An Act amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act, in taxation by school districts, further providing for public referendum requirements for increasing certain taxes.

PRINTER'S NO. 1464
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1192
Session of
2026
INTRODUCED BY COLEMAN, PHILLIPS-HILL, VOGEL AND STEFANO,
FEBRUARY 27, 2026
REFERRED TO FINANCE, FEBRUARY 27, 2026
AN ACT
Amending the act of June 27, 2006 (1st Sp.Sess., P.L.1873,
No.1), entitled "An act providing for taxation by school
districts, for the State funds formula, for tax relief in
first class cities, for school district choice and voter
participation, for other school district options and for a
task force on school cost reduction; making an appropriation;
prohibiting prior authorized taxation; providing for
installment payment of taxes; restricting the power of
certain school districts to levy, assess and collect taxes;
and making related repeals," in taxation by school districts,
further providing for public referendum requirements for
increasing certain taxes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 333 of the act of June 27, 2006 (1st
Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act, is
amended to read:
Section 333. Public referendum requirements for increasing
[certain] taxes.
(a) Applicability.--The following provisions shall apply to
this section:
(1) For the [2006-2007] 2026-2027 fiscal year, the tax
increase proposed by any board of school directors shall [not
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exceed the index unless an exception under subsection (f) or
(n) is approved pursuant to subsection (j), provided that a
board of school directors that did not elect to participate
in the former act of July 5, 2004 (P.L.654, No.72), known as
the Homeowner Tax Relief Act, shall have the authority to
petition the court of common pleas for an additional tax rate
increase if the tax rate increase allowed by the index and
any exception approved pursuant to subsection (j) is
insufficient to balance the proposed budget. No later than
July 15, 2006, the court shall grant the school district's
request for the tax rate increase upon good cause shown if
the school district proves by clear and convincing evidence
that the tax rate increase authorized under this paragraph is
insufficient to balance the proposed budget. For a board of
school directors subject to this paragraph, the dates by
which the board of school directors, the department and the
court of common pleas shall be required to comply with
section 311 and subsections (e) and (j) shall be 92 days
after the dates set forth in those provisions, except that
the date by which the board of school directors shall be
required to comply with all of the provisions of section
311(c) shall be ten days prior to the date by which the board
of school directors is required to adopt a preliminary
budget. Any exceptions granted to a board of school directors
under section 333 of the former Homeowner Tax Relief Act
shall remain in full force and effect. Notwithstanding the
provisions of this paragraph, a board of school directors
that sought and was granted approval for one or more
exceptions under section 333 of the former Homeowner Tax
Relief Act may apply for any exception under subsections (f)
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(v) and (n), where the dollar amount of an exception approved
by the department under the former Homeowner Tax Relief Act
is less than the dollar amount of the exception for which the
school district is eligible under this act.] receive a vote
from the electorate of the school district in accordance with
subsection (c)(3).
(2) This section shall apply to each board of school
directors beginning with any proposed tax increase that takes
effect in the [2007-2008] 2026-2027 fiscal year and each
fiscal year thereafter.
(b) Prohibitions.--[Except as set forth in subsection (j),
unless] Unless there is compliance with subsection (c), a board
of school directors may not do any of the following:
[(1) Increase the rate of a tax levied for the support
of the public schools by more than the index. For purposes of
compliance with this paragraph, a school district which is
situated in more than one county and which levies real estate
taxes under section 672.1 of the act of March 10, 1949
(P.L.30, No.14), known as the Public School Code of 1949,
shall apply the index to each separate rate of real estate
taxes levied.]
(2) Levy a tax for the support of the public schools
which was not levied in the [2005-2006] 2025-2026 fiscal
year.
(3) Raise the rate of the earned income and net profits
tax if already imposed under the authority of the Local Tax
Enabling Act except as otherwise provided for under section
331.2 or 332.
(4) Notwithstanding any other provision of this chapter
to the contrary, the adoption of a referendum under section
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331.2 or 332 confers on the board of school directors the
authority to raise income taxes only to the extent contained
in the language of the referendum, and any future increase of
an income tax to be used for the purpose of property tax
reduction shall be submitted to the electors of the school
district at a subsequent municipal election pursuant to the
provisions of section 332.
