Lackawanna Voters Will Have Say on Reassessment

Voters in the northeast county of Lackawanna will decide this fall (in little over three months time) whether they want the County to conduct its first reassessment in five decades.

We wrote a blog in July noting that the board of commissioners approved a motion to move forward with the question–the actual wording of which asks voters to approve incurring debt of no more than $13 million in order to bring values up to date.  One commissioner noted that the dollar amount is not valid since no bid has been solicited (that number came from research done by staff for the board of commissioners) and that the mention of the predetermined ratio (the ratio of assessed to market value) in the question was confusing.  That same commissioner wanted to move the question to the spring ballot, but failed in his attempt.

Would a voter be in favor of a reassessment if it ultimately cost $9 million in order to update the old values, but not if it cost $13 million to do so?  That could be part of the consideration that comes into play by putting a dollar figure into the question instead of just asking a “yes or no” on reassessment.

Thus the County’s taxpayers will have the opportunity to attend public information sessions, view a video (which was approved in a separate action by the commissioners) and do a little research on their own to get a sense of determining how a reassessment will affect their property values and taxes.

 

 

The Stadium Authority that Will Not Die

Nearly 20 years after Three Rivers Stadium was imploded, the authority created to build and manage it in 1964 is still in business.  As we have been writing for years, the Stadium Authority was supposed to go out of business once Three Rivers Stadium ceased to exist. Instead, the Authority retained ownership of a couple of property parcels on the North Shore over which they would have a voice in development.  Much of that property has been developed with only a few parcels remaining.

Today the Authority owns parking garages next to Heinz Field and PNC Park on General Robinson Street.  It has no staff of their own but share personnel, including the director, with the City-County Sports and Exhibition Authority (SEA).  The Authority’s primary function is to use revenues from two parking garages to pay off the bond debt associated with them.  Through an agreement with City Council in 2013, they were to go out of business in 2028 when the 15-year debt to pay off the garage on General Robinson Street was to be satisfied.

But hold on just a moment.  After a recent refinancing of that garage debt, the Stadium Authority has just voted to stay its demise for an additional 21 years, until 2049.  Of course they did.  But which came first, the refinancing or the vote to extend? Obviously, the extension would not have been necessary otherwise.   One can only imagine how many more things the Authority could get up to during the next 30 years. This is a story straight from the mind of the late-great George Romero—the Authority that wouldn’t die.

The Stadium Authority, and SEA, director claims that merging the Stadium Authority with another authority, such as the SEA, or even the Urban Redevelopment Authority, or even more appropriately the Parking Authority, would not be prudent.  Hold on a minute. The Stadium Authority could sell the parking garages to the Parking Authority and use the proceeds to pay off its debt.  Now that would be prudent and it would get rid of an Authority that was made obsolete by the destruction of Three Rivers and should have gone out of business 18 years ago.

The Mayor’s Chief of Staff is quoted as saying “a reorganization or merger of the stadium authority with another public entity may require additional transactions costs without significant public benefit.”  How many lawyers would be required to do the paper work? And selling the garages to the Parking Authority and terminating the Stadium Authority would free up the cost of paying the part time director and other administrative staff at SEA for their Stadium Authority work—all out of revenues from the garages. That sounds like a benefit.

So there you have it.  Something that should go away won’t go away. Even though everyone knows that the Stadium Authority has outlived its original function. The reasons for keeping it do not even rise to the level of flimsy. A perfect illustration of public policy Pittsburgh style.

New Fiscal Year Brings Tax Hikes in 21 County School Districts

For the fiscal year that began July 1st for 42 school districts in Allegheny County (Pittsburgh Public runs on a calendar year) and who levy a unified rate (Clairton taxes buildings and land separately, so they are omitted) the critical decision that many taxpayers wait to see is what will happen to the property tax millage rate.  It can increase, stay the same, or sometimes decrease.

The complete list of millage rates for school districts in the County is available at the County Treasurer’s website and our data analysis for this year shows that of the 41 districts starting the fiscal year a month ago and levying a single property tax rate that 21 districts hiked taxes, and 20 left rates unchanged.  The hikes ranged from a high of 1.25 mills in Penn Hills (which likely has more increases coming to correct for financial issues that have arisen in the district) to .0011 of a mill in Montour.  The average school millage rate for the districts is 21.90 mills, which is 7% higher than the average in 2013-14 when rates were reset after the assessment.

Let’s take a look at that time period, since our report this year looked at millage rate changes since 2013 but only had four fiscal years for the school districts since the report preceded the start of the fiscal year.  In eleven districts millage rates have gone up each year (2013-14 through 2017-18).  One district (Baldwin-Whitehall) cut millage one year and has increased millage each year since.

