What is Act 1?

  • Understanding the Act 1 Index 

     What is Act 1?

     In June 2006, Governor Ed Rendell signed Special Section Act 1 of 2006, the Taxpayer Relief Act. This law, known as "Act 1", was designed to help Pennsylvania school districts reduce property taxes by shifting the tax burden and utilizing gaming revenue. The legislation was designed to give voters a say in the school district’s budgeting process.

     Act 1 is not optional. All districts are required to abide by its regulations, even if they choose not to accept revenue from state-controlled gambling provided through the act.

     What is the Act 1 index for next year?

     The Pennsylvania Department of Education has calculated the Act 1 index for the 2011-2012 fiscal year at 1.4%, the lowest in the history of the act. The Act 1 index limits the amount that school districts can raise real estate property taxes.

     What has the index cap been set at in the past?

     The index cap has been steadily decreasing over the last couple of years:

    -          in 2008-09, it was 4.4%

    -          in 2009-10, it was 4.1%

    -          in 2010-11, it is 2.9%

    -          in 2011-12, it will be 1.4%

    What does this mean for Southern Lehigh School District taxpayers?

     A total of 80% of the school district’s budget is received from local real estate tax revenues. The Southern Lehigh School District Board of School Directors cannot raise real estate taxes for the 2011-2012 budget by more than 1.4%, regardless of increases to the district budget such as salaries, healthcare costs, pension costs, utilities, and maintenance. Therefore, the Act 1 index is critical to the entire district budget process.