(c) Referendum.--
(1) In order to take an action prohibited under
subsection (b)(1), at the election immediately preceding the
start of the school district fiscal year in which the
proposed tax increase would take effect, a referendum stating
the specific rate or rates of the tax increase must be
submitted to the electors of the school district, and a
majority of the electors voting on the question must approve
the increase.
(2) In order to take an action under subsection (b)(2),
at the election immediately preceding the start of the school
district fiscal year in which the proposed tax would take
effect, a referendum stating the proposed tax and the rate at
which it will be levied must be submitted to the electors of
the school district, and a majority of the electors voting on
the question must approve the tax.
(3) [Except as set forth in subsection (j), a] A school
district acting pursuant to this subsection shall submit the
referendum question required under this section to the
election officials of each county in which it is situate no
later than 60 days prior to the election immediately
preceding the fiscal year in which the tax increase would
take effect.
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(4) The election officials of each county shall, in
consultation with the board of school directors, draft a
nonlegal interpretative statement which shall accompany the
referendum question in accordance with section 201.1 of the
act of June 3, 1937 (P.L.1333, No.320), known as the
Pennsylvania Election Code. The nonlegal interpretative
statement shall include information that references the items
of expenditure for which the tax increase is sought and the
consequence of the referendum being disapproved by the
electorate.
(d) Failure to approve referendum.--
(1) If a referendum question submitted under subsection
(c)(1) is not approved, the board of school directors may not
approve an increase in the tax rate [of not more than the
index].
(2) If a referendum question submitted under subsection
(c)(2) is not approved, the board of school directors may not
levy the tax.
(3) If a referendum question submitted under subsection
(c)(3) is not approved, a school district may not impose the
proposed tax rate or rates.
[(e) Tax rate submissions.--A school district that has
adopted a preliminary budget proposal under section 311 that
includes an increase in the rate of any tax levied for the
support of public schools shall submit information on the
increase to the department on a uniform form prepared by the
department. The school district shall submit such information no
later than 85 days prior to the date of the election immediately
preceding the beginning of the school district's fiscal year.
The department shall compare the proposed percentage increase in
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the rate of any tax with the index. Within ten days of the
receipt of the information required under this subsection but no
later than 75 days prior to the date of the election immediately
preceding the beginning of the school district's fiscal year,
the department shall inform the school district whether the
proposed tax rate increase is less than or equal to the index.
If the department determines that the proposed percentage
increase in the rate of the tax exceeds the index, the
department shall notify the school district that:
(1) the proposed tax increase must be reduced to an
amount less than or equal to the index;
(2) the proposed tax increase must be approved by the
electorate under subsection (c)(1); or
(3) an exception must be sought under subsection (j).
(f) Referendum exceptions.--A school district may, without
seeking voter approval under subsection (c), increase the rate
of a tax levied for the support of the public schools by more
than the index if all of the following apply:
(1) The revenue raised by the allowable increase under
the index is insufficient to balance the proposed budget due
to one or more of the expenditures listed in paragraph (2).
(2) The revenue generated by increasing the rate of a
tax by more than the index will be used to pay for any of the
following:
(iii) Costs associated with the following:
(A) For a board of school directors that elected
to participate in the former act of July 5, 2004
(P.L.654, No.72), known as the Homeowner Tax Relief
Act, to pay interest and principal on any
indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.
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B (relating to indebtedness and borrowing) prior to
September 4, 2004. In no case may the school district
incur additional debt under this clause except for
the refinancing of existing debt, including the
payment of costs and expenses related to such
refinancing and the establishment of funding of
appropriate debt service reserves. An increase under
this clause shall be rescinded following the final
payment of interest and principal.
(A.1) For a board of school directors that did
not elect to participate in the former act of July 5,
2004 (P.L.654, No.72), known as the Homeowner Tax
Relief Act, to pay interest and principal on any
indebtedness incurred under 53 Pa.C.S. Pt. VII Subpt.
