Why Property Assessment Is So Screwed Up in Pennsylvania, and What to Do About It

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Lots of interesting info in this Pew report on Actual Value Initiative assessment reform in Philly. Sandy Smith has you covered on the local angle, but this is a state blog so I’ll throw up the section on what Harrisburg’s doing wrong. Basically, there need to be regular state-mandated assessments, but you know this already:

Pennsylvania is one of only nine states that do not impose reassessment timetables or standard assessment methods on local governments. The remaining 41 states and the District of Columbia require reassessment of property values on a regular schedule ranging from one to six years, according to the International Association of Assessment Officers, the Kansas City, Mo.-based professional association for tax assessors. In Pennsylvania, it is up to each county to determine how and when to conduct assessments.

The state is one of only three—New York and Delaware are the other two—to receive a grade of F in standardized procedures from the Council on State Taxation, a Washington-based trade group for corporate and business taxpayers. The few regulations the state does have in place have relatively little bite; a report on the effects of infrequent assessment from the University of North Carolina called Pennsylvania “perhaps the most lax state in enforcing its revaluation laws.”

Pennsylvania does have a state agency that examines local assessments. The State Tax Equalization Board is a three- member, governor-appointed body with a staff of 18. Its main role is to estimate the aggregate market value of all taxable real estate for each county, compare it to the total assessed value reported by the county, and set what is called the Com-
mon Level Ratio—which is used to allocate state funding for schools. The process also serves as a review of how well local assessments reflect market prices and provide a basis for assessment appeals and lawsuits. But the board cannot force counties to reassess.

Some counties in Pennsylvania have gone more than 30 years between mass assessments. The longer a jurisdiction goes without one, the more painful the potential sticker shock that comes with the correction, making action on this front less and less palatable. Absent a requirement for periodic reassessment, “No county spends the time and political currency to reassess properties unless a lawsuit is filed,” Sharon DiPaolo, a Pennsylvania property tax attorney, has written. Typically such lawsuits begin when a taxpayer or group of taxpayers allege
that assessment inaccuracies make them pay more than their fair share.

There are numerous examples of counties in the state—Chester, Lancaster and Allegheny among them—that have initiated reassessments under court order. In Philadelphia’s case, however, the precipitating event was not a court order but a series of articles in the Philadelphia Inquirer that documented mismanagement and political cronyism at the Bureau of Revision of Taxes, the agency that had been responsible for assessments.

The County Commissioners Association of Pennsylvania, in its 2012-2013 policy platform, calls for an appropriate state agency that would oversee property tax assessment, mandate countywide reassessments, and provide financial help to counties to maintain accurate assessments. The Uniformity Clause and Its Interpretation

Another reason that overhauling property taxes is difficult in Pennsylvania is that the uniformity clause in the state constitution limits how much local lawmakers can tailor the tax to different types of property.

The clause reads: “All taxes shall be uniform, upon the same class of subjects.”

Similar clauses appear in some form in the constitutions of all but three states. In many states, those clauses have been interpreted as mandating uniform taxation only within individual sub-classes of property. But the Pennsylvania courts have ruled that all types of property are a single class. This interpretation prohibits what is commonplace elsewhere—sorting types of property into classifications taxed at different levels. Taxing commercial and industrial property at higher rates than residential is often thought to make good political sense.

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