Tag Archives: supreme court

Major Assessment Developments for Washington County

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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.

Belief in the End of Assessments

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Four years after the state’s highest court had the issue of base year assessments before them they said that the base year idea in and of itself was not bad, just that the way Allegheny County applied it violated the uniformity clause of the PA Constitution. Problems with a base year would arise across the state, but that would happen at different times for different counties.

Not long after a state senator from Allegheny County was quoted as saying "the impression I got from other colleagues around the state is, ‘If the court’s not going to make us do it, we’re not going to do it,’…It just seems like no one’s going to step up here." One long time assessing official from southwestern PA once quipped that upon starting his job colleagues told him that the state would soon be getting rid of property taxes.

That was in 1969.

So a huge grain of salt has to be taken when officials in Washington County prep for a hearing this month on moving forward with a reassessment note "We don’t want to be the last county to go under this process. We want to fight to get it changed." The County last did a reassessment in 1981, but don’t want to spend money on updating values that "might be outdated in three to five years". One official even jested that imprisonment might be on the table, a possibility that residents of Allegheny County who followed the most recent County Executive race might remember.

Why the argument if the County agreed to go forward in 2008 if the state had not yet reformed the assessment process in the state? Nothing happened, and now the County feels that it will?

PA Supreme Court Decision on Early Retirement Could Cost Taxpayers

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From a posting dated February 12 on the Reed Smith Employment Law Watch page we learn that the Pennsylvania Supreme Court has overturned precedent and awarded unemployment compensation benefits to employees who accepted an early retirement incentive package. The Court has decided that employees who accept early retirement are to be treated as employees who accept voluntary layoffs using the arguments that both constitute terminations of employment initiated by the employer. Nice non-work if you can get it.

Whatever one thinks of the logic or illogic of this position, it clearly represents a windfall for employees who accept an early retirement package. The only real question at this point is who pays for those benefits? According to the Reed Smith writer, employers can actually take advantage of this ruling in two ways. Paraphrasing the author, (1) the employer can dangle the unemployment benefits as an added incentive to take the retirement package and (2) the employer could reduce the planned retirement incentive by the amount of the unemployment benefits. We would add that some combination of the two is also possible.

Here’s the rub. While the Court ordered unemployment benefits will likely lead to higher employer insurance payments and a bump up in their tax rate, for employers that reduce the severance package by the amount of the unemployment compensation, the increased payments will almost certainly be smaller than the reduction in the severance package thereby saving the company significant amounts of money. . Moreover, the higher insurance and tax payments are unlikely to cover the unemployment compensation received by the early retirees. Therefore, other contributors to the unemployment insurance plan or taxpayers will be stuck with most of the early retirees’ unemployment compensation. Not a good plan for the economy.

This is clearly something the state will need to keep an eye on. It could lead to serious excessive use of early retirement if companies can use the Court ruling to save themselves a lot of money by passing off a chunk of the cost to other contributors to unemployment funds.

Supreme Court in Reassessment Thicket Again

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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.

Legislature Ready to Undermine the Supreme Court

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The Pennsylvania House has once again put on display its utter contempt for the rule of law by passing a bill that would overrule orders from the courts including an order of the Supreme Court that upholds the state Constitution. Amazingly, the House passed a bill that allows county leaders to decide whether they will obey court orders to update property assessments.

One can only hope the Governor will veto this threat to the separation of powers enshrined in the Constitution. One must wonder if the members of the Legislature who have sponsored this monstrosity have considered the oath they have taken in which they swear to obey, protect, and defend the constitutions of the United States and Pennsylvania. Those constitutions empower the Supreme Courts to decide on constitutionality of laws written by the legislature and actions brought before it through lawsuits. When the Legislature decides to enact legislation that directly contravenes a Supreme Court decision based on the Constitution we have the making of a crisis in governance.

Assuming the Senate also passes the bill, and the Governor signs it, the bill will face an almost immediate challenge in the courts and will certainly be ruled unconstitutional. At that point, how does it get to be enforced? Will the Legislature write another law saying it is alright to ignore the new court rulings? Or will the county leaders go merrily on their way ignoring the court orders to reassess? If the courts acquiesce and yield to this assault on their power, they will have effectively neutered themselves as the citizens’ best hope for protection of liberty and property and relinquished those powers to a Legislature, which, by virtue of passing court crippling legislation, has shown itself to be unfettered by the Constitution or its oath to obey and defend the Constitution. This bill and its probable aftermath will make Pennsylvania the laughing stock of the nation.

The asininity of the situation is more clearly seen in the fact that the Legislature has had years to write assessment laws that would conform to and show for respect for the Constitution House members have sworn to obey. In their fear of property owners whose properties are grotesquely under assessed they have chosen not to risk the ire of those voters by passing needed reforms that would bring Pennsylvania into the 20th century, let alone the 21st century. In so doing they have allowed horrendous inequities to develop in property assessments for which only the courts can offer a remedy to property owners forced to pay far more than their fair share of taxes.

Now the courts come with orders to fix the problem as mandated by the Constitution’s requirement of uniformity of taxation and the Legislature has chosen to attempt to block the only avenue open to taxpayers seeking correction of illegal and inequitable treatment.

If the Legislature wishes to do something that shows their true colors and would be helpful to their cause, it could pass an amendment to the Constitution that removes the uniformity clause. Or if they cannot muster the political courage to do that they could pass an amendment forbidding the taxation of property.

But they will do neither. It is easier to pass bills that flout the Constitution and the rule of law. Better to stay in good stead with those getting enormous and illegal advantages in their tax bills than to deal with the problem of their own making through the years of unwillingness to tackle what has been staring them in the face. We are witnessing self-government at its most feeble.

