A Farewell to the County’s Base Year

A Farewell to the County’s Base Year

Although Allegheny County’s base year plan has not completely given up the ghost, the epitaph for the plan is beginning to be written. 


Created in October of 2005 by Ordinance #45-05, the plan actually had its roots in the earlier scheme to cap assessment increases which the court tossed out the same year.  After being adjudicated all the way to the state Supreme Court, the base year was ruled unconstitutional and a reassessment was ordered.  New values are to go into effect January 1, 2012 under an agreement reached by the County and Judge Wettick. Attempts to get the General Assembly to pass a moratorium on assessments have thus far proven fruitless as have efforts to persuade the Judge to agree to a postponement.


Until then, voters and taxpayers are sure to hear a lot about property taxes and the reassessment as the race for County Executive winds through the primary and general elections in the coming months.  Topics like “fairness”, “statewide solutions”, and “neighboring counties” are sure to be at the forefront.  So too will the assertion that the base year prevented property tax increases.


Is the assertion that tax increases have been forestalled accurate?  Looking at the County’s property tax rate in 2003 (the year after the last reassessment was done) and 2011 (the current year and the last under the base year) shows that the same 4.69 millage rate is in place.  So for the County the assertion is true as long as only real estate taxes are considered. However, it is important to keep in mind that, at the County’s behest, the state created the drink tax and the car rental tax specifically for Allegheny County.  This money was used as a substitute for property tax revenue that would have gone to the Port Authority. Moreover, the County intercepted around $40 million in gaming revenues intended for the airport to plug budget holes. 


More importantly however, the County is not the only taxing body levying taxes on real estate.  All municipalities and all school districts in Allegheny County tax property.  In the lifespan of the base year there were changes to Pittsburgh’s tax structure (though these changes did not affect its real estate tax directly) while school districts came under Act 1, which attempted to reform the severity of tax increases and provided opportunities for tax shifting. 


Data from the County Treasurer’s website permits a tracking of real estate millage rates for municipalities and school districts from 2003 through 2011. Thus we are able to see which taxing bodies increased their property taxes, which kept them the same, and which decreased them.  Three municipalities and one school district with separate rates on land and structures were eliminated from the analysis, as were two school districts that lie in both Allegheny and an adjacent county. That left 125 municipalities and 42 school districts with a single tax rate and wholly within Allegheny County subject to the base year.


The data in aggregate shows that over 80 percent of municipalities and over 90 percent of school districts had higher millage rates in 2011 than they did in 2003.  That’s a huge majority of cases. Seven municipalities and one district decreased their rates, and fourteen municipalities and two school districts had the identical rate in 2011 as they did in 2003.


Millage Rates in Municipalities and School Districts, 2003-2011

Governing Body

Higher Millage Rate in 2011

Same Millage Rate in 2011

Lower Millage Rate in 2011

Municipalities (125)

104 (83%)

14 (11%)

7 (6%)

School Districts (42)

39 (93%)

2 (5%)

1 (2%)

Since schools (other than Pittsburgh) are on a July 1-June 30 fiscal year the rates reflect those in effect as of July 1, 2003 and July 1, 2010.


The degree of the increases among those municipalities and school districts that raised taxes varies: 66 municipalities and 6 school districts had millage rates in 2011 that were at least 30 percent higher than the rates in 2003.  Seven municipalities fell into a group that had rates at least twice the 2003 level, and the highest increase among school districts was 37 percent over the 2003 rate. 


The average municipal property tax rate rose 32 percent (from 4.78 mills to 6.3 mills) and the average school district tax rate rose 17 percent (from 19.78 mills to 23.06 mills).  Compared with the Consumer Price Index for the Pittsburgh metro area, which grew 21 percent from 2003 to 2010, the average rate for municipalities grew well in excess while school districts stayed just under the increase. 


True, the County cannot control the tax rates of bodies other than their own, but the willful and sustained effort to avoid a reassessment after 2003 had a significant impact on the tax rate decisions for municipalities and school districts across the County. The bottom line is that a County imposed assessment freeze did not protect taxpayers from higher taxes. And claims to the contrary are simply bogus and born of political posturing.


What lessons can we learn from the base year debacle?  The first lesson is one that was known in advance, to wit, spending drives the need for revenue.  When assessments are frozen, as they were for the past nine years, and spending is allowed to rise, millage rates must climb unless other sources of revenue can be found. This we just demonstrated was the norm for taxing bodies throughout the County.


Second, County officials must begin devising new procedures and practices to carry out periodic assessments after the initial reassessment, given the fact that the courts found the base year violated the uniformity clause of the state’s Constitution.  Implementing the 2012 reassessment and failing to follow up with a different plan is not an option. 


While some will heap praise upon the base year assessment freeze in the coming months, its burial will open the door to more accurate and defensible assessments-if the County’s elected officials will grasp the opportunity.