HB 985 — An Act providing for an annual revenue-sharing program for municipalities relating to tax-exempt real property; establishing the Tax-exempt Property Municipal Assistance Fund; imposing powers and duties on the Department of Community and Economic Development; and making a repeal.

PRINTER'S NO.   1075

                   THE GENERAL ASSEMBLY OF PENNSYLVANIA



                       HOUSE BILL
                       No. 985
                                               Session of
                                                 2025

     INTRODUCED BY FREEMAN, MOUL, MADSEN, FLEMING, GIRAL, PROBST,
        HILL-EVANS, McNEILL, OTTEN, PIELLI, BRENNAN, KENYATTA, SMITH-
        WADE-EL, SANCHEZ, KHAN, DONAHUE, HARKINS, CIRESI,
        SCHLOSSBERG, DALEY, DEASY, GREEN, MADDEN, CEPEDA-FREYTIZ AND
        DAVIDSON, MARCH 20, 2025

     REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, MARCH 20, 2025


                                    AN ACT
 1   Providing for an annual revenue-sharing program for
 2      municipalities relating to tax-exempt real property;
 3      establishing the Tax-exempt Property Municipal Assistance
 4      Fund; imposing powers and duties on the Department of
 5      Community and Economic Development; and making a repeal.
 6      The General Assembly of the Commonwealth of Pennsylvania
 7   hereby enacts as follows:
 8   Section 1.   Short title.
 9      This act shall be known and may be cited as the Tax-exempt
10   Property Municipal Assistance Act.
11   Section 2.   Definitions.
12      The following words and phrases when used in this act shall
13   have the meanings given to them in this section unless the
14   context clearly indicates otherwise:
15      "Common level ratio."    The ratio of assessed value to current
16   market value used generally in the county as last determined by
17   the State Tax Equalization Board under the act of June 27, 1996
18   (P.L.403, No.58), known as the Community and Economic
 1   Development Enhancement Act.
 2      "Department."   The Department of Community and Economic
 3   Development of the Commonwealth.
 4      "Eligible municipality."    A municipality that imposes a tax
 5   on real property determined eligible under section 6(a).
 6      "Fund."   The Tax-exempt Property Municipal Assistance Fund
 7   established under section 4.
 8      "Liquor tax."   The tax imposed and assessed upon the net
 9   price of all liquors sold by the Pennsylvania Liquor Control
10   Board under the act of June 9, 1936 (1st Sp.Sess., P.L.13,
11   No.4), entitled "An act imposing an emergency State tax on
12   liquor, as herein defined, sold by the Pennsylvania Liquor
13   Control Board; providing for the collection and payment of such
14   tax; and imposing duties upon the Department of Revenue and the
15   Pennsylvania Liquor Control Board."
16      "Market value."    The value of property as calculated by the
17   State Tax Equalization Board on an annual basis utilizing the
18   common level ratio.
19      "Market value of tax-exempt property."     The quotient of the
20   base year market value of a property and the common level ratio
21   as calculated by the State Tax Equalization Board.
22      "Municipality."    Any of the following:
23          (1)   A city, borough, incorporated town or township.
24          (2)   A home rule municipality which is a city, borough,
25      incorporated town or township.
26      "Qualified tax-exempt property."    Real property that is
27   exempt from local real property taxes and owned by one of the
28   following:
29          (1)   The Federal Government or an instrumentality of the
30      Federal Government.

