Towanda School Board eyeing gas royalty, lease money to help run local schools

BY JAMES LOEWENSTEIN (STAFF WRITER)
Published: February 17, 2010

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TOWANDA - The Towanda School Board is starting to consider taxing revenue from gas leases and gas royalty payments to help pay the expenses of running the public schools in the Towanda Area School District.

Currently, the school district cannot tax the revenue from those sources.

But under Act 1 of 2006, the Towanda School Board can vote to place a referendum on the fall 2011 ballot which would ask voters whether they wished to reduce the school property tax in exchange for the establishment of a so-called "personal income tax," according to Towanda school officials and Les Bear of Robert W. Baird & Co. of Exton, who serves as a financial adviser to the school district.

Among the types of income that are taxed under a personal income tax taxes is revenue from certain types of investments.

"My understanding is that gas lease payments would be taxed" under a personal income tax, Bear said.

Royalties from gas drilling are taxed as income, too, and so would also be presumably taxed under a personal income tax, a Towanda School Board member said.

"It really makes a lot of sense to look at it (establishing a personal income tax)," said Bear, who gave a presentation at Tuesday's Towanda School Board Meeting on Act 1 of 2006. "I think a number of school districts in your area may do the same thing (look at possibly establishing a personal income tax)."

The Towanda school board members discussed how much money local residents are receiving in royalty payments, including a rumor that a local resident had received $44,000 in one month alone in royalty payments.

While there had been concerns in the past that the school district would have no mechanism for collecting a personal income tax, Bear said that would not be a problem.

"We've figured out a way to do it," Bear said.

If the school district were going to pursue enacting a personal income tax, it would first need to establish a tax study commission that would look into the issue of changing the school district's tax structure, said Towanda School District Business Manager Doreen Secor.

The commission would then make a recommendation to the school board on whether to change the tax structure, and how to do it, she said.

The school board would then vote on whether to place a referendum on the ballot which would ask voters whether they wished to change the school district's tax structure in a particular way, she said.

Under Act 1 of 2006, a referendum could be placed on the ballot asking voters whether they wished to reduce the property tax in exchange for the establishment of a personal income tax, Bear said.

Bear said his firm, at a cost of $2,500, would prepare information for the tax study commission to use in coming up with its recommendation, including information on the demographics of the school district.

However, he cautioned that it would probably be difficult to get some of the information related to income related to gas drilling at this time, because the gas drilling industry is so new in the area.

Towanda School Board member Susan Portnoff enthusiastically endorsed the idea of setting up the tax study commission.

"We're doing it!" she said.

But school board Vice-president Pete Alesky said the board needs to make a decision in the coming months on whether to establish the tax study commission.

Secor said the tax study commission probably needs to be established this fall in order to get a referendum on the fall 2011 ballot.

After the meeting, Bear said he wanted to consult his records before saying for sure if gas royalty payments and gas lease payments would be taxed under the personal income tax.

James Loewenstein can be reached at (570) 265-1633; or e-mail: jloewenstein@thedailyreview.com.

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25 posted comments

Matt, I want my school board pursueing every possible avenue and looking at every potential source of income other than my property taxes.
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Scott,  02/19/10 11:43
Matt, I think you would find that the bulk of the property tax money that supports our schools comes from families who don't have children in the school system. That's why property taxes are such an unfair system for supporting schools. If you want the schools to be supported by the people who have children in the schools, sales taxes are the fairest way to do it.
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tax fairness,  02/19/10 11:24
This is where it starts people. First the school board taxes your royalties and lease money, then it will be the sanitation dept, department of corrections, local police and fire, parks dept......

Stop them now, enough is enough. Do not allow them to penalize those who have been successful with this new found gas investment. Christ! Some of these old farmers and landowners don't even have school aged children anymore.
I would suggest we spend some royalty and lease money to campaign against EVERY school board member that supports this initiative.

