On a day when Northampton Area School Board members took an on-site tour of the Northampton Area Middle School and Secondary Campus Renovation Project, officials learned that legislation proposed in Harrisburg could jeopardize financing the $80.7-million construction project.

Pennsylvania Senate Bill 76, which would eliminate property taxes to fund school districts in the commonwealth, is touted as a gift to beleaguered property owners who face losing their homes to sheriff's sales each year when they can't afford to pay their property taxes.

In a letter reviewed at Monday night's school board meeting, state Sen. David G. Argall (R-29th) asked the NASD board to go on record in support of Bill 76, which is also being considered by the state House of Representatives. Argall is a sponsor of Senate Bill 76.

Following an approximately 30-minute discussion, NASD officials looked the gift horse in the mouth and indicated they're worried Bill 76 may turn out to be a Trojan horse.

"It's a big change for all of us if it [Bill 76] would take place," said school board President David Gogel.

"Everything that's in there [Bill 76], we can't agree with," Gogel said after Monday night's meeting.

"If it's approved as written I would work with the board and our financial adviser to see how we would address the Northampton Area Middle School project," Terry Leh, NASD business administrator, told The Press following the Oct. 14 meeting.

"I think it was prudent for the board to not respond to the letter without investigating the bill further," NASD Superintendent Joseph Kovalchik told The Press after Monday night's meeting.

In his letter, dated Oct. 1 and received Oct. 7 by NASD, Argall states 24 senators and 88 representatives are cosponsoring Bill 76. To ensure passage, 26 votes in the Senate and 102 votes in the House are needed.

"The Governor [Corbett] is also on the record for signing this legislation when it reaches his desk," states Argall's letter.

Earlier this month, the Bangor Area School Board passed a resolution in support of Bill 76. Argall's letter urges similar action by the NASD board.

"It's great to think about it, but I don't know how it's going to work," school board member Dr. Michael Baird said of Bill 76. "My concern is if the state is supplying all the money, they will take control."

Senate Bill 76 and House Bill 76, known as the Property Tax Independence Act, would eliminate the ability of school boards to levy taxes. The exception would be an optional Earned Income Tax (EIT) for major projects, subject to a no-exception taxpayer referendum.

To offset the elimination of property tax revenue and continue to provide revenue for school districts, Bill 76 would:

· Expand the sales and use tax to include more goods and services currently not taxed. Examples include landscaping, haircuts, sports and theater tickets, dry cleaning, laundry, candy, gum, newspapers, magazines, food items not on the Women Infants and Children (WIC) list and clothing items costing more than $50.

· Increase the sales tax from 6 percent to 7 percent.

· Increase the income tax from 3.07 percent to 4.34 percent.

· Redirect funds from the Property Tax Relief Fund, known as the Homestead Act.

There would be a two-year phase-in.

Baird and other board members questioned the reliability of the proposed Bill 76 school district funding sources.

Board member Jennifer Miller pointed out that consumers can get around paying sales tax by making purchases online.

"What do we do? Stop the [middle school] project?" Miller wondered. "We were just walking around the concrete [at the construction site]. What's troubling is if Harrisburg passes this, we could be stuck."

One official said the middle school project could resemble Stonehenge if it doesn't progress beyond the concrete block and cement stage that school board members viewed on their site tour before Monday night's meeting.

According to the Pennsylvania Coalition of Taxpayer Association, "The remaining portion of the property tax, typically about 10 percent of the total tax bill for most school districts, will be used to service current long-term debt."

A "snapshot" of school district long-term debt in Pennsylvania would "freeze" it as of Dec. 31, 2012.

"We only borrowed $12 million to that date," Leh said. "Under this provision, there is no way to fund the rest of the middle school project."

Leh said he has spoken with NASD financial consultant Jamie Doyle, director, PFM, about the potential impact of Bill 76.

"The problem being, we're $10 million-plus already incurred for the middle school project," Leh explained following Monday night's meeting.

Middle school project debt will increase by $20 million in 2012; $31 million in 2014; and $17 million in 2015, according to Leh.

The district has other debt obligations from renovation and expansion projects at Northampton Area High School, George Wolf Elementary School and Siegfried Elementary School.

"I have many concerns with House Bill 76," Kovalchik said in a brief interview after the Oct. 14 school board meeting.

"I believe something has to be done with property taxes," Kovalchik continued. "But if we're going to vote on a plan, we had better see a plan to understand the ramifications."