I saw this letter to the editor in today's PG and remember an English teacher at Mt. Lebanon with the same name.
Reassessment will hurt people already hurting
I cannot believe Judge R. Stanton Wettick's wanting this reassessment or the people writing in to say it is correct. Are they not aware of the pages of sheriff's sales in the Post-Gazette every week, or the astronomical pharmaceutical bills many are trying to pay?
Do they not hear our churches pleading for donations for the needy? Do they know that oranges are now $1 each?
Along with county taxes, we have these boroughs and townships building schools and extensions that resemble Parthenons. They go into the high millions. For instance, in the 1940s and '50s a small Mt. Lebanon high school housed two or three times as many students as today's enrollment, but now we need an extension to the school, although 46 years ago there was an extension. I realize more things may be needed in the schools now, and I do not want to take anything away that the students need, but these things are raising taxes.
Some seniors may have paid their homes off but are now living on Social Security. These huge reassessments and taxes could mean losing the homes they worked to pay off. It is all right for some to agree with the assessments because they are not hurting.
Anway, I have not yet found the answer to why Judge Wettick decides the assessments. As Anna's king of Siam would say, "It's a puzzlement."
JEAN PIROTH
Mt. Lebanon
Read more: http://www.post-gazette.com/pg/12031/1207023-110-0.stm#ixzz1l4fh90lG
Here's something that most people seem to overlook: If your property's assessed value increases, that doesn't mean that your property taxes will increase. In the City of Pittsburgh, for example, under the new assessment, about two thirds of residential properties will actually pay lower taxes.
ReplyDeleteRemember, after the reassessment, tax rates must be adjusted, typically downward, to make the reassessment "revenue neutral." So, for example, if the community's total assessment increases to 150% of its previous value, the tax rates must be lowered to 67% (= 1/150%) of their previous value. Thus tax revenue remains at about 100% of its previous value:
(community wide)
tax revenue = assessment × tax rate
= 150% × 67%
= 100%
Whether your taxes will go up or down, then, is determined by how much your assessment changes compared to the community-wide change. Continuing our hypothetical example, if your assessment goes up to 130% of its previous value, your taxes would actually decrease:
(just your property)
tax revenue = assessment × tax rate
= 130% × 67%
= 87%
So your taxes would be only 87% of your previous taxes, a decrease of 13%.
On the other hand, if your assessment went up to 200% of its previous value (that is, it doubled), you would end up paying a third more:
(just your property)
tax revenue = assessment × tax rate
= 200% × 67%
= 134%
So, yes, most people in Mt. Lebanon will have their assessments increase. But that's nothing to worry about. What you have to worry about is your assessment increasing more than most. Then, you'll pay more.
But, for most people, it's not likely to be a big deal.
Cheers,
Tom
Tom, Mt Lebanon will be in line to apply for dispensation from Act 1. They're going to get what they feel is their "fair share" of your money by hook or crook.
ReplyDeletehttp://www.mtlsd.org/District/Budget/default.asp
and I quote (and who cares about what their legal crap says)
"At the Dec. 12 School Board Discussion meeting, the majority of the Board indicated they were in support of presenting a preliminary 2012-13 budget in January with the intent to apply for the exceptions to the Act 1 Index."
Their message to seniors? Want to avoid a sheriff sale? Leave now.
People are conflating two issues. One, as Tom commented, taxing agencies have to adjust the millage rates applied properties after an assessment so the total tax revenue is revenue neutral.
ReplyDeleteTwo, the school board is requesting an exemption to the state caps on millage increases.
The school board would be asking for a tax increase above and beyond what state law allows whether or not the assessment process happened.
To be honest, I am surprised that homeowners are upset that the value of their homes are increasing. I had always assumed that owners desired and expected the value of their homes to increase.
There is a TON of misunderstanding about the reassessment in 2012.
ReplyDeleteAccording to a leading economist in Pittsburgh, taxes for 6 of 10 reassessed properties will go DOWN no up.
Due to Act 1 limits on school district windfall reassessment revenues, I believe this is correct.
