I live in PA but work in NJ. My payroll dept does take out PA state taxes but does not take out local taxes, I assume because there are no local taxes in NJ. My husband on the othre hand works in PA and has local taxes taken out for the township he works in. I am trying to figure out if I need to pay local PA taxes for the township I live in.

There is a reciprocal agreement between NJ and PA such that PA residents who work in NJ do not have NJ income tax withheld from their paychecks. See: State of New Jersey Division of Taxation (http://www.state.nj.us/treasury/taxation/index.html?njit25.htm~mainFrame)
You are required to pay income tax to PA - I don't know about your local township, but if they have an income tax then I suppose you owe that too. Where do you live?