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Dallas reorganizes, gets $1.2M check

Switch from earned income tax to personal income tax advised, as is rate hike.

DALLAS TWP. – The Dallas School Board got a check for $1.2 million Monday. It also got a recommendation to switch from an earned income tax rate of 0.5 percent to a personal income tax rate – taxing dividend and interest income – of 1.2 percent. The change would result in roughly 7,500 homeowners paying $346 less in property taxes next year, and $576 less the year after, Business Manager Grant Palfey said.

Both bits of news came after a brief reorganization meeting that saw Maureen Matiska elected to a second year as board president and Bruce Goeringer appointed as vice president. Karen Kyle had to be prodded to accept the office of assistant to the board secretary. All three won on unanimous votes, including the first vote in about six months from Board Member Dennis Gochoel, who had been serving in Kuwait as an engineer in the Navy Reserve.

The $1.2 million is the district’s share of a $1.8 million total lawsuit settlement the board agreed to Nov. 6. The rest covers court costs and lawyer fees from the firm of Rosenn Jenkins & Greenwald in the suit against several firms and the architect involved in installing a geothermal system instead of a traditional gas and electric system at the middle school. The case centered on promised savings that the board contended were never materialized.

The tax study commission was required under the state law known as Act 1, which promises to use money from legalized gambling to lower property taxes. Part of that law also gives districts the chance to switch from an earned income tax to a personal income tax, and to raise the income tax to further lower property taxes beyond what the gambling money will provide, shifting some school taxes from property to income.

Commission Chairman John Aciukiewicz said the committee voted 6-3 for a personal income tax. “We believe it was the fairest and most equitable way to shift the tax burden.” The complex law limits how much property tax payments can be reduced by such tax shifting, and the 1.2 percent personal income tax rate comes close to that maximum.

Palfey said that, historically, the first year a district switches from earned to personal income tax, only about 60 percent of the money is actually collected while all taxpayers get used to the switch. The full amount isn’t collected until the second year. That’s why he estimated the property tax relief will be smaller the first year.

Residents must also apply for the tax relief, and Palfey said only about 5,500 of roughly 7,500 eligible homeowners have done so. If the remaining 2,000 don’t apply, more money would be available for those who did.

The board has until March to accept or reject the tax study commission’s recommendations, which must also get voter approval by referendum in the May Primary.

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