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.
With City Council’s final vote and the Mayor’s pronouncement that it is “time to move on” to other issues, the stage appears to be set for the troubled pension plans to move from City administration to that of the Pennsylvania Municipal Retirement System (PMRS) under the terms of Act 44. After the vote on the Mayor’s lease plan the Council and Controller rolled out yet another plan to raise the $220 million needed to avoid the state takeover of the pension funds. The Mayor’s office indicated the Council-Controller plan is a non-starter and would not get his approval.
Mt. Lebanon taxpayers, like many taxpayers in Pennsylvania, are facing a shocking increase in school taxes over the next five years. Between now and 2015, property tax collections in Mt. Lebanon are projected to rise 45 percent as the millage rate is boosted by over 40 percent while earned income tax collections are slated to rise 19 percent. These figures are taken from the School District’s preliminary out-year budget forecasts. The coming real estate hikes are necessary to cover an enormous 120 percent jump in fringe benefit expenditures from $13.2 million to $29.7 million; a nearly $8 million rise in debt service to cover the new high school and normal increases in other expenses. Fringe benefits will surge largely as a result of the jaw dropping gush of required payments into the teacher pension fund.
With apologies to the late Paul Harvey, we have to weigh in on the comments made by the County Council President at last night’s meeting on the 2010 budget that "the story here is that for the ninth year in a row now, this council has not raised property taxes even as all our neighboring counties continue to raise taxes".
How about including in that story the fact that the state enabled Allegheny County alone to levy two new taxes, one on liquor, the other on car rentals, which allowed the County to use those revenues to fund mass transit? Or that Allegheny County, along with Philadelphia, were the sole recipients of economic development money from the gaming proceeds? Or that the County took first call of money intended for the Airport Authority by claiming it was owed money for the airport’s construction-and then taking the payments in two lump sums?
And the Council President betrays what he and the Executive and other base year proponents have said for years-that a base year prevents tax increases. If so, why would the neighboring counties-the ones that we are constantly told are on old assessment years-be raising taxes?
Or closer to home, how has the County’s base year prevented municipalities and school districts from raising millage rates? It hasn’t. Just this week the large North Hills suburb of Ross Township announced that they might be raising millage. They would join the significant number of towns and school districts that have higher millage rates now than they did in 2003, the first full year following the last reassessment.
Will there be signs of an identity crisis at County Council’s regular business meeting tomorrow night? On the one hand, Council is scheduled to take up business regarding the issuance of over $1 billion in refinancing bonds through the County Hospital Authority for the benefit of UPMC. The taxpayers are not on the hook for any of the bonds, the purpose of which, according to the legislation, is "to benefit the health and welfare of the citizens of Allegheny County, Pennsylvania".
Soon thereafter, at the same meeting, Council is expected to consider two separate pieces of legislation, both concerning the tax-exempt status of parcels owned by UPMC. One would direct the Solicitor to "undertake a challenge to the tax exempt status of all parcels owned by UPMC within Allegheny County". The second would deal specifically with the parcels comprising the UPMC Braddock hospital site, the hospital slated for closure by UPMC.
Council is purely within its rights under the state’s tax exempt property law (The "Institutions of Purely Public Charity Act" of 1997) and if there are properties in use by the medical system that don’t meet the law’s test then those properties would have to pay real estate taxes if they are not already. For instance a 2009 report by the state’s Legislative Budget and Finance Committee noted that the University of Pittsburgh (not UPMC) paid $700k in real estate taxes to the City, County, and School District in 2007.
So would County Council breezily approve the refinancing deal and then show a hard line approach on the parcel legislation? It is hard to say. Even City Council has brought up the idea of adding additional layers of approval for building projects located in zoning districts labeled industrial or medical-educational while praising the benefits of "eds and meds". That goes without mentioning the "educational privilege tax" proposal.
This season is shaping up to be a challenging one for the non-profit community in the region.
Paraphrasing the legal language, here’s what the Supreme Court of PA said in its decision on the County’s assessment last spring: the County’s base year is unconstitutional, and we hand the decision back to the Court of Common Pleas to come up with a reasonable timeframe to fix the issue. Judge Wettick is, once again, center stage on the issue. Yesterday parties to the case batted around what constitutes a "reasonable timeframe".
The County feels that the Supreme Court wanted a full reassessment and such an exercise would take two to three years to complete. The County’s former chief assessment officer-the person who once said that the updated 2005 numbers met international standards for uniformity and accuracy-said that using those numbers now would be "unacceptable". What hypocrisy! Counsel for the taxpayers who brought suit against the base year presented testimony and experts who felt the matter could be resolved in a couple of months, basically as a stopgap measure.
No ruling has come as of this writing. So here’s what we would suggest the Judge should do: tell the County that it needs to have a reassessment completed by this coming March (about the time when County real estate taxes are due) or adjust the mailing of tax notices until the reassessment is done. Corollary to that ruling, the Judge should declare that taxpayers don’t have to pay any property taxes (County, municipal, or school district) until an updated, fairer assessment is complete. This would prevent an unconstitutional collection of taxes.