Six districts (Deer Lakes, Duquesne, Highlands, South Allegheny, West Allegheny, and Wilkinsburg) have not changed their millage rate since 2013-14 (no increases, no decreases).  It is worth noting that four of those (all but Deer Lakes and West Allegheny) rank in the top ten districts in Allegheny County for the amount of state aid per pupil in 2014-15; it is also worth noting that Deer Lakes is one of a small handful of districts that does not appeal assessed values as other districts regularly do.  For year over year since 2013-14, the number of districts increasing millages has been 21, 19, 24, and 21.

Lawsuit Over Taxing Body Appeals

Earlier this summer we noted a legislative effort in Harrisburg to stop the practice of property value appeals by taxing bodies based on sales.  The most recent action on the legislation was a month ago.

Closer to home, a lawsuit has been filed on behalf of two Pittsburgh homeowners who purchased a home in 2015 for well above its assessed value and saw the school district appeal the sale and have the assessed value raised (still about $50k less than the sales price).

If successful, the lawsuit wants to see refunds on properties that were appealed in the years 2014-16 and to stop local taxing bodies from appealing values on properties based on their sale price.  It is worth noting that this property is located in the City, where the City government dropped appeals in 2016 but since the school district is a separate entity it could carry out its own appeals.

Interestingly this situation looks like an identical one to 2008 (which we touched upon in the May blog) where a school district in Schuylkill County appealed sales and prompted state legislation, which was vetoed by the Governor who felt that, because of the lax requirements on when counties have to reassess values, taxing bodies would have no recourse.  He urged legislation to mandate a reassessment cycle.  But to this day there has been no change.  So that leaves people who buy property in a situation where they could be appealed on their sale price if they fall within the criteria laid out by the taxing body.

City’s Prevailing Wage Law Extends to Authority

The City’s financial statements treat the Housing Authority of the City of Pittsburgh as a related organization whose purpose it to acquire and maintain low-income housing.  The Mayor of Pittsburgh appoints the seven board members, but the City does not subsidize its operations or guarantee its debt service.

So when the Authority was audited and findings regarding pay for contracted security guards by the Controller’s office and heard from a service union about the pay the Controller couldn’t penalize them for the pay and benefit levels.  Under the regulations for the prevailing wage law for the City, the Controller’s office takes complaints and then reviews and investigates the complaint.

The ordinance covers various types of projects, including residential buildings with at least 50 units and the City’s ordinance lists security officers as one type of building service employee and its defines City as the City itself and any related agency, department, or authority, so by that plain language it would seem that the requirements would have applied to the Authority, but it took an action of the board to make it so.

A 2010 piece examined the possible effects of the City’s prevailing wage law when it went into effect.  As we noted “…firms or agencies with City contracts will pass this cost onto the City in the form of higher prices in any future contracts and could ask for or sue for immediate additional funding assistance on the grounds the terms of their contract have been affected.”  That could be the result of the Housing Authority’s decision.

Municipalities Not Happy with School District

In terms of number of municipalities in a school district, Woodland Hills is the County’s largest with twelve municipalities comprising it (Quaker Valley is the next largest with eleven).  So the fact that the officials of the municipalities joined together to draft a letter expressing a “vote of no confidence” in the school board and ask for state intervention is no small feat. 

Of course, the municipalities and the district are separate governing bodies with differing functions (municipalities are general purpose with responsibilities of public safety, public works, sanitation, planning, recreation, etc.) while the school district is a special purpose entity charged with K-12 public education.  However, as noted in the Department of Community and Economic Development’s publication on local government the two entities have an considerable effect on one another.

According to the same publication local elected officials (city, borough, township) are not permitted to serve as a school director.  So that means officials of the municipalities that signed the letter can’t run for Woodland Hills School Board unless they no longer serve in their municipal capacity.  That leaves public pressure (showing up to board meetings to speak) communicating as they did through the letter, or asking the state to intervene, in a manner that is presently unclear, unless financial mismanagement would lead to an Act 141 action.

Do the officials want the state to break up the district?  Introduce more charter school options (based on a 2014 article the district had more than 20% of their total enrollment in charters)?  Have a turnover in the members sitting on the board?  Change it to an appointed board like Pittsburgh flirted with briefly in 2002?  Is there a unified outcome that the municipal officials hope to see?

Penn HIlls Placed into Financial Watch Status

In early June we wrote about the request of a state legislator representing Penn Hills and the Penn Hills School District to place the school district in financial recovery status under Act 141.  The Act can place districts into “financial watch” or “financial recovery”. 

