So long as they are not intentionally driving the tax collector out of business, and are not being otherwise "arbitrary or capricious," local taxing authorities -- such as PA School Districts -- are apparently allowed to pay their tax collectors however little they would like.
There was a case decided this week that examined this issue. There, it noted that there have been cases where taxing bodies have gone too far, such as when the compensation was lowered to $1 for every tax bill paid with no rationale offered for the change. On the other hand, the move has been upheld where the tax collector complained that the change would mean a 70% reduction in earnings. In the particular case examined, the court said the compensation level was legal. In reaching that decision the court indicated it will look to industry standards for what is reasonable and not at traditional practices.
So the take away from this is that the tax collector, the face of the taxing body, was likely never really appreciated by those being taxed. Now, it appears that those receiving those tax dollars may not have to give much appreciation, either.
The PA Commonwealth Court case is Baker v. Central Cambria School District, 1872 C.D. 2010, and is available here.