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 1             (2)   The Commonwealth or an instrumentality of the
 2      Commonwealth.
 3             (3)   A political subdivision, except real property owned
 4      by the municipality in which the property is located.
 5             (4)   An entity that has obtained the exemption from real
 6      property taxation under the authority granted to the General
 7      Assembly under section 2(a)(i), (ii), (iv) or (v) of Article
 8      VIII of the Constitution of Pennsylvania.
 9             (5)   A local authority.
10   Section 3.      Tax-exempt property compilation.
11      (a)    Compilation.--A county shall annually compile a list
12   identifying the market value of tax-exempt property within the
13   county.
14      (b)    Annual report.--Beginning in calendar year 2026, a
15   county assessment office shall submit to the department an
16   annual report providing the information required in subsection
17   (c) and any additional information required by the department to
18   administer this act. The report shall be filed by June 30, 2026,
19   and each June 30 thereafter.
20      (c)    Contents.--The report required under subsection (b)
21   shall be a compilation of all property located within the county
22   that is exempt from real property tax as of January 1 in the
23   year the report is required to be filed. The report shall
24   contain the following:
25             (1)   The owner of each tax-exempt property.
26             (2)   The location of the property, including mailing
27      address, name of the municipality where the property is
28      located and the uniform parcel identifier.
29             (3)   The assessed value of the property.
30             (4)   Payments in lieu of tax or other funding received

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 1      under a Federal or State program based on the tax-exempt
 2      status of the property. The amounts of the payments shall be
 3      reported by the municipality to the county assessment office.
 4      If the municipality fails to timely report the information to
 5      the county assessment office, the county is not required to
 6      include the information in the report, and the municipality
 7      shall report the information directly to the department.
 8            (5)   The millage rate for the tax on real property in
 9      effect in the municipality where the property is located as
10      of January 1 of the year in which the report is required to
11      be filed.
12            (6)   The assessed value of all property in each
13      municipality in the county.
14            (7)   The market value of all property in each
15      municipality in the county.
16      (d)   Failure to file reports.--A county that fails to provide
17   to the department the report required under this section by July
18   31 shall cause all municipalities within the county to forfeit
19   the right to share in the distribution of funding for the year
20   in which the information was required to be reported. A
21   municipality located within a county that has failed to provide
22   the department with the required report may petition the court
23   of common pleas to issue a writ of mandamus ordering the county
24   to collect the data and file the report with the department.
25   Section 4.     Tax-exempt Property Municipal Assistance Fund.
26      (a)   Establishment.--The Tax-exempt Property Municipal
27   Assistance Fund is established in the State Treasury. The money
28   deposited into the fund shall be used exclusively for the
29   purpose of making annual distributions to eligible
30   municipalities under section 6.

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 1        (b)   Revenue-sharing program.--All revenues received by the
 2   Commonwealth from imposition of the liquor tax shall be
 3   transferred to the fund and distributed as provided in section
 4   6.
 5        (c)   Timing of transfers.--The State Treasurer shall transfer
 6   revenue required to be transferred under this section in five
 7   equal installments before the last day of February, March,
 8   April, May and June of each fiscal year in which a transfer is
 9   required.
10        (d)   Appropriation.--Money in the fund is appropriated on a
11   continuing basis to the department for purposes of making
12   distributions under this act.
13   Section 5.       Distribution of funding.
14        Money in the fund at the end of a fiscal year shall be
15   distributed by the department by September 15 of the following
16   fiscal year in the manner required under section 6.
17   Section 6.       Tax-exempt properties assistance.
18        (a)   Eligibility.--A municipality is eligible to receive
19   distributions under this section if the department determines
20   that:
21              (1)   The municipality's total market value of tax-exempt
22        property equals or exceeds 15% of the total market value of
23        assessed property within the municipality.
24              (2)   For the first year of distribution of money under
25        section 5, the municipality's median household income is
26        within 115% of the Statewide median household income
27        according to the United States Census Bureau's 2022 American
28        Community Survey 1-year estimate.
29              (3)   For subsequent fiscal years of distribution under
30        section 5, the municipality's median household income is

