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The most significant information you will not hear on the nightly news is the the House Property Reassessment Task Force's resounding criticism of the State Tax Equalization Board (STEB), one of the dustier corners of the state bureaucracy but one which makes a crucial determination on which rests the fate of billions of public dollars.
The main function of STEB is to "determine annually the aggregate market value of taxable real property in each political subdivision and school district throughout the Commonwealth of Pennsylvania". Those aggregate values are then "used by the Department of Education as one factor in a legislative formula for the distribution of the state subsidies to each school district", known as the MV.
In fact, the MV isn't just one factor, it's THE factor - it is the bedrock number used alone or typically in combination with other numbers such as personal income (PI) to produce further numbers such as the "market value/personal income aid ratio (MV/PI AR).
What is the MV and its cousins to you, you ask? Nothing less than the sum and pith of how a great many forms of state aid to local governments and agencies is doled out across the state, not just to school districts (though they receive the lion's share of this MV-based money [pdf]) but also libraries, volunteer fire departments, etc., etc.
The problem is that the methodology STEB uses to compile the MV is absurdly, hopelessly slipshod - in fact, little better than throwing darts. The House Task Force evaluation of STEB's methods build on the criticisms of the Auditor-General a year ago, so that a very significant body of evidence, including the testimony of STEB's own heads, makes it clear that the MV is almost completely unreliable.
But how does this relate to Allegheny County's reassessment? Because the whole point of the court-ordered reassessment was to correct an injustice in the calculation of numbers - in this case, the unfair assessment of property values in the county.
But the county's reassessment can only correct that local injustice - and it appears that a much larger injustice is at work when STEB complies MV totals for 67 counties, each of whom have their own system of assessing MV, and most of whom rely on base-year rather than full-market-value figures. Effectively, STEB is comparing apples to oranges and multiplying by 67, then certifying the result for use by PA Dept of Ed and other state agencies in re-distributing billions of tax dollars around the state.
How this actually affects Allegheny County is illustrated by a school district like Woodland Hills, where some of the original plaintiffs in the lawsuit which prompted the court-ordered reassessment owned property. Those individuals rightly felt that the base-year system unfairly assessed the value of their homes.
But even if the reassessment has given them a better (though still unfair) assessment, they and every other resident of Woodland Hills may be receiving far less than their fair share of state aid for schools, libraries, and other public services. Or, they may be getting far more than their share. No one can say for sure, because the MV certified by STEB is completely unreliable.
Moreover, even if STEB is reformed root and branch, it will still be comparing fair-market-value apples to base-year oranges, and therefore setting aid ratios which are based on nothing more substantial than the turn of a roulette wheel, until all counties in Pennsylvania are assessed equally, under the same system, by people trained to administer it in the same way.
Many of the recommendations of the House Task Force report, when implemented, would achieve this kind of uniformity and therefore a more reliable and fair distribution of state aid.
In the meantime, however, the reasons for the state senate to pass H.B. 2137, which would place a moratorium on court-ordered county reassessments, continue to pile up. Any fairness gained by the Allegheny County reassessment may, and probably will, be offset by the unfair distribution of state aid money because of a fundamentally flawed formula, and one whose unfairness is only made worse when some counties are forced to adopt a different assessment methodology than all the others use.
In the meantime, however, the reasons for the state senate to pass H.B. 2137, which would place a moratorium on court-ordered county reassessments, continue to pile up.
Actually, you basically explained yourself why that is a non sequitur. These are two distinct issues, so delaying the County's reassessment does not somehow address this issue. It just means there are unremedied local injustices piled on top of possible state injustices.
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Any fairness gained by the Allegheny County reassessment may, and probably will, be offset by the unfair distribution of state aid money
Or the unfairness arising from the STEB situation could be compounded by delaying the reassessment, or there could be no cognizable pattern whatsoever. Again, as you explained yourself, we have no means by which to conclude there is an "offsetting" rather than "compounding" effect, so the one issue really doesn't have anything to do with the other.
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one whose unfairness is only made worse when some counties are forced to adopt a different assessment methodology than all the others use.
Again, we don't have any reliable means by which to conclude the situation would be rendered less unfair by delaying the County's reassessment (yet again--it has been delayed since 2005).
Moreover, you are painting a false picture of uniformity when it comes to reassessments among the counties outside of Allegheny County. There is no such uniformity, and in fact adopting the new numbers would bring Allegheny County closer to some other counties, farther from others.
So no doubt, you have identified an important issue which people should be paying a lot more attention to. However, it has nothing to do with whether further delaying the reassessment of Allegheny County is a good idea.
By the way, I am not sure what this was intended to mean:
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STEB complies MV totals for 67 counties, each of whom have their own system of assessing MV, and most of whom rely on base-year rather than full-market-value figures. Effectively, STEB is comparing apples to oranges and multiplying by 67, then certifying the result for use by PA Dept of Ed and other state agencies in re-distributing billions of tax dollars around the state.