Please see this article for more:
http://www.post-gazette.com/pg/12008/1201780-155-0.stm
The thing is the school districts are going to get their money. If they need to raise $1 million to make their budget balanced, they don't care if that money comes from a small increase in assessed values or from a tax increase. They will simply use both means to their end.
This is one of the main reasons Act 1 was put in place; to stop school districts from getting away with tax increases without voter approval. However, there were so many exemptions put into the law that it makes it practically worthless.
Last Summer they put a few more teeth into the law by requiring school districts to include school construction costs as non-exempt. However, the District will get around that by approving the first round of bonds prior to Act 1 going into effect and then floating the remaining bonds over a more lengthy period of time so as not to trigger Act 1 referendum limits.
Of course, this will necessarily put added pressure on programs as trying to float bonds and pay staff all at the same time while staying under low Act 1 referendum limits will be a difficult, if not impossible, chore.
Fully expect that when/if the District does need to go to referendum in the coming years that they will tell the taxpayers that a referendum is needed not to fund bonds for the rest of the HS project, but instead to fund programs and staff that would otherwise be eliminated if the referendum does not pass.
But, back to the point, the reassessment will actually help more homeowners than it hurts. And the ones that it helps the most are likely the ones that need the most help- those who have not had the money to make significant upgrades to their homes since the last reassessment.
James
James, I went through the reassessment process in 1994 and the process is a real bear to manage. We heard from many homeowners who were not able to pay a 50%-100% increase in assessment. We were able to put a cap on assessments rising more than 20% each year to allow an adjustment period but a court case has blocked that path. We thought we had five years to let assessments rise but had to repeal the cap on the advice of the District Solicitor after three years. Unfortunately many folks will figure out they would have been better off with a millage increase than an assessment hike.
ReplyDeleteAfter the experience I really can't say who it might help.
John
Ok, so if the majority go down, let's say, why would the county want to take that chance? And if they go up, and the millage goes down, we will still be paying higher county taxes, right? At a recent commission meeting, I asked about the windfall. That won't be happening. The muni will go through the whole process again next year.
ReplyDeleteElaine
Elaine,
ReplyDeleteTax revenues will not go down for the County or the District. No matter what, they will get theirs.
The question here is one of fairness. If your neighbor put a $25,000 addition onto his house in 2003, you have effectively been subsidizing him if you didn't do the same. If it was jut you and him, he should be paying taxes on that $25,000. That increased tax paid by him should be money that YOU don't have to pay now.
I completely understand John's point about people saying they cannot afford the increaese in assessed value and maybe the phased in approach is something to look at.
Believe me, I am not saying it is easy to understand, it's just that there is a lot of misunderstanding of what will happen. Remember that presentation you linked to from an Audit/Finance Committee meeting that I put together? That was as well as I could do to explain it. Of course, it is two years old now but still legitimate.
http://lebosbupdates.blogspot.com/2010/05/eyeing-2012-allegheny-county.html
James
In 1994 the overall assessment increase for Mount Lebanon was 17% for the entire community. About 1/3 of the homes had assessment increases and the increase on the homes that were assessed upward averaged 26%. Some of the increases were somewhat over 100%.
ReplyDeleteSo the total assessed value of Mount Lebanon went up 17% but the increase came from about 1/3 of the properties, those who had an assessment increase above 17% paid the higher taxes. Those who had an assessment increase below 17% had lower taxes.
The cap we put on has been ruled illegal by Judge Tony Wettick in a case filed by a Sewickley resident so the cap we put on is unavailable today because Sewickley passed a cap that was so closely patterned after our cap that the Solicitor recommended we repeal the cap after three years (instead of 5 years) because it was his opinion that the caps in Mount Lebanon and Sewickley were so similar that he believed we would not prevail in court if a Mount Lebanon resident filed a lawsuit similar to the Sewickley lawsuit.
As I understand today's laws the district can only raise taxes by the Act 1 Index limit or by referendum. Neither the index limit. nor the referendum will help those with a larger percentage assessment increase above the average percentage assessment increase for our community. Those are the folks who will have a great deal of difficulty with the reassessment.