Based on the letter from the Department to the District, Penn Hills found a negative fund balance ratio, received advances on its basic education funding, ran deficits, had outstanding debt of 189% of its 2015-16 fiscal year expenditures.  The letter also touched on the findings of the Auditor General in his audit of the District.

So what will Penn Hills receive under financial watch status?  Technical assistance from the Department with its financial challenges.  Of Allegheny County’s school districts, Duquesne is in Act 141 financial recovery and Wilkinsburg and Penn Hills are in financial watch.

Is Transfer Tax Proposal Dead?

Earlier this week it was reported that after a hearing on the proposed increase to the City’s realty transfer tax that there are not enough votes to pass the measure.  Recall that the City’s Affordable Housing Task Force proposed creating a local affordable housing trust fund (that was created here) and examined a few revenue raising measures that would have funded it, noting that any proposal should go on the ballot for an up or down vote by the City electorate.  That recommendation was not embraced, and City Council introduced legislation at the beginning of this May to raise the tax.

Would the increase have been well received by the City electorate if it made it on the ballot?  The last proposed tax increase that was considered by City voters was the 2011 increase in the property tax to provide dedicated funding for the Carnegie library system.

The members on Council opposed to the realty transfer tax increase have said they have an alternative plan to raise the money to provide revenue to the fund.  Another Council member said that the transfer tax is not a great proposal, but is “the only tool in my very, very, very small toolbox”.  If the Council member is referring to the fact that of the seven major taxes the City levies it has control only over two of them (property and realty transfer) because of the other levies altered by state law during the City’s early years of oversight and financial recovery and those levies would have to change in Harrisburg, that is accurate.  But if the City wanted to find $10 million in its $500 million plus budget then it could prioritize its functions and shutter something that is less important than the proposed fund.

Turnpike Gets Even More Expensive

Another year, another toll hike on the PA Turnpike. The upcoming boost will mark ten consecutive years of increases.

 
The rate increases are needed to cover the debt service on all the borrowing the Turnpike Commission has done and will continue to do to pay for its maintenance and construction requirements and to provide $450 million a year to PENNDOT. The $450 million is used to subsidize mass transit in the Commonwealth. As we noted in a recent Policy Brief, the Turnpike has already slid into a deep net negative net worth because of the bonds issued over the years. It will only get worse.

 
Moreover, the rise in toll rates will have some negative effect on Turnpike usage, especially on the lower demand roads. As our Policy Brief noted, traffic and revenue per mile on the Mon Fayette Expressway especially are a small fraction of the levels on the mainline road. Then too, the traffic on the Asa Hutchinson toll road and the Beaver Valley Expressway peaked years ago.

 
Compounding its financial situation, the Turnpike has very expensive employee benefits. Those benefits cost the Commission $50,000 per year per employee.

 
Unfortunately, the Turnpike’s financial woes will not begin to stop their slide until 2023 when the $450 million payment to PENNDOT is no longer required. By then the financial hole will be even deeper and the toll hikes may well continue for a long time. Using the Turnpike as a source of mass transit subsidy is very poor policy. On top of that, Legislation mandates a higher gasoline tax to be used to support Turnpike construction that cannot be justified on its own cost benefit merits–all very strange policies.

Supreme Court Will Get Soda Pop Tax Case

After losing at the Common Pleas and Commonwealth Court, parties arguing against the imposition of a tax on sweetened beverages by the City of Philadelphia will pin its hopes on a reversal at the Supreme Court. According to the description of the tax on the City’s revenue page “… this tax is on any non-alcoholic beverage, syrup or other concentrate used to prepare a beverage that lists any form of artificial sugar substitute, including stevia, aspartame, sucralose, neotame, acesulfame potassium (Ace-K), saccharin, and advantame.”  The tax rate is 1.5 cents per ounce of beverage.

It is a fairly sure bet that if the tax is upheld plenty of municipalities will be looking into creating a similar tax.  Of course. Philadelphia has much broader taxing power due to falling under the Sterling Act as opposed to Act 511 for local taxing ability, (as noted in the Taxation Manual “The Sterling Act gives Philadelphia the power to levy taxes on any privilege, transaction, subject or personal property not subject to a state tax or license. There are no limits on the rate of taxation under the Act”) but one can envision a scenario where non-Philadelphia locales would be petitioning the Legislature for the power to tax sweetened beverages, and one can also envision a scenario where the interest groups against the tax would be pushing to make it explicit in state codes that such a tax could not be levied.

Around 2010 Pittsburgh floated the idea of a pop tax but the proposal did not go very far.