Solanco School District July 24 th 2001 A Hearing for Act 24 of 2001 Occupational Tax / Earned Income Tax Resolution & Referendum Questions

Introduction / Overview Why now, Why July 24 th ? Timelines; 11/6, 8/8, 8/6, Hearing, 3 weeks of Advertising Act 24 signed into law June 22, 2001 Board Action required to place Question on the Ballot…The Hearing Purpose Citizen Action required (ie. voting) to initiate any change, a simple majority

Two Tax Options In Question Both and either / or Earned Income Tax (EIT) Currently 1/2 of 1% to the District and ½ of 1% to the Township for a total of 1% (1% is the legislative cap) Successful referendum to eliminate the OAT will raise EIT to a total of 1.6% Occupational Assessment Tax (OAT) Based on two factors: (1) Job title classification out of the County Assessment office. (2) District millage Rate (1100 mills)

Occupation Tax Overview Utilized to offset reliance on Real Estate Tax millage ( approximately 1.7 mills or 22%) Occupation tax revenue is estimated at $2,361,805 or.60% Amount paid is based on individual job title and millage rate……not income (by statute) Typically paid in a lump sum with fall tax bills By design, taxes those who are working

Earned Income and Net Profits Tax Currently the 1.0% tax collected by employers via payroll deductions each pay….or remitted quarterly or annually by schedule C and F filers…if voters indicate they want to change, the rate will be 1.6% Amount of tax paid is based on Earned Income Paid at the same percentage rate by all By design, taxes those who are working.

If the voters say Yes…. Occupation tax would not be levied July 1, The district could not re-instate the occupation tax at a later date Any and all delinquents from prior levies are still due and collectible. The Earned Income Tax rate for Solanco residents would change July 1, 2002 to 1.6% April 15, 2003 first filing with split rate April 15, 2004, first filing with full rate

If the voters say No….. Occupational Assessment Tax and Earned Income systems would remain in place

Individual Pros and Cons to add additional EIT and eliminate the OAT Employer to withhold a little per pay (most) Taxes paid are based on Income (fairness issue) Some will pay less Some will pay more Make more, pay more Make less, pay less Quarterly filing for self-employed LCTCB April 15 th vs July 1 OAT bill Part-Time; Retirees

District Concerns / Issues Dramatic Cash Flow change Major changes from one system to another Initially, the District receives the same amount of money….individuals pay different amounts Communications with citizens and voters Employer cooperation LCTCB processes… If no Resolution…. If referendum passes…. If referendum fails….

Re-Cap and Summary Board Hearing July 24 th Board Resolution for August 6 th...File with the County Board of Elections August 8 th Voters decide November 6th