Certainties in Life…

Death and school tax increases? About a quarter of the school districts in Allegheny County have applied for an exception to possibly exceed their Act 1 index that determines the degree to which school taxes can rise in a given year (both the Education Department’s spokesman and a business manager of a western PA school district made the point that even though a district is granted an exception it may choose not to use it) but this year is when new assessments have gone into effect, so homeowners who live in those districts where revenue neutral rollbacks by the County and the municipality may have minimized the tax bill bite may see that disappear. Know too that tax increases could be coming in districts that did not apply for an exception because Act 1 allows for increases up to the cap without a separate action.

The Department of Education has data on school tax rates going back to the 2002-03 school year (all districts in Allegheny County run on a July-June fiscal year except Pittsburgh) and, after tossing out a few districts that straddle the County line and Clairton, which has separate rates for land and buildings, the median tax rate that year was 18.45. Wilkinsburg had the highest millage rate at 32, South Allegheny had the lowest at 13.83. By the 2011-12 school year, the median rate had risen to 23.27 (a 26% increase, the Pittsburgh area CPI increased 33% from 2002 to 2012, so the growth was slower than inflation) and Wilkinsburg still topped the list (at a higher 35 mills) and Pittsburgh was the lowest at 13.92.

If we look at the years prior to when the Act 1 index took effect (2002-03 through 2006-07) the median millage rate for the County’s school districts rose 16%; since then, under the Act 1 provisions (2007-08 to 2011-12), school taxes have climbed 8%. Note that the pre Act 1 years from 02-02 to 03-04 and 03-04 to 04-05 saw some very big jumps (4.8% and 5.5% respectively) and that, outside of those years, the percentage change in the median school tax rate in the County does not look much different before or after Act 1. The median rate did fall in 2011-12 by 0.7% from where it stood in 2010-11, however.

That’s little consolation to taxpayers whose district may have increased taxes year after year or intends to use an exception this year, but overall the degree of increase overall has slowed over the past few years.

County’s Towns and Cities Face Assessment Changes

Earlier in 2012, Allegheny County released preliminary assessed value changes for its cities and towns showing how property values had changed, in aggregate, for 2013. The range ran from a 75% increase in Rankin (with values rising from $14 million to $24 million) to a 5% decline in Pitcarin, the only municipality that saw aggregate property values fall in the County.

With appeals taking place and certified values reflecting those changes as of their December 20th release, we see that five municipalities (Turtle Creek, East Pittsburgh, West Homestead, Sewickley Hills, and Pitcarin) saw their certified values come in higher than their preliminary numbers. Nine municipalities saw no change. The remaining 114 municipalities saw certified values fall from preliminary numbers. A good many of these (86) saw rather small decreases (5 percentage points or less). Sizeable reductions from preliminary numbers to certified numbers came in these communities: Dravosburg (86% to 34%), Neville (96% to 56%), Versailles (43% to 17%), Sewickley Heights (61% to 37%), and Harmar (56% to 41%).

Municipalities have until the end of January to set millage rates for 2013 tax bills that comply with the Act 71 requirements on revenue neutral rates and rate hikes following the establishment of those revenue neutral rates.

Another Look at School Tax Increases

The newspapers reported it this past weekend: just over a third of the 43 school districts in Allegheny County raised property tax rates for the coming 2012-13 school year. The loss of stimulus funds and the state’s fiscal condition, along with the looming pension obligations for the school employee system led districts that did not increase taxes to dip into reserves, shut down programs and buildings, leave positions unfilled, and/or layoff employees. It is a similar refrain statewide.

However, Allegheny County has an additional wrinkle in that there is a pending reassessment that will require districts to adjust their millage rates so that they don’t take in more than the previous year’s Act 1 index would allow. That will happen once the new assessed values are certified. But with the new tax rates for 2012-13 we can measure the impact of school tax increases during the years of the County’s base year plan, which was adopted by ordinance in October of 2005. It is reasonable to measure from the start of the following school fiscal year, 2006-07 through the projected 2012-13 rates, for 42 of the County’s 43 districts (Clairton had a two-tier rate in 06-07 and only one rate was reported in the news report, so it was eliminated).

  • 33 districts had a higher millage rate for 2012-13 than they had in 2006-07. Obviously there is a sizeable range in the degree of how much higher. Some of the larger ones were Cornell (22% higher), Elizabeth-Forward and Northgate (17% higher), and South Fayette (23% higher).
  • 3 districts-Baldwin, Carlynton, and McKeesport-had lower millage rates projected in 2012-13 than they had in 2006-07.
  • 6 districts-Pittsburgh, Duquesne, Plum, Montour, Sto-Rox, and Brentwood-project no change in school millage rate over the years of the base year.

Recall the drumbeat that "reassessments cause tax increases" and realize that over 75% of the school districts in the County increased their tax rates over the years when the County conducted no reassessment and the argument rings hollow. Also realizing that Act 1 does not do much to prevent property tax increases makes that policy measure seem lacking.