Major Assessment Developments for Washington County

 

Two big developments regarding property reassessments have occurred in the last three weeks that will have a tremendous impact on Washington County.  As we noted in our inaugural Brief of this year, the County has been in a court battle with two of its school districts since 2008 over conducting a revaluation of property, a task not carried out since 1981.

 

 

The first big development occurred this week when the Supreme Court of Pennsylvania declined to hear an appeal from the County on the matter.  In December of 2012 Commonwealth Court noted that the parties to the case had agreed in 2008 to a document containing “nine stipulations of fact and a proposed order” that stated if the Legislature or the courts had not made substantial change to the property assessment system in Pennsylvania by September 30, 2009, the County was to move forward with a reassessment.  County officials opposed to a reassessment dispute the nature of the 2008 agreement and were hoping that the Supreme Court would overturn the lower court rulings, but that was effectively ended with the April 9th decision. 

 

The second development came about three weeks ago when the Pennsylvania House of Representatives passed legislation with no opposition (as did the Senate in late January) to move the State Tax Equalization Board (STEB), an independent agency since 1947, into the Department of Community and Economic Development (DCED).  Prior to this legislation, and following the Supreme Court’s 2009 decision on Allegheny County’s base year plan, the Legislature had attempted a legislative moratorium on court ordered reassessments and created a task force to examine the issue.

 

The rationale is that by making this move DCED will, according to a fiscal note prepared on the bill, “provide appropriate administrative, legal, and technical support needed by the Board to accomplish its purpose”.  STEB will be charged with determining the market value of real estate in each school district, obtaining lists of properties transferred in each county on a monthly basis, establishing the common level ratio of assessed to market value by July 1 of each year and informing counties if their ratio has increased or decreased by 10 percent or more, among other duties.  Perhaps most important with respect to counties carrying out reassessments, STEB is to:

  1. “Create an operations manual in consultation with the County Commissioners Association of PA and the Assessors’ Association of PA for counties to utilize when completing a countywide reassessment or when valuating property”.
  2. “Create and maintain a centralized and standardized statewide database for counties to utilize and report all property values and data to the Board.”
  3. “Develop and maintain statewide basic and detailed training programs for all persons involved in the valuation of property within all counties. The programs shall be completed and passed by any person that is employed to collect, compile, compute or handle data for purposes of reassessment valuation within the State.”
  4. “Develop standards on contracting for assessment services in consultation with the County Commissioners Association of PA and the International Association of Assessing Officers.”

 

These steps should go a long way to improving the assessment process, and, according to the fiscal note, would do so for a very inexpensive sum of $35,000.  However, while making these changes, the bill does not say when a reassessment has to happen, how often one has to happen, does not call for a statistical trigger that would inform a county that its values are out of kilter and possibly violating the uniformity clause. On the other hand and to its credit, it does not recommend or dictate a moratorium on court ordered reassessments during the implementation of the STEB-DCED integration. A version of the legislation in last year’s session attempted to do that, but it did not pass the General Assembly. As we have noted on several occasions, a legislative order that contravenes a court order is a constitutional crisis waiting to happen.

 

Here’s the question. Are state and local officials from Washington County looking at the state’s bureaucratic reorganization and the development of reassessment assistance as a moratorium of another stripe?  One Commissioner was quoted as saying “[the County] will take a wait-and-see attitude. We’re going to see what this means…how this will affect us and what we need to do to become the pilot program” and a state representative stated “I don’t know how a vendor could respond to a (request for proposals) even as state law is changing under their feet…we need to sit down with DCED and estimate a timeline and find out what [the County] need[s] to do.” 

