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Tax issue troubles Center and Monaca school boards
Legislation would allow new district to keep mercantile levy
Thursday, October 02, 2008

One important thing may have been forgotten in the early-September scramble to reassure the Center Area school board that it would not have to lose its mercantile taxes by merging with the Monaca School District.

"We were never approached about how we felt about it," Monaca board member Sherri Weber said.

And their feelings are not all that great, since saving the tax on Center Area merchants would mean imposing it on Monaca merchants.

"Most of them here are small merchants, and they're struggling," Ms. Weber said. "People have said they can just raise their prices a nickel to pay for this, but it's not that easy. I don't think it's fair."

Center Area has mercantile taxes, assessed on merchants' receipts. Monaca does not. Under state law, no new mercantile taxes can be approved. So as the law stands, the new school district would not be able to assess the tax.

A number of Center Area school board members balked at that, noting that the tax generates about $300,000 a year. A week before the state's Sept. 18 vote making the merger official, Center board members were pondering calling for a delay to get the mercantile tax question answered.

The delay ultimately did not happen, partly because state Rep. Vince Biancucci, a Center Democrat, was busy pulling out all the political stops to get legislation approved that would let the new district keep the tax.

The legislation, as proposed, would let a new entity created by a merger levy mercantile taxes if one of the merging entities had the tax.

The trouble is that if the legislation passes and the school board approves the mercantile tax, it will apply to Monaca businesses along with Center businesses, and that's not exactly welcome in Monaca.

"There's a concern," Monaca Mayor John Antoline said. "We don't want to impose a mercantile tax on Monaca businesses."

But Mr. Antoline said he's not that worried because the tax would have to be approved by the current Monaca school board, and "that's never going to happen."

That's actually not as simple a question as it sounds, though. The tax would actually be decided by the 18-member board that will exist when the two districts officially merge July 1.

Monaca board President Bill Temple said he was surprised that the issue arose.

"All along I thought the mercantile tax was going away," he said. The merger is expected to yield $1.5 million in annual cost savings, enough to make up for the lost tax revenue with room to spare.

But Mr. Temple said that given Center's adamant stance, he was in favor of setting up a commission including merchants and board members to seek a compromise.

One possibility, he said, would be exempting some set amount of a business' receipts from the tax. That would give small businesses, like those that predominate in Monaca, a break.

Mr. Biancucci, however, said such a solution would take a revision in the legislation, and that statewide legislation would not be likely to pass with an exception written in for two individual communities.

He noted that the legislation has potential significance that goes well beyond the new school district's borders. There are many school districts and municipalities that would like to be able to levy mercantile taxes but can't; this legislation would give them incentive to merge with entities that already have such taxes.

"If Pennsylvania is serious about moving in the direction of consolidation in local governments and school districts, then I think this is a first step," he said.

Mr. Biancucci said the legislation is getting strong bipartisan support, both from caucus leaders and from leaders of the education committee.

And bottom line, Mr. Temple said, the school board would have to approve the tax for it to happen.

"A lot of people have the impression that if this legislation passes the tax will be automatic," he said. "It's not."

He also noted that while Center businesses pay a 1 percent tax -- half a percent to the school district and a half to the municipality -- Monaca businesses would pay only the half-percent to the school district.

Still, Ms. Weber thinks that too much has been made of Center's concerns and not enough of Monaca's.

"Everyone's worried about Center, Center, Center," she said. "I just think this is being handed to Center. More attention is being paid to them and their worries than to us and our worries."

Brian David can be reached at bdavid@post-gazette.com or 412-722-0086.
First published on October 2, 2008 at 12:00 am
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