 1.39% of revenue • Processed separately • 12 brackets, 390 occupations • CRSD can increase yearly • CRSD can decrease • Paid annually – no refunds if become unemployed, retired • 4% of budget in 1995-96 • 2% of budget in 2011-12* • Tax administered by district • Cost of collection > 2% of revenue • Sent with Per Capita bills *Occupation tax was last increased in 1986. Consumer price index rose 50% from 1995 to 2012.

6. Example Impacts By Occupation CRSD Median Earned Income ~$30,000 and Mean ~ $70,000

7. How would change impact your taxes? http://taxcalc.crsd.org/

8. Three Ways to Deal With Occupation and Per Capita Taxes • Do nothing • Continue complex taxes with high overhead • Transfer over time of Occupation Tax to real estate taxes or CRSD increases Occupation Tax assessments • Board eliminates these taxes without voter approval • % of budget that is real estate funded rises 3% • Voters direct CRSD to eliminate Occupation Tax and replace with at mosta 0.17% EIT increase • Simpler and cheaper tax to comply with and administer • Transfer of Occupation Tax to real estate is prevented • EIT rate CRSD share always <= 0.67% • Per Capita Tax will then also be eliminated by CRSD board to avoid very high costs of collection (>25%)

9. Results of Voter Approval(2012-2013 Estimates) Currently If Occupation Eliminated Households Receive 1 Bill Each Year 28,000 Tax Bills Per Year Occupation Tax Brackets: 0 EIT Tax Brackets: 1 (1.17%) EIT rate can not increase Revenue EIT: $17.7 MM Cost of Collection EIT: $261K Tax shift to real estate stopped • Households Receive Three Bills Each Year • 82,000 Tax Bills Per Year • Occupation Tax Brackets: 12 • EIT Tax Brackets: 1 (1.0%) • Occ tax can increase yearly • Revenue EIT + Occ + Per Cap : $18. 1MM • Cost of Collection EIT + Occ + Per Capita: >$413K • Tax shift to real estate ongoing

10. Questions?

11. School Districts 2011-12 Budgets