 

While this might sound like due diligence, it could also be interpreted as an opportunity for foot dragging by officials who have no desire to conduct a reassessment as evidenced by the court battle and public statements made by members of the Board of Commissioners.  It is worth pointing out again that the Commonwealth Court quoted the 2008 stipulations of fact and proposed order that said if there was no state level change by September 2009 the reassessment process would begin.  How can anyone argue with any persuasiveness that a legislative change in April 2013, while substantive, could be grounds to hold off moving forward with a reassessment?  Especially now that the Supreme Court has denied the County’s latest appeal, thereby effectively ending the judicial channel for delaying a reassessment? 

 

Clearly, the recently enacted legislative reforms are long overdue. We pointed out in a 2007 report that some state level department or agency, perhaps the Department of Revenue or STEB, be involved as an overseer of the assessment process, including bringing some standardization to the process.  And it appears there might be some movement in that direction six years later. We also argued for mandated reassessments every three years, zero revenue windfalls from reassessments, and voter approval of all millage hikes.  Unfortunately, the first of these three recommendations has yet to be adopted. However, legislation was enacted earlier requiring municipalities to take separate votes to roll back millage rates to achieve revenue neutrality after a reassessment and then another vote to take a five percent increase. If desired, municipalities can petition the courts for millage rate hikes above five percent following a reassessment. School districts are limited to a revenue increase determined by their state calculated index.

Supreme Court in Reassessment Thicket Again

It has been nearly four years since the state Supreme Court struck down Allegheny County’s base year assessments.  It might have to wade back into the issue based on an appeal to be filed by Washington County.

 

 

Here are the important highlights of the pending case as summarized by a Commonwealth Court opinion from December 5th.  In January of 2008 the McGuffey and Washington School Districts sued Washington County to force a countywide reassessment, arguing that since it had been a very long time since one had been done the uniformity clause of the Pennsylvania Constitution had been violated; in November of that year the County and the Districts came to the Common Pleas Court with a document described as “containing nine stipulations of fact” and a proposed order. 

 

The order-agreed to by all parties-said that if there was no significant legislative or judicial change to assessment law by September 30, 2009 the County was to proceed with the reassessment process. This was delayed by the Legislature’s attempts at a moratorium on reassessments while the issue could be studied. A bill ordering a moratorium for Washington County passed both houses of the General Assembly but was vetoed by the Governor in July of 2011. The County appealed the courts for a “stay” in December of 2011, was denied relief and thereby required under court orders and its own agreement of 2008 to begin a reassessment. True to form, the County felt that would be “a permanent denial of relief because it ‘compelled the appellants to proceed with a countywide reassessment without further delay'”.  Hence the County’s most recent appeal to the Commonwealth Court of the earlier lower court ruling. But in the decision handed down December 5th the Commonwealth Court ruled the previous court order was “not an appealable order”. 

 

Now Washington County will appeal the Commonwealth Court ruling to the Supreme Court in the hope that it will provide the County permanent relief from ever having to reassess. A member of the County’s Board of Commissioners stated in a newspaper article that “we’re stuck in this legal limbo where we’re being forced to reassess. It is a case that’s of interest throughout the state. We don’t want to be the last county in the state to be forced to reassess under the old system.”

 

Why would the Commissioner think that the state is ready to replace the old system?  First, all a moratorium would have accomplished is to raise the specter of a constitutional crisis with counties deciding which branch of government to listen to: the courts, who would be saying “do a reassessment”, or the Legislature who would be saying “ignore the courts, wait until we can find a solution”.  Following the requirements of the uniformity clause in the Constitution, the courts are currently-and by default-the only source of relief for property owners when it comes to correcting massive inequities in property assessments resulting from the failure to update assessments on periodic basis.  

 

But more to the point about the old system being replaced, it is noteworthy that whenever the possibility of significant reform of Pennsylvania’s assessment laws arises, it gets punted away.  We wrote last year (Policy Brief Volume 12, Number 20) about the legislative task force that was charged with giving counties a self-evaluation tool to tell them when they should reassess or to come up with a statewide standard on a time frame for reassessments.  The group failed to reach agreement on either problem-indeed, it did not offer a pathway to reaching needed meaningful long term reform. 

