Home Rule Overview
Understanding Home Rule
The Home Rule Charter organizes municipality under its own "constitution".
The advantages with Home Rule are:
- Flexibility in defining structure, powers and functions of municipality
- Creating government that best meets the citizens' particular needs
- It shifts responsibility from state legislature (municipal code) to local citizens (charter)
- Flexibility on taxes
Both Clearfield and Lawrence have constraints that indicate future financial issues.
- Clearfield is near property tax rate maximum and has limited room to expand its tax base
- Lawrence is over property tax rate maximum but has room to grow tax base
- Uncertainty on Act 13 revenue
Action is needed before further financial problems start to develop.
State law determines how municipalities can raise revenue for services.
- Top two sources are property and earned income taxes (EIT)
- Rates for both sources are capped by state law
- Most municipalities (including Clearfield and Lawrence) are at EIT maximum
- Real estate tax millage increase generally offers only opportunity for revenue growth
Home Rule removes state tax caps and gives the ability to lower property taxes on all residents by adjusting EIT and other tax rates.
- Retirees with no wages see overall tax relief
- Tax reduction on commercial properties can spur economic development
- Wage-earning property owners pay smaller amount over time instead of larger lump sum
Example: Doubling EIT would reduce property taxes by more than half.
"Consolidation is necessary because both the township and the borough are spending more money than they’re taking in in taxes. If the spending continues, which financial analysis says it will, deficits will continue for the next several years. Consolidation is a way to reduce costs which will reduce the need for tax increases." Randy Lemmo, Insurance Business