B prior to the effective date of this act. In no case
may the school district incur additional debt under
this clause except for the refinancing of existing
debt, including the payment of costs and expenses
related to such refinancing and the establishment of
funding of appropriate debt service reserves. An
increase under this clause shall be rescinded
following the final payment of interest and
principal.
(B) To pay interest and principal on any
electoral debt incurred under 53 Pa.C.S. Pt. VII
Subpt. B. An increase under this clause shall be
rescinded following the final payment of interest and
principal.
(E) For purposes of this subparagraph, electoral
debt includes the refunding or refinancing of
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electoral debt for which an exception is permitted
under clause (B) as long as the refunding or
refinancing incurs no additional debt other than for:
(I) costs and expenses related to the
refunding or refinancing; and
(II) funding of appropriate debt service
reserves.
(F) For purposes of this subparagraph,
indebtedness includes the refunding or refinancing of
indebtedness for which an exception is permitted
under clauses (A) and (A.1) as long as the refunding
or refinancing incurs no additional debt other than
for:
(I) costs and expenses related to the
refunding or refinancing; and
(II) funding of appropriate debt service
reserves.
(v) Costs incurred in providing special education
programs and services to students with disabilities if
the increase in expenditures on special education
programs and services, net of State special education
payments, was greater than the index. The dollar amount
of this exception shall be equal to the portion of the
increase that exceeds the index.
(g) Revenue derived from increase.--Any revenue derived from
an increase in the rate of any tax allowed pursuant to
subsection (f)(2)(iii) shall not exceed the anticipated dollar
amount of the expenditure.
(h) Limitation on tax rate.--The increase in the rate of any
tax allowed pursuant to an exception under subsection (f)(2)(v)
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or (n) shall not exceed the rate increase required as determined
by the department pursuant to subsection (j).
(j) Department approval.--
(1) A school district that seeks to increase the rate of
tax due to an expenditure under subsection (f)(2)(iii) or (v)
or (n) shall obtain the approval of the department before
imposing the tax increase. The department shall establish
procedures for administering the provisions of this
subsection, which may include an administrative hearing on
the school district's submission.
(2) A school district proceeding under the provisions of
this subsection shall publish in a newspaper of general
circulation and on the district's publicly accessible
Internet site, if one is maintained, notice of its intent to
seek department approval at least one week prior to
submitting its request for approval to the department. If the
department schedules a hearing on the school district's
request, the school district shall publish notice of the
hearing in a newspaper of general circulation and on the
district's publicly accessible Internet site, if one is
maintained, immediately upon receiving the information from
the department. The notice shall include the date, time and
place of the hearing.
(3) The department shall approve a school district's
request under this subsection if a review of the data under
paragraph (4) demonstrates that:
(i) the school district qualifies for one or more
exceptions under subsection (f)(2)(iii) or (v) or (n);
and
(ii) the sum of the dollar amounts of the exceptions
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for which the school district qualifies makes the school
district eligible under subsection (f)(1).
(4) For the purpose of determining the eligibility of a
school district for an exception under subsection (f)(2)(v),
the department shall utilize data from the most recent school
years for which annual financial report data required under
section 2553 of the Public School Code of 1949 has been
received. The department shall inform school districts of the
school years determined under this subsection no later than
30 days prior to the date on which public inspection of
proposed school budgets is required under section 311(c).
(5) (i) The department shall rule on the school
district's request and shall inform the school district
of its decision no later than 55 days prior to the date
of the election immediately preceding the beginning of
the school district's fiscal year.
(ii) If the department approves the request, the
department shall determine the dollar amount of the
expenditure for which the exception is sought and the tax
rate increase required to fund the exception.
(iii) If the department denies the request, the
school district may submit a referendum question under
subsection (c)(1). The question must be submitted to the
election officials no later than 50 days prior to the
date of the election immediately preceding the beginning
of the school district's fiscal year.