 

Washington County is in a bind: it stated it would wait for Harrisburg to act by September 2009, but that did not happen nor is the Legislature likely to act on the issue in the foreseeable future. If the Supreme Court hears the latest appeal, it may choose to limit its ruling to whether or not the County can appeal the order, an option already denied by the Commonwealth Court.  If the Court instead decides to deal with the broader issue of whether the County’s assessments are sufficiently inequitable to violate the uniformity clause, it will undoubtedly look at the 2009 Allegheny County decision as a precedent. 

 

In that ruling, the Court did not deal with the use of a base year in and of itself.  The majority opinion held that “we find no ineluctable constitutional deficiency with the use of a base year system; it is only through the passage of time that a base year assessment will become stale, and thus unconstitutional”.  In effect, this made the issue a case by case situation wherein aggrieved taxpayers could seek relief through court action. Different counties would find their base year plan has become deficient at various points of time.  The Supreme Court did find that Allegheny’s base year plan had kept in place inequities that violated the uniformity clause of the Pennsylvania Constitution.  Maybe the Court will find that Washington’s assessments have not yet reached that point, but it will be hard for the Court to ignore the 2008 consent order and what lower courts have  ruled.  Note that while Allegheny County had done a reassessment in 2002 Washington County has not done one since 1981.

 

Officials reluctant to reassess will never have a shortage of reasons not to reassess. However, they should take the time to present a clear explanation of the process to the taxpayers, especially the fact that state law requires counties and municipalities to adjust millage rates so as to be revenue neutral and, in the case of school districts, to be limited to an increase after reassessments not to exceed the Act 1 index. They should further point out that a large number of properties could see their tax bills go down following the reassessment, or for many others remain unchanged. An honest presentation of the “windfall” limitations would go a long way to avoiding a lot of the confusion and anxiety that will otherwise accompany the opening of envelopes containing updated assessment values. 

 

Such a move by Allegheny County officials could have lowered the level of angst among home owners considerably if it had been employed rather than the non-stop efforts by officials to make taxpayers believe that reassessments are necessarily followed by tax bills going up for everyone.

 

As we have written on several occasions previously, if opponents of reassessments believe they can never get accurate results, then it is imperative and incumbent on these opponents to end the levying of property taxes in short order and to develop alternative sources of revenue to fund local governments and schools in the Commonwealth.  Perpetuating gross inequities in property taxation is unconstitutional and unethical.

Washington County Assessment Appeal Thrown Out

In a long running drama remarkably similar to the case in Allegheny County, a Commonwealth Court judge denied Washington County’s appeal of a November 2011 lower court order requiring the County to begin a property reassessment immediately.

 

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Allegheny’s Neighbor Joins Court-Ordered Reassessment Frat

The complaints levied by Allegheny County officials that they have been "singled out" by the state’s courts in having to conduct a reassessment have been long and loud, but the County has company from its neighbor to the south, Washington County. It just received word that the Commonwealth Court tossed its appeal of a Common Pleas decision that it had to reassess. The Governor vetoed a bill in 2011 that would have permitted a moratorium on the Washington County reassessment.

So where does the issue go from here? Obviously there could be a Supreme Court appeal or another motion to the Commonwealth Court, but based on the Allegheny County decision if the issue at hand is the underassessment of commercial properties due to a base year that has become "stale", then it is quite simple to predict what is going to happen. The Supreme Court held that it could take a long time for inequities to arise in some counties; Washington County might be there.

A January article quoted one of the County Commissioners who referred to "the mess in Allegheny County" as reason to hold off. Sounds a lot like the desire of Allegheny County officials to have "predictability and stability", twin goals that the courts did not agree with.

Supreme Court Undermines Act 47 Coordinators’ Authority

A recently announced momentous decision of the Pennsylvania Supreme Court has severely limited the power of Act 47 to impose steps aimed at helping financially distressed municipalities return to fiscal stability.

 

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