Bye, Bye Property Taxes?

Bye, Bye Property Taxes?

Can Allegheny County, by virtue of being home rule, eliminate property taxes for the County, its municipalities, and school districts?

It seems like the chances are slim, but there may be legislation to try just that in the near term. Spurred on by the current reassessment, the legislation would apply only to Counties of the Second Class, in other words Allegheny County. The legislator sponsoring the proposal noted that "the best option for the assessment situation is to apply the Home Rule Charter if our local government cannot determine a long-term solution".

Leaving aside the issue of what a tax shift involves, problems abound with the proposal. The language in Section 2962 of the state’s home rule law-the section that prevented petitioners from rolling back the rate of the drink tax a few years ago-rears its head because the section prohibits a charter from giving a home rule entity powers regarding "regulation of public schools", "fixing the subjects of taxation", and "the assessment of real or personal property and persons for taxation purposes". It would take an act of the General Assembly to remove that language from the home rule law.

But there is language in the Allegheny County Charter itself that prevents the proposal from moving too far forward as well. Article I of the Charter says that "this Charter shall not limit in any way the jurisdiction, rights, powers, or autonomy of the municipal governments in the County". Prescribing a cessation to property taxes and a shift to a new menu of taxes via a County driven referendum as opposed to state legislation for municipalities seems to do that. In addition school districts are not mentioned anywhere in the Charter.

Additionally, the legislation would allow County Council to pass an ordinance eliminating assessments. If Council does not do it by a simple vote, "the county council, or the voters of Allegheny County, will have the ability to propose the ordinance through a public referendum." That’s where other problems arise. Article XII of the Charter says that voters can ask for a referendum on an ordinance as long as the requisite number of signatures is gathered and the issue is singular and germane to County government. While property assessments are the domain of the County, can voters put an issue on the ballot that would affect the taxing powers of the municipalities and school districts in the County? Seems unlikely given the 2962 language. And since the Charter says Council can only call for a referendum by ordinance to amend the Charter, is the proposed law going to spell out that Council would be able to ignore that language so they could put a general question on assessments and tax mixtures on the ballot?

Other home rule counties could provide guidance here. There are six, not counting Philadelphia and Allegheny. Many have been home rule since the 1970s, and all still levy property taxes, as do their municipalities and school districts. It is not clear if the General Assembly has tried something like this proposal for them, but if the referenda and initiative powers vested in them by home rule would allow for the elimination of property taxes and replacement of other sources, one would think they would have done it by now. Curiously, two of them-Lehigh and Erie-have new assessments scheduled to go into effect for 2013, just like Allegheny County, which was to have them ready for 2006 before embarking on the present course.

Long story short, if the goal is a tax shift away from property taxes to something else, particularly giving taxing powers to entities that don’t have them now (like sales taxes to schools or wage taxes to counties), it is going to have to be a statewide plan.