I agree with James that the District will get the money they need. If they don't get enough in index limit increase to pay the bills they will use district assets to convince the community to vote for a referendum to raise taxes above the index limit. If they put it on the ballot I believe it will pass.
John
Those who will see the largest increases are likely those who have been underpaying for decades. There are million dollar homes in Lebo that are assessed at less than half of that amount. That doesn't make those homeowners bad people, but it certainly places an unreasonable burden on those homeowners who are paying taxes based on a more recent/fair assessed value. The process will work if the County politicians allow it to work.
ReplyDeleteDave Franklin
Yes Dave, and if all of the reassessed values are truly accurate market values....it's the combination of politicians, questionable assessment accuracy and fairness of the appeal process that scares a lot of people like me.
ReplyDeleteBill Lewis
Mr. Franklin, I agree with you except that weren't those the claims of the 2002 reassessments. - to eliminate the inequalities - to fix the system if you will.
ReplyDeleteThat effort cost the county if I remember correctly around $20 million dollars and taxpayers money and time filing appeals for in many cases obvious errors.
Here we are 10 years later, going through the same idiotic process.
The system sorry to say is inherently flawed in that someone is arbitrarily assigning a value, however educated that estimate is to something that really is only worth what one can get for it. Politicians getting out of the way has nothing to do with it.
As an example, let say I have a 17th century antique and I have it appraised and they figure it's worth $50,000.
That's all well and good, but until I find a buyer and they are willing to pay $50,000 the monetary appraisal means nothing. [excluding insurance issues]
If I find a buyer and they offer me $20,000 which is the real value - the $50M offered by the appraiser or the $20M offered by a real buyer?
The only real fix is to find another system or base the home values based on the actual sale number.
The other flaw is that you never ever really own a home. Even if you pay off the mortgage and think you own it, should you fall on hard times or as a senior the taxes exceed your ability to cover them the state can come and take that home you think you own.
Do I have an alternative - no, but it's apparent the current system hasn't been fair or equitable.
Andy Bradford
Mr. Bradford, your example assumes that the new assessment numbers will be wildly off. I think that's an unfair assumption, and frankly it's an assumption that is not necessarily playing itself in the City. Will there be mistakes? Of course there will be. That's why there is an appeals process.
ReplyDeleteOnorato fought to delay the revised assessment system simply in an effort to garner votes in the Governor's race. Now Fitzgerald wants to delays the system because, as he puts it, it will unfairly single out Allegheny County.
Guess what - whether or not every county in PA reassess will have absolutely no affect on the level of taxes paid by homeowners in Allegheny County or Mt. Lebanon. None. It is immaterial. They could reassess tomorrow in Butler, Washington, Westmoreland, etc. and it will have zero impact on Allegheny County or Mt. Lebanon. The school district budgets in Mt. Lebanon, Peters Township, Butler and Latrobe will be what they will be, regardless of whether or not there is a reassessment.
The issue is uniformity within those individual taxing districts, and not uniformity from county to county.
It is also critical to remember that much rests with the homeowner's willingness to cope with (and be taxed on) a fair market number. Over the years, I've met with quite a few people who want to appeal their assessments, but when I ask them what they honestly believe they could sell their house for, they give me a number at or higher than the assessed value. I then tell them they little chance of winning an appeal.
As I see it, the system works when everyone (or at least as many people as possible) are paying taxes based on an accurate assessed value. I've often suggested that the County's contract for coming up with the assessed values should be awarded to Howard Hanna. They would probably nail every home's proper value within about $10,000.
That said, I'm not sure we can say the revamped system has failed or will fail when we haven't even seen the numbers yet.
Dave Franklin
I think the opportunity for errors in the assessment process are exacerbated by the length of the time between assessments. The same can be said for sticker shock. Doing assessments every ten years is just asking for chaos.
ReplyDeleteAn assessment process in which properties are assessed every three years (with one-third of the county's property being assessed every year) would seem to be a much smoother and saner process. I think that this was actually the proposed assessment program of Allegheny County back in 2002 but was scrapped.
I personally think the the local media is playing up the mistakes. All we hear about are the egregious mistakes (that are very correctable). I would bet the around 95% of the assessments are bang on. It's not newsworthy to report that most homeowners agree with the numbers (even if they don't like them).
