Murrysville officials battle misperceptions about earned-income tax discussion

Murrysville officials are fighting a battle of perception — or in many cases, they say, misperception — regarding consideration of raising their share of the earned-income tax, a 1% levy split between the municipality and the Franklin Regional School District.

The first misperception is that the school district and municipality are somehow connected. Chief Administrator Jim Morrison and Council President Dayne Dice said they have fielded several calls from residents who assumed they were the same entity.

“This (potential) increase is not something the school district can take advantage of,” Morrison said. “If this occurs, none of these funds go to the school district.”

In fact, according to school Superintendent Gennaro Piraino, if the school district wanted to boost its share of the earned-income tax, it would have to do so through a voter referendum, per state law.

The second misperception, Councilman Mac McKenna said, is that raising the earned-income tax is a response to financial setbacks during the covid-19 pandemic.

“We’re not looking at plugging a hole from having a tough year last year,” he said. “We’re looking 10, 20 years down the road at having a prosperous community.”

Morrison has also looked into an issue raised by resident and primary council candidate Brad Funari at a public hearing held March 3 — that Murrysville is slated to receive nearly $2 million as part of the latest federal stimulus package.

While that is true, Morrison said the money “is not free. It comes with limitations. They’ll tell us how we can spend it.”

Morrison said the general guidelines include:

• Responding to a public health emergency;

• Responding to aid workers performing essential work during a public health emergency;

• Providing for government services to the extent of the reduction in revenue to local government.

“So if we had a deficiency of revenue last year, we can use these funds to make that up,” Morrison said.

None of those uses cover the rising cost of the type of capital and equipment expenditures Morrison said led to the discussion about raising earned-income tax. The proposed ordinance, if passed, would empower council to raise the local share of the earned income tax by up to 0.5%.

Council voted March 17 to advertise the ordinance and will likely vote on it in April.

If it is approved, the ordinance also requires the municipality to request a declaratory judgment from the courts, to validate that it is following the correct procedures as outlined in its home-rule charter.

Solicitor George Kotjarapoglus said the town’s status as a home-rule municipality allows it to set the rate of taxation without a referendum.

“I don’t believe the county election board would put it on the ballot for a vote because it’s an advisory decision, and they don’t do advisory decisions,” he said.

Last week, Morrison explained that the need for more revenue has been seen for years.

“Beginning in 2018, we’ve been forecasting a need for a tax increase to occur in the 2022-23 year,” he said. “It’s proposing a fundamental shift in the burden for payment of municipal services by the residents of the community from a property based tax — which can be regressive at times — to an income based tax.”

In contrast, Morrison said, a tax on earned income is more progressive, “and you only pay on what you earn,” he said. “If you aren’t working, you don’t pay it.”

Increasing the amount of income taxed by 0.1% would bring in an additional $800,000 to Murrysville, Dice said. To generate that same amount through propert taxes would require council to increase the tax rate by 2.5 mills.