Fitzgerald: Emperor Wannabe or Ignorant of How Separation of Power Works

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In his latest rhetorical foray into governmental theory and structure, Allegheny County’s Executive dismisses the role of the judiciary and attempts to arrogate unto himself and Council exclusive rights to determine how much property owners will pay in taxes and on what basis those taxes will be determined. This most recent denigration of the courts, the Constitution and the rule of law was prompted by Judge Wettick’s decree that the County manager and three other County officials complete the reassessment as previously ordered or face contempt charges.

Interestingly, the Judge opted not to cite the Executive for contempt after his defiance of the court’s orders last week. The ploy to put the threat of fines or jail on the Executives underlings can be viewed as a brilliant tactic in one sense and limp wristed in another.

By threatening to jail employees if they follow the Executive’s order not to comply with the Judge’s decree, he has put the burden of bearing punishment on people other than the Executive thereby placing the decision of whether they are punished in the hands of the Executive. Thus, the Executive must decide if he believes holding up the court ordered reassessment is worth having employees go to jail. Or he might choose to fire all the people the Judge has ordered to finish the job and not replace them-delaying the work for quite some time.

At the same time, removing the threat of punishment from the Executive takes away any fantasy the Executive might have had about being a martyr for the cause of frozen, never-to-be-changed assessments. On the other hand, it can be argued that authority and accountability reside in the Executive and it is he who should bear the consequences of his court defying behavior. As such, does the Judge’s decision to excuse the Executive reflect excessive deference and therefore bodes ill for the process going forward?

The language of the Executive in response to the Judge’s decree is telling. He told reporters the Judge was trying to run the County by judicial fiat and had overreached his authority.

Clearly, these comments are indicative of someone who is frantically trying to rationalize his own flawed position or who has completely forgotten-or never knew-about the role of the three branches of government. His attitude ignores reality. First of all, the County is a creature of the state and is therefore subordinate to its Constitution and laws. He might have guessed at that possibility when he recently took an oath to obey and defend the Constitution and the state’s laws, which includes by extension orders from the judiciary, especially those from the Supreme Court. Thus, the County Executive and County Council are not free to behave in any way they wish simply because the people of the County elected them. This is something the Executive should have learned as a member of Council when several Council passed bills were struck down by the courts.

But a number of recent pronouncements by the Executive regarding the courts and the reassessment order point to a belief that there are some laws and court orders the County has no obligation to obey and is within its rights to ignore. That level of disrespect for the Constitution and the judiciary if not checked can only encourage the populace to treat the rule of law with increasing disdain. The rule of law is the bedrock upon which a free society exists. Undermining the rule of law is tantamount to promoting anarchy.

If laws or constitutions need to be changed for whatever reason, there are prescribed, legal mechanisms in place to do that. But open defiance of the law by elected officials is a toxin in the body politic and must not be tolerated.

Reassessment Battle Escalates

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“Out with the new, in with the old” seems an apt description of what transpired last week.  In the latest twist in the never ending reassessment story, the new County Executive told the media that 2012 property assessments will be ignored and the County will instead certify the existing 2002 base year numbers for taxation purposes in 2012 and beyond-in defiance of court orders.

 

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The Effects of a Reassessment Delay

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If you are happy with your assessment and might see your real estate tax bill stay the same or fall as a result of the new numbers, you will have to wait until 2013 to reap the benefits. That’s the message delivered by Judge Wettick based on yesterday’s news that he may be open to delaying the implementation of the new assessments until next year. Additional delay brings the admonition of the Supreme Court’s 2009 decision that the overhaul of the base year be done in "a realistic timeframe" makes one wonder what is meant by realistic.

The benefit of hindsight might have moved the Judge to contract with an outside vendor completely and not the County who so opposed and continues to oppose reassessing and felt that accurate assessments can never be achieved (but are happy to tax assessments whether they be incorrect, correct, or something in-between). An Allegheny Institute recommendation that a sampling of values checked by independent appraisers or real estate experts could have gone a long way to helping with the current situation. Recall at one point in 2009 the Judge even proposed his own four district plan that would have seen the fourth district reassessed by October of 2013. Maybe that plan is coming together by hook or by crook.

Delaying the implementation until 2013 supposedly came at the behest of the Pittsburgh Public School District, which stated it would be very hard to determine its millage rate due to appeals. But that was precisely why the Judge moved the District to the front of the pack-so that it could see the aggregate changes, establish a millage, and send out tax bills.

A year-long delay basically puts Allegheny County back where it was in 2005: new values were released at the beginning of that year so that people could have a year to appeal, taxing bodies could see new values, and then get ready for January 1, 2006. When the new numbers were shown, sticker shock led to panic, which led to various plans before settling on the base year approach. What makes anyone think that the 2012 plan would not be a repeat of those earlier years?

The Assessment Nightmare Before (and After) Christmas

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As if the craziness surrounding the much delayed implementation of the Supreme Court’s decision regarding Allegheny County’s base year could not get any worse, it is possible that property owners living outside the Pittsburgh Public School District could get not one, but two property tax bills in 2012.

 

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Gearing Up for the New Assessments in Allegheny County

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“Assessments” and “fatigue” are two words normally not linked together, but they are forever joined in Allegheny County thanks to the events of the past decade. Since the revaluations of 2001 and 2002 the County’s property assessments have been on a tortuous journey only a fiction writer could have constructed before the fact. In 2005, County officials began conjuring up schemes to avoid a promised reassessment due in 2006 resulting in an initial effort being overturned by the Courts followed by the adoption of a base year system that was challenged in a case that went all the way to the Pennsylvania Supreme Court.

 

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