Legislative Budget and Finance Committee releases new report on property tax reassessments authorized by Levdansky resolution
HARRISBURG, Sept. 22 – The Legislative Budget and Finance Committee today released a study aimed at finding ways to improve the state’s fragmented method of reassessing property values.
House Finance Committee Chairman David Levdansky, D-Allegheny/Washington, introduced the resolution (H.R. 334) authorizing the study, which examined the methodology, financing, taxpayer protections and constitutional provisions that impact property tax assessment in Pennsylvania compared to other states.
“The impetus for the study was a court decision in which the state Supreme Court rejected an Allegheny County ruling and upheld that based-year assessments are constitutional,” explained Levdansky, who also serves on the LBFC committee. “That ruling raised serious questions about how counties implement their individual base years. Furthermore, counties are increasingly reluctant to implement a reassessment because they are costly and unpopular politically. So reassessments are only occurring when courts rule they are required. We need a statewide standard on when reassessments occur, a better way to fund them, and a requirement that limits property tax increases after a reassessment.”
Levdansky said the current fragmented system allows counties to assess property values at varying time frames and methods, which can cause individual property values to rise dramatically between assessments and lead to disparate assessments on similar properties.
“Sometimes this system works to the advantage of the homeowner, but it’s unfair to expect one homeowner to pay taxes based on an assessment in 2010, while their next-door neighbor could be paying based on an assessment from 20 years ago,” Levdansky said. “Irregular assessments are also one reason people see huge jumps in their property taxes for which they may not have budgeted.
“Homeowners often view reassessments as a tax increase, but for every tax increase, there generally is a decrease, especially now that the housing bubble has burst and many property values have declined,” Levdansky continued. “Without a reassessment, people are paying higher taxes than they really should. Reassessments correct an unbalanced tax distribution.”
The Legislative Budget and Finance Committee, in conjunction with the Local Government Commission and State Tax Equalization Board, worked with the Assessors and County Commissioners associations of Pennsylvania to conduct a study of the state’s fragmented system of property tax assessment and compare it with systems that are utilized in other states, with a particular emphasis on Maryland and California.
The study found that many counties acknowledged the need for reassessment, and in some cases said their practices were “outdated, inequitable, inaccurate and non-uniform.” The study also found that considerable time had passed since the last reassessment occurred in Carbon, Erie and Lancaster counties – almost 30 years.
“The study meticulously documents how unfair, inefficient and inequitable the tax burden is distributed throughout the 67 counties,” Levdansky said.
The study found:
· Unlike many states, Pennsylvania obtains no revenue from property taxes.
· 22 counties have not completed on-site inspection of all properties since at least the mid-1980s.
· Counties differ in their property markets and assessment systems.
· Comprehensive countywide reassessment does not assure that statistical standards for assessments are met.
· The State Tax Equalization Board calculates certain statistical measures, but it is not designed to evaluate county systems or determine if a county should be required to reassess.
· State courts have a major role in Pennsylvania’s property valuation and assessment system and have ordered counties to reassess.
· States differ in their real property valuation and assessment systems.
Levdansky said he will work to implement the LBFC recommendations for improving the current system:
· Authorizing a state agency to supervise county property valuation and assessment activities.
· Providing for state and local government financing of reassessments.
· Amending the state constitution to provide caps on individual property tax increases following reassessment; permit residential and commercial property to be treated as separate classes; permit partial or selective reassessments of certain geographic areas or property types (i.e. residential, commercial); and permit property to be valued based on its sales price.
Levdansky added that this issue is separate from property tax reform, which focuses on shifting the burden of funding school districts and local governments off homeowners, and said he hoped more progress could be made on reforms in the near future.
A copy of the report, “Pennsylvania’s System for Property Valuation and Reassessment,” can be found on the Pennsylvania Legislative Budget and Finance Committee website at http://bfc.legis.state.pa.us.