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York County school districts' state-assigned tax caps are the highest they've been in a decade, reflecting increasing wages and a strong local economy.

Tax caps have not been this high in county districts since the 2010-11 school year, when 12 districts in the county had caps of 3.5% or higher, according to state data.

Adjusted indexes — which determine the maximum state-allowed tax increase — for all York County school districts are 3% or higher this year, compared with last year, when half were still between 2.6% and 2.9%.

Lower unemployment rates lead to more competitive wages, since companies are seeking the same workers, said South Western School District business manager Jeffrey Mummert.

"Essentially everyone who wants a job has a job," he said of the low national unemployment rate, which was 3.5% as of December.

Each year, the state Department of Education releases caps on the percentages local districts can raise property taxes — adjusted for each district based on its market value and personal income aid ratio.

The Taxpayer Relief Act, also known as Act 1, determines the maximum tax increase for each district without state-approved exceptions or voter referendum. 

Statewide, all districts have a base index of 2.6%, calculated by averaging the percent increases in the Pennsylvania statewide average weekly wage and the federal employment cost index for elementary/secondary schools.

This year, the districts with the highest adjusted indexes are York City at 4.2%, Dover Area at 3.6% and Northeastern and Red Lion Area at 3.5%.

Most districts fall in the middle of the pack with 3.4% or 3.3%, and the lowest are Southern York County, at 3.2%, York Suburban, at 3.1% and West Shore at 3%.

This year's high comes after two years of decreasing tax caps.

More: State caps on York County school district tax increases fall second year in a row

"The base index is up, which is why everybody’s other one’s up," said Susan Green, chief financial and operations officer for Southern York County School District.

That base is also the highest it's been in a decade, reaching 2.9% in 2010-11. Last year, the base index was 2.3%.

"It's all relative," Green said, noting that in 2006, the base index was 4% or more. "They’ve just been very low."

But Mummert said districts' adjusted indexes are a lot more complicated than a reflection of the base index.

"It's not a sedentary issue," he said. The adjusted index looks at a district's relative wealth, which depends on the relationship between market value and income aid ratio.

If market value is lower, the index will be lower — but it will be inflated with a higher income aid ratio, a measure of poverty levels in the districts.

"Our relative wealth went down this year," Mummert said, because of a higher income aid ratio — meaning the district has higher poverty levels than last year.

Most districts do not file for exceptions to increase taxes above the Act 1 index, but a higher maximum this year means property tax rates could increase significantly if districts raise to the maximum.

Districts typically raise taxes to their index to support substantial capital projects or long-term debt, but most York County districts last year opted for smaller tax increases.

More: What changed in final York County 2019-20 school district budgets?

Northern York County was one district that increased taxes to its Act 1 index of 2.9% last year. Central York and Spring Grove Area school districts had both proposed maximum increases but reduced them before their final budgets were passed.

Mummert said it's up to his board to ultimately decide if it would raise taxes to the index this year, but he said he always recommends they do to put them in the best financial position possible.

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