The Act 1 Installment Payment Challenge

This should not come as much of a surprise to anyone, but Act 1 has problems. The latest problem to be discovered by many school districts appears to be a drafting error by the legislature, and it is causing some confusion about one of the lesser publicized parts of the law.

As many people know, Act 1 of the Special Session of 2006, requires public school districts in PA to propose a tax shift from property taxes to earned income or personal income taxes. The voters, at the May primary, will then make the ultimate decision of whether to approve of the tax shift that the districts are required to propose.

That Act also includes some lesser discussed provisions, however, including an apparently confusing section relating to the method by which property owners will pay their property taxes. Section 1502(a) provides for the payment of property taxes in installments, with the following language:

(a) General rule.–A board of school directors of a school district of the second, third or fourth class may adopt a resolution authorizing the collection and payment of school real property taxes in installments.

The language appears to indicate that the acceptance of installment payments is optional. But it only appears so, since Section 1502(b) says:

(b) Adoption of resolution.–No later than June 30, 2007, a board of school directors of a school district of the second, third or fourth class shall adopt a resolution which, for calendar year 2007 and each year thereafter, authorizes the collection and payment of school real property taxes, excluding any interim or delinquent school property taxes, in installments.

Now, I believe that the legislature intended Section 1502(b) to mean that those district electing, pursuant to subsection (a), to collect instalment taxes must do so by a resolution adopted by June 30. The plain language of the statute, however, includes no such limitation on subsection (b). Regardless of what the legislature meant, they said that all must collect installment taxes.

Until the apparent mistake is corrected, I must advise that the collection of installment taxes is not optional.

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