York County school districts against statewide income tax collection

West York Area High School in West Manchester Township, Tuesday, Aug. 21, 2018. Dawn J. Sagert

School districts in York County are opposing a proposed statewide earned income tax collection, with some boards passing resolutions telling the Legislature to stick with the status quo.

The York Adams Tax Bureau (YATB) has been collecting the tax on behalf of school districts for six years, and some local officials argue it's working just fine.

"They’re the known — we know it works," said Brian Geller, Northeastern School District's director of operations. A statewide collection, though it might be beneficial, is unknown, he added.

House members unanimously adopted a resolution in March to study the benefits of having the state Department of Revenue collect all earned income taxes, with the idea that consolidation could reduce administration costs for districts.

State Rep. Seth Grove, R- Dover Township, said the state has a "convoluted tax structure," with taxes going to several different entities. A recent study released by independent tax policy nonprofit The Tax Foundation recommended statewide and local consolidation.

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History on its side: "York's a little unique," Grove said, in that it's had a consolidated EIT collection system for years. 

State Rep. Seth Grove, (R) sits with the York Dispatch editorial board for a discussion about taxes and the state budget. Tuesday, Dec. 6, 2016. Grove is leading a move to privatize the state liquor industry. John A. Pavoncello photo

Though the YATB does a very good job managing taxes for York County, state Rep. Stan Saylor, R-York Township, said some areas in the state do not have the same benefit, and he would like to see if there could be improvement elsewhere.

The study of statewide collection will look at how many employees would need to be hired, or what extra costs would be incurred, and determine if that method is more or less efficient and saves money, Grove said.

"An entity doing a one-stop shop does lower the cost of tax collection," he predicted, adding that with fewer administration costs, there will be more operational dollars available for districts.

"Do you want to pay administration for tax collection or do you want to get new books for your kids?" he said. 

Lack of efficiency: Local school districts are skeptical, however, of a move to a state-run system — not just because of cost, but because of overall efficiency.

Eight York County school boards have either approved or had on their agendas a resolution to oppose the change and express support for countywide collection — with only one district, Southern York County, failing to pass the motion 4-3. 

West York Area School Board President Todd Gettys said the preference is for the YATB to collect the tax because of the belief it is more efficient and there is more accountability.

Dover Area School District included in its Aug. 14 board agenda a letter from the bureau to the Revenue Department with a long list of concerns, including how much the state will charge for collections, whether there would be a timely distribution of revenue, how residency information would be maintained and what impact state budget shortfalls or impasses would have on the tax collection.

Dallastown Area School Board member Steven Bentzel, who noted the district did not have its own opposing resolution, referenced the same letter at a recent meeting, adding, "Having the state do it would be a huge mistake."

Jeffrey Mummert, business administrator for South Western School District, warned that districts could run into trouble if they rely on the state's timeline for delivering funds, saying that during a state budget impasse two years ago, the district did not receive any state funding until December.

But Grove said this is not an issue, clarifying that it would be similar to current collection of sales taxes by the Revenue Department for Philadelphia and Allegheny counties — EIT will be collected and remitted back to districts automatically and would not be affected by a budget impasse.

Countywide benefits: The tax committees also listed some benefits of countywide collection, such as access to local offices for questions, issues or filing assistance.

EIT revenue has increased 36.4 percent for York and Adams counties under the YATB from 2012-2017, with an increase of 7.14 percent from 2016-2017, according to the letter.

The Pennsylvania School Boards Association and the Pennsylvania Association of School Business Officials also oppose the House resolution, Mummert said.

"I would be hard-pressed to believe the state could do better," he said.

Completing the study does not necessarily mean something will be done, Saylor said, adding that it would be up to legislators to decide if they wanted to make a change.

But Grove said if the system does change, it will likely be a mandate for all districts, meaning none could opt out.

The Department of Revenue must report findings from the study by Dec. 31, according to the resolution.