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Matt S.,  02/19/10 8:14
I get a real kick out of this.. Everyone screams change but when the rubber hits the road it will be the same old worn tires running everything.Why?? Because people talk a very good talk but when the time comes to be able to make the change they sit back and say someone else will do it!! It takes everyone to make change..and standing up for what you believe in helps a great deal also.. You can't come home from work and say i am to tired to vote or i don't feel like it.. YOU have to be the change!! this government has forgotten where it's roots are and taxation runs rampant!! Why?? Because no one will do anything about it! We will sit back and complain and say that suck's but in the end will just sit back and take it!! The wasteful spending and greed will NOT stop because you write to a newspaper.. Teachers are grossly out of control and they need to be woke up to the fact that the taxpayer can only take so much!! The time for complaining should be over and the time for action should be taken!! If you don't then do not complain when your taxes go even higher....
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FED UP,  02/19/10 5:53
Only thing I see and read throughout all of these 20 comments is "down with the school board" and/or "change spending not receiving money". I hope all these comments can get back to the school board, something/someone needs to change.
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amazed,  02/19/10 5:31
I live in a school district that is having the same problem. We have been watching very closely the spending our school has been doing also. We the taxpayers have been fighting our school board for the past year. Every school has a reserve fund that most people don't know about. A school district here was robbed thru the computer of 3 milion dollars. So we started looking to see what this schools reserve fund is. In our case that amount is much bigger. We also started cutting back on bus runs which resulted in getting rid of a couple busses and their drivers. Which was a savings of $45.000 dollars per driver. Thats not including the bus and maintenance. We have also started looking at class sizes. These teachers now a days don't know what it is to have 20 or even 25 children per class. In just our first grade there is 3 teachers, 1 class has 18 children, the other 2 classes have 16 and 12. We told this school board to reduce their teachers. Break up the class that has 12 children in it, put 5 in one and 7 in another making it 23 students per class. Thus getting rid of 1 teacher. Saving this district another $40,000 dollars. Between the 2 busses and a teacher there is a savings of atleast $130,000. The schools spending has gotten way out of hand. The people of Towanda need to start watching every dime that their school is spending. Start asking questions about their usage. Look into every bit of spending this school is doing. Including salaries of all staff, from kitchen aides to the superintendent. Put a freeze on ALL raises. Under the Freedom of Information Act, you have the right to know how much all your teachers and office staff are making. The school district has this information and you are intitled to know it. I am not saying that your educators aren't doing their jobs. But what I am saying is these teachers aren't doing the jobs they are being paid for. How many aides does this school have? Get rid of someof them. Make the teachers do the job they were hired for and if they can't then out the door they go. Also start watching bus driver salaries. We have 1 driver here that makes a thousand dollars a week. Way to much money for a small district! Start replacing the current school board if they don't want to do what the town wants. TAKE BACK YOUR SCHOOL! This is just some of the things we have done here. Start looking at tuitions. If there is a child going to your school that you know isn't paying tuition and should be let the school know. This is all monies that you can be saving. It might not seem to be much but in the long run it will be. Pennies make dollars. Start looking in every corner to get the money where it belongs! Times are tough all over. To make these people pay a tax on money the state and government has already taxed is crazy! If your going to do that then why not go one step more and charge a tax for each student that attends your school, rich or poor. If that sounds stupid then you better start looking at this PIT. It is just as stupid, the only thing that will result in is people putting their houses up for sale and moving out of the district! Just like it has happened here where I live! People moved out and no one is moving back in that has children. Wake up Towanda School Board, THIS IS NOT YOUR SCHOOL IT IS THE TAXPAYERS SCHOOL AND YOU CAN AND WILL BE REPLACED!
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former student of Towanda,  02/18/10 9:01
Congratulations to "Shame on most of you". You've hit the nail on the head. You are correct. You have stated what is really the way it is not just flapping your gums like most of the other comments here.
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Been there,  02/18/10 8:54
New billboard idea: Welcome to the "Endless Mountains Of Taxation" Enjoy ! Enjoy !
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Over the top,  02/18/10 4:48
I am simply amazed at many of the comments I read here. Obviously no responder has ever held a school board position. They spend their entire elected terms trying to figure out ways to cut costs and spending, reduce waste, buy in groups to receive price breaks, efficiently use energy, reduce redundant positions, and try to keep from raising taxes. As a result they never get a chance to work on ideas to improve education, and in truth, they are ill equipped to do so. So they leave that task to the education professionals. Those individuals are teachers who have come up through the ranks, gone back to college repeatedly, and worked to stay on the cutting edge of what works in education today. They are the administrators, and deservedly so. The pity is that these experts in the field of education are not allowed to do what they know to be best for education because they are constrained by the government. They can't educate because they have to produce test scores, which are a measure of test taking ability, but certainly don't have much to do with education. The government imposes unfunded mandates. That means they demand certain programs and outcomes, but they leave it up to the school districts to find ways to pay for them as the government will not contribute a cent to the programs they require. The government is many years behind the times with regard to education research. They don't care what's best for our students and our nation's future because they're wrapped up in trying to fulfill the requirements of "No Child Left Behind", which is based on false premises and is destined in the short term to fail in its goals, and fail America's future in the long term as a result. So if you have no idea what you're talking about, quit griping about the waste which isn't there, the teachers who can't teach, and the business managers who are truly marvels at what they do with the little they have to do it with. Remove your legislators and replace them with some people who understand education and are willing to invest in the future of education. And I don't mean invest money. Money is not the answer.
