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Tax collecting

Published April 19. 2010 05:00PM

The Carbon County Tax Collection Committee, which is composed of representatives from all 23 municipalities and five school districts in the county, is working on developing by-laws as directed by state law Act 32.

PA Act 32 restructures earned income tax collection throughout the state in order to consolidate and centralize EIT tax collection in the county, and then selects one vendor to perform the service for everyone in each county. What is supposed to be a joint effort has set the stage for a bitter disagreement between Penn Forest Township and Mahoning Township over the method of voting on committee business. More specifically should each taxing unit leverage the same weight across the board or should the votes be weighted based on population or some other relative measure?

"I'm not sure why I'm being singled out in this attack on whether we should use weighted voting or not," said Mahoning Township Chairman John Wieczorek. "I simply carried back the consensus of our board of supervisors to the committee when we debated this issue."

Wieczorek's words ring true in the sense that at the Feb. 22 meeting, he explained to Mahoning supervisors the choice between weighted and straight voting in the committee, pointing out that the weighted votes allocate 50 percent of the vote to the five school districts, which overlay collectively the 23 municipalities, while the municipalities retain 50 percent of the weighted vote.

An examination of the current draft of the committee's proposed by-laws shows that quorums would be established by a majority of the committee's delegates being present at a meeting. The by-laws also divide decisions into major decisions and other decisions. Major decisions require two-thirds vote to pass, while other decisions require a simple majority. The by-laws list major decisions falling under seven areas: amending the by-laws, forming joint collection committees, approving the sale or purchase of real estate, borrowing money, hiring a tax collector, creating a collection bureau or creating action committees.

The controversy begins

Upon discussion during that Mahoning supervisors meeting, all of the supervisors felt that a weighted vote was fairest in that it reflected the population sizes of the municipalities, and that was how they directed Wieczorek to vote.

In a series of e-mails between March 17 and March 19, the township supervisors received messages which were entered into the public record at the March 22 meeting, allegedly from Penn Forest Supervisor Alan S. Katz, who attended the tax collection committee meetings although the representative was Paul Montemuro, chairman of the Penn Forest Township supervisors. Montemuro confirmed after the Mahoning supervisors' meeting on March 22, it was Katz who sent the messages, although Montemuro had not read them. Montemuro attended the March 22 meeting in an attempt to sway supervisors over to supporting a straight vote.

Montemuro did not receive the best reception, as Katz's e-mails created a tense environment and instead of receiving support for his petition, the Mahoning board chastised him for allowing his supervisors to send inflammatory and in Wieczorek's words "abusive" letters to the township because of a disagreement in their positions. Wieczorek told Montemuro during the meeting that Mahoning Township will not tolerate such unprofessional behavior and it does not create an environment conducive to cooperation.

Penn Forest's view

After the Mahoning Township meeting, Montemuro explained his rationale for wanting a straight vote instead of a weighted vote.

"There were four townships in the (tax collection committee) meeting that voted 'no' on the by-laws solely because of the voting issue. They wanted equal votes for all," he said. "Mahoning Township didn't want equal voting, they wanted weighted voting."

Montemuro said by allowing the weighted voting it gives school districts 50 percent of the vote and with a minority of municipalities, he claimed it provides the power needed by school districts to increase the EIT rate by getting the tax collection committee to approve an increase. Then it would be put on the ballot as a referendum as the law allows.

He said the school districts basically have two ways of raising revenue, either through property taxes or through earned income taxes, but this tax collection committee gives the districts a new avenue for increasing their revenues.

His belief is if the school districts are weighted equally with the municipalities it provides a check that will keep a balance between the municipalities interests for its taxpayers and the school districts interests.

"I think the question that the residents of the Lehighton area including Mahoning Township should ask themselves is do they want their supervisors and councilmen to put the power in the hands of the school districts to control taxes or in the hands of the municipalities," Montemuro said.

"This isn't a control issue," Montemuro continued, "Penn Forest has the largest weighted vote among all of the municipalities. We are willing to give up that edge for an equal representation among the counties because we want to ensure the people maintain the power to control taxes and not the school districts with a minority of municipalities supporting them."

When asked about Katz' behavior and e-mail messages to the supervisors, Montemuro said he hadn't read them, but he knew Katz was upset with the supervisors.

"Mr. Katz was a little too aggressive with his e-mails," said Montemuro.

At the last Mahoning Township meeting, Wieczorek reported Katz's continued abuse of the e-mail list actually got him removed from it, and he is no longer able to use it to send messages to the county municipalities.

What is EIT?

