Thursday, March 16, 2006
Let the Wailing Over Assessments Begin
While the Chief Executive is busy lauding Common Pleas Judge Wettick’s decision to allow the 2002 assessments to stand as Allegheny County’s new “base year” valuation, the decision leaves a lot of problems in its wake.
The most notable is that all properties valued in 2002 were done by comparative sales method, and the Executive spent a great deal of time proclaiming their inaccuracies. Now, they will form the basis of assessed values for what could be years to come. That’s quite a reversal of positions for the Executive.
2002 assessments values on properties existing at that time were done on comparable sales (sales of similar properties used to derive the value for others). Now take a property built in the County in future years: how will it be assessed? The Executive has said that it would be done on a construction cost approach with materials and labor adjusted to the 2002 base year. See the problem? None of the nearly 500,000 existing properties were assessed on the construction cost basis, and they won’t be adjusted to that basis for purposes of the base year. We have not yet heard or seen how the adjustment model will be built to achieve such comparisons.
That’s why the judge should have required that a base year be a future year when the difficulties associated with new properties could be adequately addressed and the existing properties values could be set using the same methodology.
Moreover, there is no clear process on how appeals will be done. This will be especially problematic in Downtown where, as we pointed out last year, several large properties were to have seen their assessments fall when the County was doing reassessments for 2006 prior to abandoning those plans. They can’t appeal on the basis of sales, which affects numerous property owners that saw their structures sell for well less than their 2002 value.
The decision does nothing to address the sky-high millage rates that keep climbing as a result of out-of-control school and local government spending. When the original 2006 assessments came out in February of 2005, the administration did not like them because they felt taxing bodies would not adjust their millage rates downward. Well, they now have the reverse problem: assessments will be fixed, so the millage rates will simply climb to account for the missing growth in the assessed values as should have occurred. Failure to address municipal and school spending growth will continue to drive the high property taxes upward, one way or the other.
In fact, those whose properties are overassessed and are now destined to stay that way will have to pay their high millages right along with those whose properties are underassessed. The inequities will surely get worse over time in this ill-designed base year system.
Still, the County “did” its job, which is providing the assessments for its tax purposes and the other local entities. Those assessments are supposed to be as accurate and fair as humanly possible. Of course, that has not happened. Now comes the anger from those who should have gotten a break from an accurate re-assessment.
The most notable is that all properties valued in 2002 were done by comparative sales method, and the Executive spent a great deal of time proclaiming their inaccuracies. Now, they will form the basis of assessed values for what could be years to come. That’s quite a reversal of positions for the Executive.
2002 assessments values on properties existing at that time were done on comparable sales (sales of similar properties used to derive the value for others). Now take a property built in the County in future years: how will it be assessed? The Executive has said that it would be done on a construction cost approach with materials and labor adjusted to the 2002 base year. See the problem? None of the nearly 500,000 existing properties were assessed on the construction cost basis, and they won’t be adjusted to that basis for purposes of the base year. We have not yet heard or seen how the adjustment model will be built to achieve such comparisons.
That’s why the judge should have required that a base year be a future year when the difficulties associated with new properties could be adequately addressed and the existing properties values could be set using the same methodology.
Moreover, there is no clear process on how appeals will be done. This will be especially problematic in Downtown where, as we pointed out last year, several large properties were to have seen their assessments fall when the County was doing reassessments for 2006 prior to abandoning those plans. They can’t appeal on the basis of sales, which affects numerous property owners that saw their structures sell for well less than their 2002 value.
The decision does nothing to address the sky-high millage rates that keep climbing as a result of out-of-control school and local government spending. When the original 2006 assessments came out in February of 2005, the administration did not like them because they felt taxing bodies would not adjust their millage rates downward. Well, they now have the reverse problem: assessments will be fixed, so the millage rates will simply climb to account for the missing growth in the assessed values as should have occurred. Failure to address municipal and school spending growth will continue to drive the high property taxes upward, one way or the other.
In fact, those whose properties are overassessed and are now destined to stay that way will have to pay their high millages right along with those whose properties are underassessed. The inequities will surely get worse over time in this ill-designed base year system.
Still, the County “did” its job, which is providing the assessments for its tax purposes and the other local entities. Those assessments are supposed to be as accurate and fair as humanly possible. Of course, that has not happened. Now comes the anger from those who should have gotten a break from an accurate re-assessment.
Comments:
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Jake,
I find your objection to Judge Wettick's decision upholding Dan Onorato's base year system for property tax assessment to be illogical and misguided.
Most of your criticisms of the new assessment rules would apply equally to any assessment system, for the simple reason that no satisfactory assessment system has ever been devised. At least the Onorato decision will rid us of the inconvenience and cost of having assessments every three years (the purists at the Post-Gazette would like to have them every year). County-wide assessments are an expensive proposition and an element of our government that we can live without. And of course, after every assessment, there are hundreds or thousands of appeals that cost money, not only the government's but the aggrieved taxpayer's.
Of course the system does not result in mathematical accuracy and uniformity. No system can or will. The best system, which I assume is not permissible given the PA constitutional provision, would be one in which the assessment is based on the purchase price of the property, and remains unchanged (except to reflect improvements) until the property is sold. That way, what you pay is what you, in effect, agreed to pay. You have no complaint.
Of course the base year system is not going to prevent property taxes from rising. But it will require the taxing jurisdictions to take the unpopular step of raising millage each time they want to raise taxes, rather than, as in the past, relying on increasing assessments to provide more money for their bloated spending programs. I would have thought you would have approved of a system which requires the various councils and boards to be up front with the taxpayers regarding their spending plans.
The best solution of all would be to abolish the property tax in its entirety, because it can never be made fair. But until that day of grace, I will be happy with Onorato's solution.
Doug Burns
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I find your objection to Judge Wettick's decision upholding Dan Onorato's base year system for property tax assessment to be illogical and misguided.
Most of your criticisms of the new assessment rules would apply equally to any assessment system, for the simple reason that no satisfactory assessment system has ever been devised. At least the Onorato decision will rid us of the inconvenience and cost of having assessments every three years (the purists at the Post-Gazette would like to have them every year). County-wide assessments are an expensive proposition and an element of our government that we can live without. And of course, after every assessment, there are hundreds or thousands of appeals that cost money, not only the government's but the aggrieved taxpayer's.
Of course the system does not result in mathematical accuracy and uniformity. No system can or will. The best system, which I assume is not permissible given the PA constitutional provision, would be one in which the assessment is based on the purchase price of the property, and remains unchanged (except to reflect improvements) until the property is sold. That way, what you pay is what you, in effect, agreed to pay. You have no complaint.
Of course the base year system is not going to prevent property taxes from rising. But it will require the taxing jurisdictions to take the unpopular step of raising millage each time they want to raise taxes, rather than, as in the past, relying on increasing assessments to provide more money for their bloated spending programs. I would have thought you would have approved of a system which requires the various councils and boards to be up front with the taxpayers regarding their spending plans.
The best solution of all would be to abolish the property tax in its entirety, because it can never be made fair. But until that day of grace, I will be happy with Onorato's solution.
Doug Burns
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