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shame on most of you,  02/17/10 7:21
Larry, I've never worked around any group as cheap as our school board. They squeeze every dime until it screams and cut everything non-educational to the bone. Since scores in all county schools are pretty good, I would suggest if your childs grades are poor that you increase homework time and perhaps your own involvement in the process. School boards have to pursue every possible revenue source because they know the taxpayers are maxed out and the state and federal governments continue to mandate increasingly expensive programs without funding them. If you have a funding stream to suggest I'm sure your local school board would love to hear of it. Every bit of waste was squeezed out years ago. We turn off every light when we leave the room and bring our own toilet paper from home because no human should be expected to use what the school buys.
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Robert class of 65,  02/17/10 5:47
Wait a minute here. Many of the wells in the county, which will number well into the thousands by the time the gas companies are done with us, sit on clean and green property. Not all of them, but many of them. Everyone please remember that the commissioners were kind enough to the early to lease landowners to delay the due date of the roll back taxes from clean and green until a well gets up and running and gas gets flowing into a pipeline. But there will be rollback taxes, representing lots of money. In addition the sites that the wells and compressor stations sit on will be taxed as industrial facilities. No one has said how much that will be yet. The school district will get the lion's share of the rollback tax and the additional tax on the newly appraised industrial facilities. Now, tell me again, why does the district need the PIT also?
If there is some kind of additional delay on the rollback tax for clean and green, or some kind of delay on the reassessment of the wells as industrial facilities, let's hear about it. But with all the wells there should be plenty of money for the school district to get, and on the same timing, too, with no tax study commission needed, and no referendum. Let's just make sure that what should happen does happen, clean and green properties do get charged their roll back, and the well sites and other facilities do get reassessed at whatever industrial value is correct. No need to double dip with a PIT, too.
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Clean and Green Landowner who remembers the should,  02/17/10 4:41
@tired of paying~
You are sooooo right!!
That is what Sam Rohrer si proposing when he is elected Governor! It puts more money in your pocket & the schools will still get their share. Check: "SamRohrer.org."
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Sylvia Ellis,  02/17/10 4:41
Time to fire them all and remove the unions! We need to take out schools back.
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Feedupantaxeout,  02/17/10 4:11
The school district spending is out of control. No one is ALLOWED to keep any wealth....it obviously MUST be turned over to those who spend like drunken sailors on a binge. That is basically how I have come to see government spending at all levels including in their schools. Talk about communism...everyone one has or earns or can make....and believe you me everyone's property taxes will be going sky high as they are re-assessed because there is gas below them....
must be turned over to the government....GREED, GREED, GREED. Lets make sure no one benefits but the government.
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Robin,  02/17/10 1:58
I have read about some insane ideas. But the idea of a PIT absolutely takes the cake. That idea is going nowhere. Anyone who thinks it is, is dreaming. Let's get some school board members who are able to cut expenses. That's what we need. And you can start by saving the $2500 Les Bear wants. Why should we line his company's pockets for this loser of a proposal!! This kind of thing is just absolutely nuts!
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Florence Stone,  02/17/10 1:25
"From each according to one's abilities, to each according to one's needs." Now where have I heard that before? Oh yes, now I remember; KARL MARX said that!
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Joe Doherty,  02/17/10 9:53
In your dreams! DO NOT give the Towanda School Board or Doreen Secor any more money! QUIT SPENDING!! The teachers are going to have to suck it up on their next contract too! If they don't like it, they should all be fired including Doreen Secor! These teacher's unions have killed education in this country! The money tree is gone!
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Concerned Citizen,  02/17/10 9:51
I'm no lawyer, but it doesn't sound legal. SueA. might like it - from those to whom much is given, etc.
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wage earner,  02/17/10 9:15
Just remember folks, a personal income tax (PIT) would be set-up similar to the PA state income tax. It wouldn't be just the gas lease and rental income that would be taxed. The PIT would also include taxing senior citizens' savings accounts and CDs (people that can least afford additional taxes). Just remember the big property tax "savings" projected from gambling revenues...how much of that money have we seen?
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grayhaired guy,  02/17/10 8:53
If they want to use a PIT system then get rid of the property tax all together and let everyone with income in the district pay a share, gas royalties or not. At the same time, the District needs to cut costs.
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fair share,  02/17/10 8:44
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