HARRISBURG - In a legal battle that could usurp the power of local officials to choose when, and by how much, to raise taxes, a state appellate court is expected to decide soon on a case pitting one of Pennsylvania's wealthiest school districts against some of its taxpayers.
Attorneys for the Lower Merion Area School District faced off in Commonwealth Court on Thursday with Arthur Alan Wolk, a lawyer from Gladwyne, who filed a class-action suit against the district earlier this year.
Wolk claimed, and a Montgomery County Court judge over the summer agreed, that the district misled taxpayers to justify raising taxes above a state-set cap.
The case is being watched closely by parents and taxpayer groups, as well as education officials, who see it as a potential litmus test for who should determine - school officials or the judiciary - how much money is needed to support public education at the local level.
"That would create chaos," Alicia Hickok, who represents Lower Merion school officials, said Thursday when asked about the statewide impact should the district lose the legal battle. "Every decision that a school district made would be subject to anybody going into court and trying to undo it."
Wolk sees that as a positive change.
"If they decide the case on its merits," he said of the panel of Commonwealth Court judges who heard legal arguments Thursday, "it will change the way school districts do budgeting."
Hickok said she expects the court will decide the matter soon, possibly within 60 days.
At the heart of the case is the Lower Merion district's decision to raise taxes by 4.4 percent for 2016-17 - or more than the state-set ceiling on such hikes - when it actually had millions of surplus dollars. The current school millage is 27.3963; for Wolk, who owns a property with an estimated market value of $2 million, that translates to a $30,000 annual tax bill, according to public records.
Pennsylvania places a cap on how much school districts can raise taxes without first getting voter approval. But school districts can circumvent such referendums by getting special approval from the state Department of Education, if they can show that they need the money for specific purposes, such as special education.
Lower Merion did receive approval from state education officials for its hike, as Hickok noted several times during legal arguments Thursday.
"This was a school board that had taken time . . . to do this right," Hickok told the judges. "The idea that they did something fraudulent is just a mistaken characterization."
After Wolk sued, Montgomery County Judge Joseph A. Smyth ruled over the summer that the district could increase taxes for 2016-17, but by no more than 2.4 percent.
He left open the question of whether residents should receive rebates or refunds on their school tax bills. But he said he would consider forming a trust to collect "improperly" accumulated past taxes - an estimated $1,400 per household - if it was determined that all Lower Merion taxpayers were plaintiffs.
After Smyth's ruling, the board said that should it stand, it could eliminate $4 million targeted for special education and retirement benefits in the coming year.