Mr. Franklin:
ReplyDeleteSometimes your really baffle me. You write: "Mr. Bradford, your example assumes that the new assessment numbers will be wildly off. I think that's an unfair assumption, and frankly it's an assumption that is not necessarily playing itself in the City. Will there be mistakes? Of course there will be. That's why there is an appeals process."
Is there anything in any branch of government that you at the very minimum question. As in is this the best we can do?
Here's the lead paragraph from an article in today's Trib. "No one denies there are flaws in Allegheny County's $11 million court-ordered property reassessment, but an attorney representing a group of homeowners that pushed for the assessments wants to know if the problems are pervasive enough to run afoul of accuracy standards."
Did you see that first sentence? "NO ONE DENIES THERE ARE FLAWS IN ALLEGHENY COUNTY'S $11 MILLION ... ...REASSESSMENT,"
How many more millions and man-hours will be spent by taxpayers and the county on appeals to correct flaws?
Is that way things work, accept flaws then cheerfully attempt to correct them. Guess if a doctor screws up your major surgery, its OK we'll will appeal it later.
If your auto mechanic screws up 10% of the brake jobs he does, we'll appeal when your wife or daughter dies in a car crash, because they couldn't stop.
Guess the term "close enough for government work" really is true
Oh by the way who mentioned any of the other PA counties???
Call me a nit-picker Mr. Franklin. I guess I'm a fool to look at a system where at the onset one admits and actually prepares for appeals knowing full well they've got things messed up. I just happen to believe there has to be a better way!
Also, you never responded to the earlier question as to why staff and teachers get preferred parking at the HS when you daughter says there isn't much difference in the walk from the church. Your answer I suppose will be-- its not a big deal. That's OK>
I happen to believe-- why not have teachers [fewer and less apt to fool around and lack attentiveness to cars] cross thru traffic and keep the kids safer on the school grounds.
Just a different perspectives Dave. its really OK if we have different priorities.
Andy Bradford
One more thing, Mr. Franklin.
ReplyDeleteI wasn't debating taxes. Only the system in place for setting the rates. Want to live in Mt. Lebanon, you'll pay higher taxes than say Sto-Rox or West Mifflin.
How much we pay or want to pay for services and essentials is a separate issue.
Andy Bradford
Mr. Bradford, would prefer a system that does not afford you an appeal?
ReplyDeleteEvery business on the planet acknowledges that mistakes will be made. They build them into the cost of doing business. Even the best companies you can think of operate that way. Governments do the same thing. We do it as individuals too with auto, home and life insurance.
No one is suggesting that mistakes, especially egregious mistakes, are acceptable. You certainly won't find that in my comment. I simply took issue with your suggestion that you know - beyond a shadow of a doubt - that these new numbers are so horribly wrong (or as you suggest, arbitrary) across the board that we can't possibly expect it to be any better. Too bad no one asked for your opinion before we embarked down this path. We could have saved a ton!
As for the parking nit, I'll worry about it when the people who are actually parking and walking complain about it as much as those who are simply blogging about it.
Dave Franklin
Mr. Bradford, I forgot to answer one of your questions . . . and I know how that bothers you. Yes, I question the government. Ask anyone who has ever served as Ward 1 Commissioner. Ask Jo Posti, Steve Feller, Matt Kluck, Dan Miller, Dave Brumfield or any of the host of others that have had to listen to me question their decisions. I think I even called out Onorato and Fitzgerald in my post, right?
ReplyDeleteWhere we differ, however, is that I try to see the good first. The glass is half full until I have good reason to suspect otherwise. As Mr. Goodin notes, we've really only heard from those people whose assessments are obviously out of whack. We certainly haven't heard any gripes from the two-thirds of City residents whose taxes will go down. Maybe this time, they largely got it right.
I respect our government officials, particularly those in Lebo, for taking their time to do the best they can. Are there bad politicians, of course. Even in Mt. Lebanon. I just see no benefit in throwing everyone under the bus at every opportunity.
