Imagine a slightly-misshapen map of Crawford County that includes only the municipalities within the boundaries of the Conneaut, Crawford Central, Jamestown Area, PENNCREST and Titusville Area school districts.

That map, to be precise, would yield everything within the Bloomfield and Sparta township borders — including Spartansburg — to Erie County’s Union City and Corry Area school districts while spreading out to the south and east to annex Mercer County’s Greene and French Creek townships and Jamestown; Venango County’s Plum, Cherrytree, Oil Creek and Allegheny townships and Pleasantville; and Warren County’s Southwest Township.

For want of a better term, let’s call the whole thing the Crawford Tax Collection District.

Then imagine that each school district and municipality within the new district now collecting an earned income tax from its residents has until Sept. 15 to name a delegate and an alternate to serve on a Tax Collection Committee, a new government entity that will control and oversee earned income tax collection within the CTCD.

Imagine that the first meeting of the new committee must be called by Morris Waid, chairman of Crawford County Board of Commissioners, and must take place — with 50 percent of the total delegates represented — by Nov. 15. Note that once the initial meeting is called, the county will have no further role in the process.

Imagine that the committee has until April 15, 2010, to approve bylaws and until June 1, 2010, to appoint an independent three-person appeals board. Note that votes cast by members of the Tax Collection Committee will be weighted according to a calculation based 50 percent on EIT revenues and 50 percent on population.

Take a deep breath, sit down and continue to imagine that this committee will, by Sept. 15, 2010, have figured out how the new unified system will work and will have appointed a single tax collector to collect and distribute all earned income taxes generated within the district. With everything in place, then imagine that the committee will decide — no later than Nov. 1, 2010, whether the new tax collector will start out by collecting 2011 income taxes or wait until Jan. 1, 2012, the deadline for full implementation of Act 32 of 2008.

Here’s the reality check: It all has to happen. The process just described is law.

Area school districts and municipalities are now in the process of selecting committee delegates and alternates; all selections must be made by Sept. 15.

Historical perspective

Act 32 of 2008, which became law in July 2008, reduces the number of earned income tax collectors in Pennsylvania from the current 560 to 69.

The seeds of change were planted with the August 2004 publication of “Pennsylvania’s Earned Income Tax Collection System: An Analysis with Recommendations” by Pennsylvania’s Department of Community and Economic Development. According to a recent presentation by Pennsylvania Association of School Business Officials, the report noted that “A fragmented and dysfunctional local earned tax collection system causes the loss of over $100 million annually and increases the cost of doing business in Pennsylvania.” According to PASBO, a subsequent Pennsylvania Economy League study more than doubled the estimate of lost tax revenue to $237 million.

“The idea is to make it more friendly to the business community,” Shawn Sampson, business manager of Titusville Area School District and member of a statewide task force working to clarify implementation of the new legislation, said during a recent interview.

At the present time, earned income taxes are being collected by myriad collectors. In Crawford County for example, the City of Meadville collects earned income taxes for Crawford Central School District and the municipalities within its borders. PENNCREST School District’s Wage Tax Office collects the district’s earned income taxes as well as those of all the municipalities within its borders except Townville. Headquartered in Bangor, Pa., Berkheimer Tax Administrator Inc. collects earned income taxes for Titusville Area School District and all the municipalities within its borders while also collecting earned income taxes for several municipalities located within the Conneaut School District. Conneaut uses the collector selected by each municipality within its borders to collect its earned income taxes.

The basic idea behind Act 32 of 2008 is that each of Pennsylvania’s 67 counties will have all earned income taxes collected by a single collector. However, it isn’t quite that simple.

For starters, the legislation exempts the City of Philadelphia and specifies that Allegheny County will be divided into four separate tax collection districts. Those changes give the state a total of 69 collectors.

In addition, while the new system is generally set up along county lines, some county boundaries are being fundamentally redrawn. In Crawford County, for example, the only border surviving intact is along the Pennsylvania-Ohio state line.

The law specifies that multi-county school districts must be included in the county where the most school district residents reside — and municipalities must follow their school district. Of the seven school districts with residents residing within the Crawford County borders, only one, Conneaut, is completely contained within the county’s borders. Crawford Central and Jamestown extend into Mercer County; PENNCREST and Titusville extend into Venango County; and Titusville Area also extends into Warren County. Bloomfield Township will have its earned income taxes collected in Erie County with the rest of the residents of Union City Area School District. Sparta Township and Spartansburg residents will also have their earned income taxes collected in Erie with fellow residents of Corry Area School District.



Mary Spicer can be reached at 724-6370 or by e-mail at mspicer@meadvilletribune.com.