HB 2889

Overview

This legislation amends Title 53 of the Pennsylvania Consolidated Statutes by establishing a new chapter, Chapter 87A, which imposes specific limitations on municipal real property tax rate increases. The bill applies to cities, boroughs, incorporated towns, and townships, explicitly excluding first-class and second-class cities, counties, and school districts.

The primary function of the act is to cap annual increases in the aggregate rate of real property taxation for municipal purposes. Under these new rules, a municipality cannot raise its tax rate by more than the lesser of four percent or the percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U) for the preceding calendar year. If the CPI-U shows a negative increase, the cap is set at zero percent.

Key Provisions

• Municipalities may only exceed the statutory tax rate cap with approval from a majority of electors voting on a referendum question.
• The governing body must adopt a resolution authorizing the referendum no later than 60 days before the election, which must occur immediately preceding the fiscal year in which the increase would take effect.
• Referendum questions must specify the proposed percentage increase and the resulting millage rate, accompanied by a nonlegal interpretive statement detailing the purposes of the additional revenue and the consequences of disapproval.
• For the first fiscal year following a countywide reassessment, the limitation is measured against the revenue-neutral rate rather than the pre-reassessment rate.
• The provisions limiting tax increases apply to taxes levied for fiscal years beginning on or after January 1, 2028.