Dave Franklin
Maybe we should look for a different way to pay taxes. Eliminate the property tax and move to a sales and income tax. The change would not be that great, 3.2% income would go to 3.9% and sales would go from 7 to 9% if I remember the numbers correctly. Seniors or anyone who has paid off their mortgage would not have to be afraid of being thrown out of their houses. What you save in property tax most likely will be spent and that will help the economy. It would also make buying a house easier as you would not need as much cash at closing because there would be no tax escrow to fund. The problem is getting the other counties on board.
ReplyDeleteThere you go again, Mr. Franklin. Where in any of my post have I accused government office holders or employees bad politicians or bad people? Please point it out to me.
ReplyDeleteI promise, I will post the sincerest apology.
Our board members especially being unpaid deserve our appreciation for their work. Having said that, that doesn't exempt them from criticism or scrutiny.
See that's what I don't understand in your post. You say you're critical, you suggested I ask our elected officials if that's true. But, for some reason if I or others post a critique or suggestion on a topic here on Elaine's blog - we are seeing the glass half empty. You on the other hand see it s half full! Which as we all know from our science classes is infinitely better than our half empty glass!
Let's take the HS parking issue that I've been harping on.. Is it better to minimize the amount of traffic our kids navigate through rather than adult staff. Kids will be kids, run out on traffic, shove each other, day dream etc. Also, teen age drivers take more chances and ars usually in a hurry after school. There are younger kids from Washington and Mellon that cross the church drive before and after school. Teachers might be. More attune to watch out for them more than teens.
Is it the end of the world if the board doesn't reconsider the parking arrangements? No! Are they bad for not doing so? No! If a kid gets hit, it could be the end for them. Might never happen and you can cherish the opportunity to call me any name you wish. If an accident, does happen I'll sadly day I warned you.
As for the assessments, it just seems there has to be a better way. Do I have one no. Doesn't mean we shouldn't look for one.
Andy Bradford
Chris M., I'm with you, it is an alternative worth investigation. The other positive is that it would eliminate the county from having to spend $11 million every reassessment. I think the 2002 fiasco actually ended up around $20 million when it was allsaid and done.
ReplyDeleteAndy Bradford
One of the problems with assessed values is two similar properties should be assessed about the same amount. However, if your property is the higher assessment, and the amount is close to what it should be, you can't appeal the value of the under assessed property upward; you can only appeal the value of your property downward. You must rely on the appeals process to accomplish that. If the appeals process upholds the value of your property you are paying too much in taxes and the lower assessed property owner is not paying enough taxes - so the process remains unequal.
ReplyDeleteThe only way I know of to appeal the value of a property upward is for the Municipality or the District to make that appeal.
In the past the Municipality handled the residential property assessments and the District handled the more expensive commercial property appeals because it had the larger budget.
Unfortunately, the Municipality stopped their appeals so residential properties that were under assessed were not appealed. The lack of Municipality over cite in this process led to some unintended consequences when residential assessments were dropped drastically upon appeal.
I agree with Mr. Franklin that those who got the big reductions and are now under assessed are not bad people but the system was failing to uphold proper assessments because of the appeals process.
The District then had to pick up the bill to have a professional attend the residential appeals in the District and they had to pick up a bill the Municipality had agreed to pay because the assessment reductions were too generous and many folks slipped through a window of time in the appeals process where the Municipality didn't do their agreed upon job.
The District had to pick up the bill to preserve its own tax base and the Municipal tax base. This was a clear malfunction in the assessment system that the appeals process did not address.
In this time of very low Act 1 millage increase limits the District should consider asking the Municipality to uphold their past promise to handle the residential appeals process and release the District from an expense it cannot and should not afford.
John
The tax on non-productive residential real estate is anachronistic, regressive, fictitious, and opprobrious. Taxes can only be paid out of profits or wages - no residential property in Mt. Lebanon has ever paid County, Municipal or District real estate tax. Arguing about "fairness" or assessments only clouds the issue, and pits one neighbor against another. No one in Mt. Lebanon should give a Flying Wallenda about what his neighbor pays in real estate taxes - or any other tax, for that matter.
