Saturday, January 08, 2011

The Groundhog will returneth

No, this isn't about the weather, the movie, nor any other famous marmota monax.  This is about property assessments and yes, that does make sense around here.
Since people keep asking me about this, I’ll say a few things.  I know little on the legality of tax referendum for new property tax changes in Pittsburgh as is being proposed, but it does seem to me that this is all an assessment issue first and foremost.  The issue of equity in the county’s property tax system has been at issue and litigated nearly continuously since Larry Dunn fired all the assessors and froze property assessments in 1996. Larry Dunn I still argue is the biggest change agent in the county over the last 40 years, though not quite in the way he intended. (even less fair, it seems even Bob Cranmer has a wikipedia entry, but none for Larry..  what's up with that?).  As many know, yet many still unawares, Allegheny County is currently proceeding with a court-ordered mass reassessment.  The primary purpose of which was to correct obvious inequities that inevitably emerge if you do not reassess your real estate comprehensively in a routine manner.  We are getting close to getting new numbers for the political machinations to have re-started on this.
So the first question to ask is what happens when the county finishes the current property assessment? Will it then try to never do another reassessment ever again until forced to do so by a judge somewhere.  Judge Wettick is going to eventually retire and one could predict a future where no other judge would even be willing to take.  We could easily get back to a situation much as I described when I wrote “Groundhog Day in the Assessment Office”, which is now going on 9 years ago.  My friend the late John Craig would use a similar meme in the intro paragraph of "Same as it ever was",written a few years later, but of course he probably would not have read the former as it was in the Trib.  It's a kind of self-evident theme around here and the fact that Phil Connor/Bill Murray was of Yunzer provenance in the movie just can't be a coincidence.
Obligatory history mention, but if you really want to know about problems in assessments, the Allegheny County Jaffurs’ report is the rosetta stone.  Yeah, I know it is from the 1970's.  Some of it has been overcome by events, but an awful lot of it is relevant today.  There is a great point in there that even then, a century after the invention of the camera and decades after folks were generally using computers, assessment records were mostly pen and paper and for many parcels the only visual record or many properties were WPA-era line drawings.  Cool, but not such a great practice for a modern assessment office... let alone in a region that was even back then on the cutting edge of computer applications.

I digress. Equity problems in property assessments are part endemic and otherwise too much to get into here.  But it is almost always going to be true that equity issues grow as assessment values age.  So the question is how good.  This also gets to what will be the bigger story.  The bottom line is that Pennsylvania manages property assessments about as badly as they manage local public finances, which is they do not manage it much at all.  Pennsylvania as a state exercises little of the oversight and none of the management of the assessment system as is typical in many if not most other states.  There are some statutory issues that require the state to do something and one can look at the Pennsylvania State Tax Equalization board which is an office that collects data on assessments and property sales valuation from all counties. 
The STEB computes a “Common Level Ratio” which is a metric measuring how far off assessed valuation are from recent property sales on average.  So a lower value means assessments on the whole are below current market values.  The important note is that this is on average, and does not say much about whether your individual tax is over or under assessed. You can look at the aggregate STEB data for counties in Pennsylvania here.

No doubt over time assessment values have divereged ever farther from current market value. Here has been Allegheny County’s CLR (as per the STEB) since 2002.


A common argument is that Allegheny County is unfairly put upon to reassess when other counties have not.  Given the numerous anti-windfall statutes you have to differentiate between assessment accuracy and tax rates and I have never completely understood the argument.  Overall assessment values go up? Reset millage rates to whatever the neutal rate is. Of course it is not that simple and taxing bodies have ways to push the system and sneak in a tax increase when assessments happen.  Nonetheless, different counties do better and worse when it comes to accuracy in the aggregate.  This is what the STEB data says about how counties do at using assessment rates close to curent market value.
PA Counties with highest CLR’s in 2009
County2009 CLR
LUZERNE99.7
CLINTON96.9
VENANGO93.5
ALLEGHENY86.2
LAWRENCE84.8
GREENE84.6
MCKEAN84.6
LYCOMING82.7
ERIE81.8
FAYETTE81.4



PA  Counties with the lowest CLR’s in 2009    
County2009 CLR
BLAIR8.9
BUCKS10.9
FRANKLIN12.3
HUNTINGDON13.2
BUTLER13.7
LEBANON14.2
MONROE15.8
JUNIATA17.0
LACKAWANNA17.0
WASHINGTON17.5
So it looks like Blair County wins the prize as the county with the lowest CLR.  So their tax bill shows they live in a home that on average is really worth 11 times the value shown on the bill itself.  Are they being undertaxed?   If their values were reset, the millage rates would be reset as well and whether they wind up paying more or less will be determined by the accuracy of their assessment relative to everyone else. 
There is a follow up to my “Groundhog” oped that I need to get into at some point.  The full story of the first 2001 mass reassessment in Allegheny County has never really been written and like all our public finance stories around here becomes pathologically convoluted as only we can make these things… for another day.

3 Comments:

Anonymous BrianTH said...

I've made extremely limited progress trying to explain to various people why a reassessment is about the distribution of the tax burden, not the overall magnitude of the tax burden. To be fair, the implications of reassessments when there are anti-windfall laws is one of those things that is pretty intuitive for people who find, say, algebra (or maybe calculus) pretty intuitive. For the vast majority of the public--who also rationally spend their time thinking about other things anyway--this is at least two or three operations too complicated to really grasp.

Sunday, January 09, 2011 10:45:00 AM  
Anonymous MH said...

To quote the post:

taxing bodies have ways to push the system and sneak in a tax increase when assessments happen

I'll believe it is revenue neutral when I see it. The county is operating at a deficit, the school district spending reserves, and Pittsburgh is being Pittsburgh. If it is actually revenue neutral, the increase will come soon.

Sunday, January 09, 2011 5:23:00 PM  
Anonymous MH said...

That reminds me that I'd seen one of the assessors last week. They drive suitably practical cars and wear those traffic warden vests.

Sunday, January 09, 2011 7:50:00 PM  

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