LMSD Tax Injunction Stayed, Funds Placed in Escrow During Appeal

The ruling handed down by Montgomery County Court of Common Pleas Judge Joseph A. Smyth that placed an injunction on Lower Merion School District's 2016-2017 tax plan has been stayed, allowing the district to enact its 4.4 percent tax hike until the district's appeal process is complete, Main Line Media News reports.

Doug Young, the district's director of community relations, said the district filed its appeal on Aug. 31, just days after Smyth's Aug. 29 ruling. Young said he is not aware of a court handing down a ruling similar to Smyths.

According to Main Line Media News, during Monday's Education Committee and Supplemental Board meeting Lower Merion School District Solicitor Ken Roos said the injunction was stayed because the Lower Merion School District is a political subdivision of the state or a local government while the case is under appeal, meaning the district does not have to shift its tax raise to 2.4 percent as ordered by Smyth. The board has hired D. Alicia Hickok of the law firm Drinker Biddle to handle the district's appeal at $495 per hour.

Smyth ruled that the district's budget deficit projections used to justify tax hikes violated Act 1, also known as the Taxpayer Relief Act of 2006. The ruling placed an injunction the district, preventing it from enacting its 2016-2016 tax plan that would give residents a 4.4 percent tax increase. The board also approved a motion to place money in an escrow account that would include an estimate of any tax dollars between the 2.4 and4.4 percent tax hike.

Young said Smyth's ruling was met with "a lot of surprise" from organizations across the state.

The Pennsylvania Association of School Business Officials (PASBO) is calling the recent overturn of Lower Merion School District's 2016-2017 tax plan "erroneous," saying the court's action could set a precedent for districts across the state.

PASBO, in a press release, described district budgeting as "a complex process of prognostication and educated
guesswork" and contends the district did "nothing wrong or misleading."

"As a result of this uncertainty in the budgeting process, school districts often start on day one of a new fiscal year looking for opportunities to reduce expenditures to ensure that they do not overspend their budget should their estimates not come to fruition," the statement says. "School districts, like Lower Merion School District, that have reached the end of a fiscal year with a surplus, have not gamed the system as is insinuated in the decision."

Lower Merion residents' attorney Arthur Wolk, who said he took the case pro bono, said the district passed budgets projecting major deficits 2008-2009.

"In every fiscal year from 2008-09 through 2014-15, the School District passed a budget that projected multimillion-dollar deficits, yet year-end audits showed multimillion-dollar surpluses," Wolk said in a press release. "Including the recently enacted tax increase for 2016-17, since 2006 the School District has raised its taxes by a total of 53.3%. As a result the School District estimated that it has approximately $50 to $60 million in the bank."

At Monday's meeting, Board President Robin Vann Lynch said the board has "been extremely transparent throughout the budgeting process, in no way have we ever attempted to deceive you."

"In my view, the board today and previous boards have been responsible, ethical, sound and professional stewards of taxpayer funds," she said.

Philly.com reports that over 200 people showed up to Monday's meeting, with some defending the district, praising its responsible budgeting, and other crying foul, saying the district had been lying to taxpayers for years.