Property Tax Rates Move Up, Maybe

Grant Street will see plenty of activity regarding property tax rates for the City of Pittsburgh and Allegheny County this week as both the City and County Councils deliberate on property tax millages for 2012. The respective fiscal year for the City and the County begin on January 1st.

The City Council has to codify a 0.25 mill increase as a result of the referendum on library funding earlier this month. That mill will be added on to the current 10.8 mill rate "…exclusively for the maintenance and operation of the Carnegie Library of Pittsburgh" and a property taxpayer will pay a rate of 11.05 mills as of January 1, 2012.

County Council’s Budget and Finance Committee is meeting tomorrow to discuss its tax levy for 2012. Right now the millage is 4.69: the bill being discussed, as of its most recent publication on Council’s website, would raise it a mill to 5.69. It would take a vote of ten Council members to pass the increase.

Under normal circumstances, the increases would mean a Pittsburgh homeowner with an assessed value of $80,000 would be paying a combined $100 more in property taxes than they are now. A homeowner with a similar value outside the City (assuming no changes in municipal or school rates) would pay $80 more. As last week’s Brief pointed out, the big unanswered question is how the court-ordered reassessment impacts the picture. Under a 2005 state law, if 2012 is really a reassessment year, then all taxing bodies have to roll back their tax rates to be revenue neutral. They then can take a separate vote to collect 5% more and could then petition the courts for more revenue.

For the City, the library millage was not being levied so the focus would be on the 10.8 rate. The referendum binds the City to levy a quarter of a mill into the future, so it will be part of the millage going forward. The reassessment might mean the general City rate would drop, but could end up lower, identical, or higher upon a separate vote. County Council would have the same rollback, but a 5% vote would still require the 10 votes per the Home Rule Charter.

Backpedaling on Assessment Completion Date

For those who were on the edge of their seats waiting to get assessment notices this month, the excitement will have to wait. Allegheny County won’t be processing reassessment notices until January of 2012.  Certified values for use in calculating tax bills may not be available until May or June of 2012.


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Mathematical Ineptitude Vis-à-vis Assessments

In fearful anticipation of the 2012 re-assessment figures, a County Council member has proposed softening the sticker shock by using a fractional Predetermined Ratio (PDR) to lower assessments from the 100 percent of appraised value procedure now in place. That is to say instead of a $200,000 appraised value property being assessed for tax purposes at $200,000, the County could use a ratio of say 80 percent and lower the assessed value to $160,000. For a homeowner whose property appraisal was actually increased from $160,000 to $200,000 by the reassessment that would seem to leave the tax liability unchanged. But in fact it does nothing to change the shift in tax burden that would have occurred if the 100 percent PDR is used.

Since all property values would have the same 80 percent factor applied, the relative values of properties would remain unchanged. Presumably, taxing bodies will need to maintain total revenue collections after the re-assessment somewhere close to the pre-reassessment levels. Thus, millage rates will have to be adjusted to make that happen and changing the predetermined ratio merely creates an illusion of lowering tax liabilities. Thus, property owners whose appraised value rises far more than the average increase in their school district and municipality and county will still face higher taxes while properties that have been over assessed and whose value drops relative to the average change will see decreases.

Re-assessment is about getting accurate values for purposes of taxation so that equity among property owners is achieved. Playing with the PDR is a gimmick meant to disguise the sting of sharp assessment increases. It won’t work.