But to clarify, STEB does NOT take the assessed values in each county and assume they equal the market values in those counties. Rather, STEB gets its own sampling of sales data for each county and determines a market value for the counties. In other words, it is performing its own little shadow reassessment of each county. It also then calculates a ratio between the assessed value and its calculated market value for each county (called the "common level ratio"), but again, it does not assume the market value is equal to the assessed value (indeed, in that case the common level ratio would be definitionally 1 for each county).
Again, I'm not sure the OP was suggesting otherwise. But this is an important point to understand, because otherwise people might get the mistaken impression that by fiddling with the assessed value, a county could easily manipulate STEB into a more favorable market value calculation. That's not how it works.
Good blog post here on HB 1776, the "Property Tax Independence Act", a proposal to eliminate prop taxes for public education funding, substituting income and sales taxes.
Since the funding mechanism would substitute a much simpler per-capita formula for school district funding, and since all SD funds would come directly from these state revenues, it would not just end the STEB insanity and mostly take the heat out of the reassessment issue - this proposal kills so many birds with one stone, it looks like the opening day of grouse season.
More detailed report on House Reassessment Task Force from Patch here.
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'The Reassessment Task Force Report confirms what many of us have suspected all along, that the current reassessment system in Pennsylvania is a complete mess, but one that we now hope to get untangled once and for all,' state Rep. Jesse White said.
I would take issue, however, with her suggestion that the report makes no useful suggestions for improving PA's property assessment system(s). The report is anodyne (as I remarked in an earlier thread), but not a completely vapid political document, and the testimony incorporated in it, particularly the suggestions by Ira Weiss and others, come close to answering Ms. Hauptman's crucial question: Do you have a better plan?
The fact is, other states, even neighboring states, manage to operate coherent, uncontroversial and uniform state-wide (or at least state-supervised) systems of property assessment. Hauptman's conclusion that the report contained "no practical suggestions on how to change and/or improve the current reassessment system in Pennsylvania" is not strictly accurate, if the entirety of the report and supporting documents is taken into consideration. But even if it were, those practical suggestions are not mythical beasts or the Holy Grail - better systems exist, they can be studied, and the proof for skeptics will lie in whether the bill's sponsors and other members introduce companion legislation.
Secondly, while Hauptman makes a case for not wasting the effort and good achieved so far, reasonable people are aware and willing to admit that the re-assessment in Allegheny Co was very far from ideal. The new numbers may be more fair, but they are not actually fair, nor does the present system address legitimate concerns about the consequences of sudden property tax bill changes. These improvements are not going to be achieved through the courts: if they happen at all, they will come from the legislature. There is no reason why the expense Allegheny County has undergone needs to be wasted, if the Gen Ass proves capable of producing a better way.
(1) The availability of models in other states is not something we needed a Task Force to figure out. Adopting one of those models remains a question of political will, not study;
(2) This reassessment has been delayed since 2005, with the last one being in 2002. "Sudden" this is not.
Interesting endorsement from Driscoll, though the later part ("no legislative authority") is utter drivel.
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Attorney Don Driscoll, who represented some of the clients who sued Allegheny County to force reassessment, said he agreed with those who say reassessment should be governed by state rules.
But he rejected Mr. White's call for a moratorium on reassessment projects until the state acts, characterizing the idea as "a waste of time."
"The Legislature can and should do something about setting assessment standards, but members do not have the authority to stop a process that the [state] Supreme Court has ordered to fulfill a constitutional mandate," Mr. Driscoll said. "They have no legislative authority."
While White seems is hinting that he has an answer to Hauptman's objection about a better plan:
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Mr. White said he and other task force supporters were preparing to introduce a series of bills to standardize and modernize reassessment when the Legislature reconvenes after the April 24 primary.
One proposal would require appraisal companies doing work for counties to reveal how they arrive at property values, he said. "Now they tell us their formulas are proprietary information," he said. "We want everybody to be able to see how they did the valuation.
Having the state assume responsibility for the property tax process may be the best option. Only Delaware with three counties and Pennsylvania with 67 counties continue to require county assessments.
A statewide system would offer many benefits. Mandated frequencies (i.e., rural counties every five years, urban counties every two and a half years) would mean that individual counties could no longer avoid reassessing in order to gain an advantage over a neighboring county. Using a common formula would improve efficiency and the economics of scale would dramatically lower cost. The state could require that each county pay for the cost of reassessments, resulting in no cost to the state. Most welcome would be the elimination of partisan politics from the process.
Unfortunately, the odds of this option being accepted by the state Legislature are longer than the odds of the Pirates winning this year's World Series. Those odds could be changed if we insist that the political leaders of both major political parties and the business communities of a majority of our counties unite to support a plan for Pennsylvania to join the 48 other states that have statewide assessments.
Each of Pennsylvania's 67 counties now decides on whether a reassessment is warranted -- a system that has its supporters and detractors. Many counties, such as Erie, have shown a commitment to regular countywide reassessments, while others have gone decades without re-evaluating the taxable values of the properties in the county.
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Last edited by Yac; 04-18-2012 at 12:59 AM..
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