(6) Within 30 days of the deadline under paragraph (5)
(i), the department shall submit a report to the President
pro tempore of the Senate, the Minority Leader of the Senate,
the Speaker of the House of Representatives and the Minority
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Leader of the House of Representatives enumerating the school
districts which sought an exception under this subsection.
The department shall also publish the report on its publicly
accessible Internet site. The report shall include:
(i) The name of each school district making a
request under this subsection.
(ii) The specific exceptions requested by each
school district and the dollar amount of the expenditure
for each exception.
(iii) The department's ruling on the request for the
exception.
(iv) If the exception was approved, the dollar
amount of the expenditure for which the exception was
sought and the tax rate increase required to fund the
exception.
(v) A statistical summary of the information in
subparagraphs (ii), (iii) and (iv).
(l) Index calculation.--No later than August 15, 2005, and
each August 15 thereafter, the department shall calculate the
index. The department shall publish the index by September 1,
2005, and each September 1 thereafter in the Pennsylvania
Bulletin.]
(m) Election interference prohibited.--
(1) No public funds may be used to urge any elector to
vote for or against a referendum or be appropriated for
political or campaign purposes.
(2) This subsection shall not be construed to prohibit
the use of public funds for dissemination of factual
information relative to a referendum appearing on an election
ballot.
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(3) As used in this subsection, the term "public funds"
means any funds appropriated by the General Assembly or by a
political subdivision.
[(n) Treatment of certain required payments.--
(1) The provisions of subsections (f) and (j) shall
apply to a school district's share of payments to the Public
School Employees' Retirement System as required under 24
Pa.C.S. § 8327 (relating to payments by employers) if the
increase in estimated payments between the current year and
the upcoming year, as determined by the department under this
section, is greater than the index.
(2) For purposes of this subsection, the following
apply:
(i) The school district's share of payments as
required by 24 Pa.C.S. § 8327 for the current year shall
be determined by the department using:
(A) The lesser of the school district's total
compensation for the current year or the school
district's total compensation for the 2011-2012
school year.
(B) The employer contribution rate under 24
Pa.C.S. § 8328 (relating to actuarial cost method)
for the current year.
(C) A State retirement subsidy calculation based
on the school district's total compensation under
clause (A) and the employer contribution rate under
clause (B).
(ii) The school district's share of payments as
required by 24 Pa.C.S. § 8327 for the upcoming year shall
be determined by the department using all of the
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following:
(A) The lesser of the school district's:
(I) estimated total compensation for the
upcoming year; or
(II) total compensation for the 2011-2012
school year.
(B) The employer contribution rate under 24
Pa.C.S. § 8328 for the upcoming year.
(C) A State retirement subsidy calculation based
on the school district's total compensation under
clause (A) and the employer contribution rate under
clause (B).
(3) The dollar amount to which subsection (f) applies
shall be determined as follows:
(i) Multiply:
(A) the index; by
(B) the school district's share of payments for
the current year, as determined by the department
under this subsection.
(ii) Subtract:
(A) the product under subparagraph (i); from
(B) the amount of increase, as determined by the
department under this subsection, in the school
district's share of payments between:
(I) the current year; and
(II) the upcoming year.
(4) As used in this subsection, the term "compensation"
has the meaning ascribed in 24 Pa.C.S. § 8102 (relating to
definitions).
(o) Rescission.--
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(1) Any increase in a rate of a tax levied for support
of the public schools imposed prior to or during the 2011-
2012 school year under a referendum exception granted, prior
to the effective date of this subsection, under subsection
(f)(2)(i), (ii) or (iii)(C) and (D) shall be rescinded:
(i) immediately following fulfillment of the court
order or administrative order that was the basis for the
referendum exception;
(ii) immediately following the payment of costs to
resolve a condition which posed an immediate threat of
serious physical harm or injury to the students, staff or
residents of the school district that was the basis for
the referendum exception; or
(iii) following the final payment of interest and
principal related to the indebtedness.
(2) For the purposes of this subsection, the term "final
payment of interest and principal" does not include a school
district's payment of debt as a result of refunding or
refinancing the debt.]
Section 2. This act shall take effect in 60 days.
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