Jul 29, 2014
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Even With an EIT, Lots of Red Ink Looms in T/E

The T/E School District's Tax Study Group delivers the harsh reality and the pros and cons of an Earned Income Tax.

Even With an EIT, Lots of Red Ink Looms in T/E

Even if the T/E School Board approves a ballot referendum and the voters then approve a one percent Earned Income Tax, the District's financial outlook is anything but rosy... unless the roses are covered in red ink.

According to the T/E Tax Study Group report presented to the school board and the public Thursday, even with a EIT the district would most likely still be faced with a $23 million budget shortfall at the end of the 2016 school budget year.  According to the report, that $23 million deficit projection assumes that Easttown and Tredyffrin Townships supervisors would vote to take half of the revenue from any EIT that voters might approve for the school districts.

Yes, that is one thick sentence with a lot of "if's" and "then's".

Here's what it means:

•The Tax Study Group is not endorsing or opposing an EIT. Their job, as mentioned numerous times during the presentations on Thursday, was to look at the pros and cons of an EIT as a way to raise money for the T/E School District.

•The question now goes to the school board. Armed with the information in the Tax Study Group's report, the board can decide whether to put an EIT up for a public vote or not.

•If (and that may be a pretty big "if" at this juncture) the board decides to put an EIT up for a public vote, the question would be on the April 2012 primary ballot.

•If the public were to say "yes" to an EIT, the school board could then impose a one percent Earned Income Tax that would be applied to wages but would not be applied to interest, dividents, social security, trusts and the like.

•If the EIT were to get on the ballot and be approved by the voters, the boards of supervisors of Easttown and Tredyffrin Townships could then pass resolutions to take half the revenue generated by the new Earned Income Tax.  The Tax Study Group's report projections assume that the two townships would vote to take half of the money collected as they are entitled to under current Pennsylvania law.

Is your head spinning yet? Hopefully not.

But wait, there's more.....Enter Politics

The Tax Study Group members told the public that they tried to take a non-political approach to their work and their report.  The question of an EIT now is in the hands of politicians, on the T/E School Board and potentially the Easttown and Tredyffrin boards of supervisors. Many seats on all three bodies  are on the ballot in next Tuesday's general election.

Every candidate for the T/E School Board,both Republican and Democrat, has come out as "personally opposed" to an EIT.

After the 1 p.m. presentation Thursday at the T/E District Headquarters, TT Dems Leader Dariel Jamieson laid down the gauntlet for Republicans on the Tredyffrin Board of Supervisors, who could vote to take half the revenues from an EIT if it were put on the ballot and approved. "We challenge every Republican (on the Tredyffrin Board of Supervisors) to pledge they would not take it," she said.

Whether an EIT is ultimately imposed or not, whether Easttown and Tredyffrin's supervisors would vote to take half the revenues if an EIT was imposed or not, whether Tuesday's election shifts the balance of power on the school board or not, one thing does seem pretty certain. The T/E School District needs to find a way to close a budget deficit that looms - with or without an EIT.

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