Municipalities Call for More Property Tax Assessments

Mar 9, 2015

Last year, the Allegheny County Board of Property Assessment Appeals and Reviews ruled on more than 10,000 appeals from property owners, municipalities, and school districts that thought certain homes and businesses were paying too much or not enough in property taxes.

The number of appeals declined from 2013, when many property owners and taxing bodies challenged the 2013 county-wide property reassessment values, according to Eric Montarti, senior policy analyst for the conservative Allegheny Institute for Public Policy.

On the whole, more than half of all appeals came from property owners seeking  to lower the assessed values of their homes or commercial property. Forty two percent of appeals came from municipalities or school districts, which were interested in raising the value of properties. In the end, appeals in 2014 raised the overall taxable value of properties by $161,985,000.

According to Montarti, the fact that the appeals process resulted in a net increase in property values, which means more taxable value for the county, municipalities, and school districts, could be because governing bodies have more resources at their disposal.

“School districts and municipalities are going to have full time solicitors,” Montarti said, “so I would think there’s probably more expertise on the part of the governing bodies.”

The City of Pittsburgh, Mount Lebanon, and Carnegie  were the only municipalities to file appeals. The city filed the most, at 1,195, followed by Mount Lebanon with 287 and Carnegie with one.

According to Andrew McCreery, finance director for Mount Lebanon, it is more common for school districts rather than municipalities to file appeals because school districts rely heavily on property taxes for revenue and therefore “have more skin in the game.”

Montarti agreed. “When you look at your combined real estate tax that you pay in a year, typically for most of Allegheny County, about 75 percent of it is going to the school district.”

Of the 4,344 appeals brought by governing bodies, 66 percent came from school districts, and only four of the county’s 43 districts did not file any appeals (Elizabeth Forward, Deer Lakes, West Mifflin, and McKeesport).

However, in both Pittsburgh and Mount Lebanon, the school districts focus on commercial appeals while the municipalities pursue residential appeals.

Paul Leger, finance director for the City of Pittsburgh, said the city was not trying to target anyone with appeals, but instead balance the property tax burden fairly to avoid raising the property tax.

“We want to make sure that everybody pays the tax that is fair to them,” Leger said. “So if I have somebody paying a lesser amount, that means somebody has to take up the slack.”

According to Montarti, Allegheny County would not have to process so many appeals if property assessments were done more frequently. The court ordered 2013 assessment happened more than a decade after the last county assessment, and there are no current plans for the next reassessment, according to the Allegheny County Office of Property Assessments. Montarti says unlike other states, Pennsylvania has no statewide reassessment policy or schedule, so it is left up to the individual counties, who often do the reassessments sporadically or not at all.

Paul Leger said annual assessments would provide more accurate numbers, result in fewer appeals, and make both property owners and governing bodies happier.

“[Reassessing is] a very expensive process, but for the taxpayer, the sticker jolt is far less if you do a reassessment every year and you keep the values current,” Leger said.

One problem with sporadic reassessments, according to Montarti, is it causes school districts and municipalities to target people who purchased homes recently. If there is a decade-long gap between assessments, Montarti says,  home prices change, which becomes evident whenever a home is sold. Governing bodies look at the sales price, which is usually higher than the assessed value, and use that as a basis for appeal.

“And of course those people that are appealed are saying ‘Well, we’ve been blind-sided because when we bought the house, we looked at the sheet that the real estate agent gave us and they told us this is what the expected taxes on the property would be. And this is what we budgeted from,” Montarti said.

To avoid this problem, which homeowners in Mount Lebanon are calling “the Newcomer Tax,” Mount Lebanon is launching a program to consider all homes for appeal, not just those recently sold, according to McCreery.

Leger explained that Pittsburgh uses a similar program that looks at entire neighborhoods, not recent sales, to find homes with a gap between their market values and their assessed values.

McCreery said the number of appeals filed in the county reflects inefficiencies in Allegheny’s assessment system.

“If the county did this on a regular basis and we could count on a cyclical reassessment process, we wouldn’t be going through this process currently,” McCreery said.