ReplyDeleteA logical step toward a coherent and rational local tax policy is to adopt the following plan: a)eliminate real estate taxes altogether on private, residential property, b)retain real estate taxes on property used for profit (commercial property), such as the sites of retail stores, service stations, etc., and c)raise the local income tax rate. Some economists also suggest charging a per capita tax on families with school-age children.
Let me remind everyone, again, that the current real estate tax system favors the wealthy because the fixed price of taxes for a home "assessed" at a given value is independent of what the owner makes. The wealthy in Mt. Lebanon aren't concerned about real estate taxes, as they will weather that storm quite well. It's a different matter for people who have seen the so-called "value" of their homes escalate at rates higher than those for their incomes.
Taxes should be based on profits and/or income, not on wishful thinking.
Richard said:
ReplyDelete"No one in Mt. Lebanon should give a Flying Wallenda about what his neighbor pays in real estate taxes - or any other tax, for that matter. . . . Taxes should be based on profits and/or income, not on wishful thinking."
If you don't give a flying Wallenda, about what your neighbor pays, why are suggesting a new tax structure?
John
Mr. Ewing asks:
ReplyDeleteIf you don't give a flying Wallenda, about what your neighbor pays, why are suggesting a new tax structure?
Because "The tax on non-productive residential real estate is anachronistic, regressive, fictitious, and opprobrious." Taxes on private, residential property are irrational because private, residential property is non-productive. It is the system that I call into question, and not the amount of money my neighbor is forced to pay into it. It is the system, that requires the opinion of a third party to assign value to my property without the expedient of a sale, that I find morally offensive.
RG, this is what I find offensive: a house assessed well below the sale price. Shouldn't the sale price be the gold standard? What someone is willing to pay for a house is, in my mind, what it is worth.
ReplyDeleteElaine
Hi Elaine:
ReplyDeleteI bring up assessments, and taxes on those assessments, and how some folks are complaining about why their neighbors pay less real estate tax than they do on comparable property, as examples of the fallacies of the residential property tax. None of that matters. Unlike a farm, which actually does produce wealth, a private Mt. Lebanon home produces nothing. Yet the private home-owner is sent property tax bills every year that must be paid out of his after-tax income, and the amount of which is calculated on what some disinterested party thinks that property is worth.
What my house is worth should be of no concern to the County, Municipality or the District. Those entities should derive my proportion of their revenue, not from my house, but from my profits/income - because "that's were the money is."
Mr. Gideon,
ReplyDeleteAn ad hoc commission to the Board studied two alternative ways to tax property in 2006. The choices were to continue the real estate tax or tax personal income. The real estate tax was chosen by all members of the commission but that can be reconsidered every two years by the school board under Act 1.
Perhaps now would be a good time to reconsider the decision as we had federal and state funding cuts to education last year and a state budget freeze of educational funds totaling almost $16 billion this January. On February 7, 2012, the Governor's budget will be released and may contain some interesting news about education funding for the upcoming school year. Couple that with very low Act 1 millage index limit increases and curtailed school budget exemptions under Act 1 and you have a basis for bringing the subject before the Board for reconsideration. From the blogging you have done I believe you would be a good applicant to serve on that committee if the Board decides to reconsider the issue.
Regards,
John
Hello Mr. Ewing:
ReplyDeleteThanks very much for the suggestion. However, I must tell you that my service on any committee that deals with the Board would be a little like me volunteering for skeet shooting - as skeet! I doubt seriously if either the District or the Municipality is ready for libertarian ideas; but I will give your suggestion some thought.
Mr. Gideon,
ReplyDeleteAs I understand the options, they are to 1) continue the property tax or 2) tax personal income. If it turns out libertarian ideas are not an option, you would have a good understanding of the constraints under which the board operates; the constraints are not easy and a volunteer effort of about 5-6 meetings might help us all, with your help, to understand the issue better. I can tell you it helped me understand those issues as I volunteered for the 2006 tax commission.
If you get a full understanding of the advantages and disadvantages of each side of the issue you may or may not be in a better position to make your case to State legislators and give the board better options. If not, you come away with the understanding for yourself, and may be a good spokesman to explain the rationale to other members of our community. Good luck with your decision.
John