Sunday, October 30, 2011

Reading isn't Understanding

So I finally got around to asking myself what the details are on the library tax referendum that will be on the ballot in the City of Pittsburgh in just more than a week.  I wanted to start with what the actual wording was of the referendum itself.  It is suprisingly hard to find.  Nothing on the Allegheny County elections web site as best I could find.  Likewise, the City of Pittsburgh's web site was not helpful.  If either had something it was not very obvious.

So of course I then ask Ms. Google and the first search hit I get, which seemed to be directly on subject was this:

Which I then started reading and was reinforced in my web wandering that it was all about the referendum coming up.  I started to get a bit annoyed even, it sure seemed to be saying all sorts of things that were not made known in an news on the topic thus far. Turns out, of course it was saying things not relevant to the news today.  The site is about a referendum.. or a proposed referendum some years ago.  I can't quite tell the date from any of the content there.  I don't quite recall any such referendum making it on the ballot.  Did it?   Nice snag of the domain though.  I know the library's budget is tight, but it was probably worth a few dollars to register a few of those ancillary domain names sometime along the way. 

So the more relevant web site for the folks pushing a 'yes' on the referendum is this:

Still, on that site nor anywhere else I still can't find the actual specific wording of the referendum itself.  Yes, there are folks I know who clearly know and I could probably get it from them directly.. but still you think it would be more easily available to people since I guarantee the vast majority of folks showing up at the polls will not even know about any referendum.. just as they won't know the name of a single judge on the ballot in judicial elections.

But the news coverage is pretty clear.  The referendum is ammending in some form the Pittsbrugh City Home Rule Charter saying a 0.25mil increase in city of Pittsburgh property tax rate will generate money earmarked for the Carnegie Library in the City of Pittsburgh.   The news accounts have varied on what they say it will generage in cash for the library.  Most amounts hover around $3.5 mil.. I've see some say $3.25 mil annually.   I think all those numbers are high.

I used to work at the Congressional Budget Office and scoring tax proposals was a routine project.  We will skip what the tax elasticity is on say residential migration decisions, though I think that is still a big issue for the City in general.   Here is a more basic ratio analysis.

Current city property tax rate:  10.8 mills.    Proposed .25 increment is  2.3% of an increase. 

Current city of Pittsburgh property tax revenues have been very stable over the last decade at between 124-127 million annually with no obvious trend up or down.  There are collections of past revenue accounts which the new tax will not apply to at first, but in a long run steady state they should be added in. That averages to an addtional $2-$7 a year, but an aveage of under $4mil  Total average real estate tax revenues for the city are pretty stable at just under $130 mil a year.

So, 2.3% of $130 mil is  $3 million annually. Not quite sure why you would think it would bring in more.  It is just a simple ratio analysis I know, but any adjustments as we would do at CBO for say tax elasticity would only be downward.  I'll get into the issue of the impending reassessment in a minute.

As for who will be paying the tax, as I noted before, there is a huge variation in property tax revenue collection across city neighborhoods.  Whole neighborhoods are tax delinquent to a degree some bills will never be paid, and the range of property values is quite extraordinary. 

I am a bit curious about how the legalities will work with regard to the reassessment and this referendum.  The timing of the referendum exactly on top of the reassessment is going to be confusing to some.. likely including those who send out tax bills.  There is going to have to be a resetting of all property tax rates in the county in order to comply with state revenue neutrality rules that apply specifically to mass reassessments.   What is the baseline as it applies to this referendum?   If the new assessment values go into effect a day before the new tax rate becomes effective, maybe it does not need to be reset and it winds up bringing in a lot more money since by all accounts the nominal value of city property will be going up a lot on aggregate.  Or is it the other way around and the referedum millage needs to be reset the moment it goes into effect?   It just seems this is something someone must have thought of given that the reassessment train has been going a lot longer than this referendum has been in the works.  At issue is going to be a million dollars a year give or take.  I see no mention of the issue in the coverage.  Maybe it's all clear to someone how it will work and I am making this all up?

So I am not sure how it all works out.  Note the City of Pittsburgh budget projections show an increase in property tax revenues over the next 5 years. The thing is that the city's projections have always shown that increase coming in upcoming years.. yet it never comes. The original Act 47 plan projections for the city all presumed successive and perpetual 10% jumps in the city's property tax revenues with the really funny notion that that was how the budget would be balanced in the long run.   It keeps being put in there I think because it makes us feel better about what the future budget problems will be in the city.  With the base year assessment and unchanging property tax rates there has not been a lot of potential for any meaningful increase.  With a new assessment, laws effectively requiring revenue neutrality will limit any increase as well.    With continuing population loss in the city, especially household population loss, there isn't a lot of potential for property tax revenue to increase any time soon.  Might be a bump if someone really makes any progress changing the laws that let most large commercial property transactions escape from paying any transfer taxes.. but that is likely as dead a subject as it has been when broached in past years and decades.


Anonymous MH said...

The library people called me for a push poll. I may have mentioned it before. That left a really bad taste in my mouth.

Sunday, October 30, 2011 10:57:00 AM  
Anonymous Anonymous said...

So what you're saying is, you hate libraries and children. ;~>

I haven't read MH mentioning the push poll before, but I too had a negative experience with the pro-library tax push poll. I've asked a couple of public-private task force members (Kraus and Dowd) for a copy of the questionnaire used in the poll, to no avail.

Monday, October 31, 2011 9:27:00 AM  
Anonymous MH said...

There were only two questions: Are you going to vote? Are you going to vote for the tax? If you said maybe, you got a lecture.

If it had more questions it might have been a real poll. Just calling and giving reasons to vote for the tax would have been fine also. It's the fake poll that is the problem.

Monday, October 31, 2011 10:04:00 AM  

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