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 1      within 115% of the Statewide median household income
 2      according to the United States Census Bureau's most recently
 3      published American Community Survey 1-year estimate.
 4      (b)   Revenue.--The department shall annually distribute money
 5   available under section 5 to an eligible municipality based upon
 6   the following:
 7            (1)   The municipality's total market value of qualified
 8      tax-exempt properties shall be divided by the total market
 9      value of qualified tax-exempt property in all eligible
10      municipalities with the quotient expressed as a percentage.
11            (2)   The percentage under paragraph (1) shall be
12      multiplied by the money in the fund at the end of the fiscal
13      year to determine the payment due to the municipality.
14            (3)   A municipality may not receive more than 10% of the
15      money available. The following apply:
16                  (i)    Subject to subparagraph (ii), if a
17            municipality's allocation as calculated exceeds the 10%
18            limit, the municipality shall receive 10% of the money
19            available.
20                  (ii)    If the department determines that more than one
21            municipality's allocation as calculated exceeds the 10%
22            limit, the department shall calculate the allocation to
23            those municipalities against the total amount of money in
24            the fund at the end of the fiscal year.
25                  (iii)    For the remaining municipalities, the
26            department shall recalculate the payment amounts using
27            the formula in paragraphs (1) and (2), except that the
28            recalculation shall exclude:
29                         (A)   a municipality whose allocation exceeds the
30                  10% limit; and

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 1                     (B)   the amount equivalent to the municipality's
 2              10% allocation.
 3        (4)   A municipality may not receive an amount exceeding
 4    $100 per person based upon the population of the municipality
 5    as of the last Federal decennial census. The following apply:
 6              (i)    If the department determines that a
 7        municipality's allocation exceeds the per-person limit,
 8        the municipality shall receive a $100 per-person
 9        allocation from the money available.
10              (ii)    If the department determines that more than one
11        municipality's allocation as calculated exceeds the $100
12        per-person limit, the department shall calculate the
13        allocation to those municipalities against the total
14        amount of money in the fund at the end of the fiscal
15        year.
16              (iii)    For the remaining municipalities, the
17        department shall recalculate the payment amounts using
18        the formula in paragraphs (1) and (2), except that the
19        recalculation shall exclude:
20                     (A)   a municipality whose allocation exceeds the
21              $100 per-person limit; and
22                     (B)   the amount equivalent to the municipality's
23              $100 per-person limit.
24        (5)   If the total allocations as calculated result in
25    $1,000,000 or less remaining in the fund, the money shall be
26    retained in the fund for allocation in the next fiscal year.
27        (6)   If the total allocations as calculated result in
28    more than $1,000,000 remaining in the fund, the department
29    shall recalculate the allocation amounts for the remaining
30    eligible municipalities that do not exceed the allocation

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 1      limitation under this subsection. The department shall use
 2      the formula under this subsection, except that the
 3      recalculation shall exclude a municipality that exceeds the
 4      allocation limitation and the amount equivalent to the
 5      municipality's limited allocation. If the recalculation
 6      results in money remaining in the fund, the money shall be
 7      retained in the fund for allocation in the next fiscal year.
 8          (7)   The department shall deduct the amount of any
 9      payment under section 3(c)(4) from the final payment to a
10      municipality, and the money deducted shall be returned to the
11      department and deposited into the fund for disbursement in
12      the next fiscal year. If a municipality receives a payment
13      from a government agency under section 3(c)(4) after the
14      municipality receives a payment under this section, the
15      municipality shall reimburse the fund the amount of the
16      payment made under this section. In no case shall a
17      municipality receive a payment under this act and a payment
18      from a government agency for the same parcel of tax-exempt
19      property in the same fiscal year.
20   Section 7.   Regulations.
21      Within 180 days after the effective date of this section, the
22   department shall develop written guidelines for the
23   implementation of this act. The department shall submit the
24   guidelines to the Local Government Committee of the Senate and
25   the Local Government Committee of the House of Representatives
26   upon completion.
27   Section 8.   Repeal.
28      Section 2 of the act of June 9, 1936 (1st Sp.Sess., P.L.13,
29   No.4), is repealed insofar as it requires money to be credited
30   to the General Fund.

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1   Section 9.   Effective date.
2      This act shall take effect in 60 days.




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