Published Friday, March 19, 1999 Monday, the board agreed to form an advisory committee to look into how it could replace property taxes lost through the so-called homestead exemption.
But first, the board has to know how much of a property tax shortfall it can expect if it agrees to grant homestead exemptions. Under a state law enacted last year, school boards can reduce property taxes for homesteads or farmsteads -- primary residences -- and levy income taxes instead.
"We need to look at it," Cedric Butchy, school board president, said Monday after a presentation on the tax exemption by Superintendent Dr. Lawrence R. Connelly.
However, "we don't have the numbers" for the school board to commit itself to put the issue to the voters, said school director Walter Darraugh.
Under the law, property owners may apply for a homestead exemption, or a discount in the property assessment for their primary residences, for school taxes only. When all the qualified applications are compiled, the discount would be equal to half of the median -- or middle -- assessment.
A school board can make up the shortfall of property tax revenue by asking voters to approve an increase in the earned income tax.
Mercer Area School District has 4,993 properties, generating $3 million to support a $10 million budget, Connelly said.
The board does not know how many property owners applied for homestead exemptions or how much the median assessment is, Connelly said.
When the county gives those numbers to the board, it can calculate how large a shortfall it would face if it participates in the program.
Property owners had until March 1 to apply for the exemption; about 3,000 Mercer County landowners applied. Whether they actually get the discount depends on their school board's decision.
Property owners must apply every year for the exemption and school boards must calculate each year what the revenue shortfall will be.
If the board adopts the exemption, school budgeting would have to change.
Budgets would have to be done two years in advance to put the income tax on the ballot the year before the budget takes effect, said Gloria J. McElroy, Mercer's business manager.
Darraugh wanted to know another statistic about the Mercer school district: how many senior citizens live there. "They are the force behind this," he said.
Because retirees do not earn income, they are not subject to income taxes. However, many retirees are homeowners and face rising property taxes while living on fixed incomes, he noted.