The Earned Income Tax is the one percent deducted from the wages of all employees in the state of Pennsylvania with the exception of the cities in the commonwealth. The tax was set up that the revenues collected would be split 50/50 between the employee's home municipality and their home school district, however the taxes are levied by the municipality governing the employee's workplace. This set up the situation in which the majority of the state's wage earners have their taxes levied in municipalities other than where their residence is located in many cases.

This Act was established to prevent the revenue that is currently slipping through the cracks of noncollection by municipalities due to clerical errors or inadvertent negligence or lack of experience from continuing. Lawmakers believe that once collection is consolidated many of the taxing units in the state will see their revenues increase simply from a more systematic and thorough collection, distribution and accounting of these taxes.

The numbers

Montemuro is correct in that the school districts plus a minority of municipalities can achieve the 66 vote if needed to control the Tax Collection Committee, however Penn Forest Township is not the majority weighted vote holder. Upon examination of the worksheet sent by Katz which illustrates the weighted voting, Penn Forest is second to the Lehighton Borough with regard to weighted voting.

His concerns for the strength of the Lehighton area communities and the school district using weighted voting do have some merit. The Lehighton municipalities and school district, which comprise seven entities, collectively control 30.15 percent of the vote; Palmerton areas control 23.30 percent; Jim Thorpe areas control 20.01 percent; Panther Valley areas control 18.86 percent; and Weatherly 7.69 percent of the vote.

Based on those collective calculations it would still require a majority or more of the school districts and their representative municipalities to pass anything major. However, it does set up an interesting dynamic that actually gives lower Carbon County most of the control of the collection committee in that only Lehighton can create a majority with a minimum of two of the other area municipalities and districts. The others need to be totally united to stand up to the Lehighton bloc if it is cohesive when voting in this scheme.

This is where statistics can be misleading. While Montemuro is supporting a straight vote as being more fair collectively, and in a sense it creates a 23-to-5 tilt in favor of the municipalities. However, further analysis shows that unlike the weighted vote, which leans toward the Lehighton and Palmerton areas, a straight vote favors the Weatherly and Jim Thorpe areas. In fact, with straight voting, Lehighton and Weatherly blocs control 50 percent of all votes in the county, while PV and Palmerton control about 18 percent each, and Jim Thorpe controls 14 percent of all votes.

Even if the school districts stand against the municipalities on any issue, the communities collectively in each bloc ensure Lehighton and Weatherly blocs more control in a straight vote. In a weighted vote though, the school districts would need at least two or three blocs of communities to stand with them to get a 66 percent needed for major decisions.

The ballot issue

Montemuro also mentioned the school districts can use the tax collection committee to create an alternate way of raising revenue. The law does allow school districts to raise EIT taxes through a referendum, but from research that provision appears to have been in place before, although it was accepted by the majority of the commonwealth to be instituted at 1 percent.

Where there seems to be a breakdown in corroboration of the allegation, is the by-laws of the tax collection committee as well as all published documentation found on Act 32, state that currently the tax collection committee's job is strictly to establish a central collection unit for the county for EIT taxes for all eligible county taxing bodies. The by-laws cite in section 7 part c. the provision in public statute 53 states the tax collection committee has no authority to "change the rate or subject of any tax." Also, nowhere in the tax enabling act was found any language that authorized anyone other than a school district or municipality to change the EIT tax rates.

The laws found were pretty clear that the school district or any taxing subdivision would have to ask a direct simple question on a referendum about adjusting the EIT rate, as well as provide to the general public the amount of revenue it would raise and how it would be used. The tax collection committee seems to have no authority to insert itself into this decision other than to collect the tax at the rate specified by the municipalities and/or school districts.

A conflict over an idea?

Montemuro stands on his belief the straight vote is the proper way to fairly handle decisions on the committee, while Wieczorek does not understand how he became the focal point or face of the weighted vote perspective.

"I simply acted on the issue at the direction of the board of supervisors of Mahoning Township, so I don't understand why Mr. Katz is making me into the voice of this issue. I'm one of several who supported this idea. I respect their position(s), but you have to be willing to talk about it," said Wieczorek.

One criticism Wieczorek did make is that Katz had been repeatedly asked to provide supporting documentation regarding his claims about the tax collection committee being able to change tax rates, an issue Wieczorek says has never been discussed. Katz has not supplied any proof of his claims to the committee.

Last month, the Mahoning board voted 5-0 to send a letter to Penn Forest requesting that Katz be told to cease his unwarranted personal attacks on the township and its positions. It's unclear at this time when this matter will be resolved between these two municipalities.

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