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Passing the buck on tax boosts
Council President Rich Fitzgerald, D-Squirrel Hill, said it is possible the two-thirds majority of council members needed to enact legislation immediately will get behind the plan.
If questions remain about details of the plan to cap assessment increases at 4 percent, the measure could be referred to a committee for further study, he said.
Instead of completing a full reassessment of property at current market value as presently required in the county code, Onorato wants a six-tiered reassessment system that would allow valuations to grow at a maximum of 4 percent for the 2006 tax year.
Newly introduced council legislation is usually referred to a committee for study and recommendation before a final vote at a later meeting.
Council assessments committee chairman Wayne Fontana, D-Brookline, said Onorato's office was pushing last week to get the plan adopted quickly, but was unable to provide him with full details of the legislation.
The meeting will be held at 5 p.m. in the Gold Room in the Allegheny County Courthouse.
Dan Onorato
He's pitching the cap on reassessments as protection for homeowners from huge property tax hikes. But it won't rule out bigger bills because school districts largely control property tax rates, and county school boards have demonstrated their willingness to raise taxes and take the heat from voters.
In the two full years since the county's last reassessment was completed in 2002, school district property tax rates have risen by an average of just over 2 mills countywide while municipal tax rates have risen by an average of 0.4 mills. A mill equals $1 for every $1,000 of assessed value. On a home with an assessed value of $100,000, the average combined school-municipal rate hike adds up to an extra $240 in taxes each year.
So while assessments remained unchanged, tax bills went up, said Mike Suley, a real estate agent, assessment appeals specialist and former member of the Allegheny County Board of Property Assessment Appeals and Review.
"You can't blame that on the assessments," Suley said. "It's the millage rates that drive that train."
Allegheny County was scheduled to send notices of updated property values to all property owners last month. Countywide, the reassessment calculated by Onorato's office would have raised property values by an average of 19 percent. But Onorato, who questions his office's ability to accurately gauge the current value of the county's 550,000 properties, pulled the plug.
Instead of setting a full market value for each property, he wants to place them into one of six tiers of adjustment. The most a property's taxable value could rise would be 4 percent. There would be no limit on reductions.
Onorato's proposal, though, would not limit the ability of school districts, municipalities or the county to raise tax rates if they want to collect more money to pay their bills.
Critics say Onorato's plan allows him to dodge responsibility for raising taxes, but fails to ensure that all property owner pay their fair share.
"It makes it easier for the county executive to look like he didn't do anything wrong, while pushing the burden onto the local authorities," said Joe Rodella, a Mt. Lebanon school board member.
Onorato said school districts are not supposed to use reassessments to generate new tax dollars and accused them of seeking to "gouge" taxpayers.
"The only reason they could be mad is they want somebody else to raise taxes for them and I'm not going to do that," he said.
State law forbids taxing bodies from gaining more than 5 percent in new revenue when a reassessment occurs, unless the school board, municipality or county votes to raise taxes. Districts where reassessments lead to big increases in the total assessed value are supposed to make corresponding cuts in tax rates to keep the amount of money collected at or below the 5 percent windfall limit.
Other than the allowed 5 percent increase in collections, reassessments are supposed to redistribute the existing tax burden among property owners based on current market values.
If every home went up in value equally -- no matter how much -- all homeowners would still be responsible for the same share of the taxes collected, tax rates would go down and their bills would remain the same.
When some property assessments go up faster than others, homeowners with the fastest-rising values would be responsible for a greater share and pay more in taxes. Those at the average of the increase would maintain their share and continue to pay the same amount. Those below the average would see their tax bills go down.
But Onorato said no one gets a break because school boards don't roll back their tax rates. That's why he wants to limit assessment increases, even though he acknowledges it will prevent an accurate redistribution of the tax burden, forcing some to pay more than they should and giving a break to others.
"I have no faith and no belief the system will roll back the millage rate," Onorato said. "We haven't seen it in the first two reassessments, and we weren't going to see it this time."
Alan Bennett, fiscal services director at Moon Area School District, said Onorato is exaggerating school districts' willingness to reap a windfall by breaking the law.
"The impact of the cap is to water down the amount of the millage rate decrease you would have gotten," Bennett said.
Rodella agreed that Onorato's plan seems to hurt lower-end homeowners because their properties are more likely to be assessed at figures closer to market value, and because they will be less likely to see tax rate reductions.
"Frankly, it's going to lead to the more expensive properties getting a break," Rodella said.
County records show that a large majority of school boards have been voting to raise tax rates and collect more money for their schools.
Since 2002, 38 of the county's 45 school districts have increased their tax rates. Only two have cut rates and five have kept them level.
Municipal governments, which claim a much smaller share of the tax bite, have a more mixed record: 62 of the county's 130 municipalities raised tax rates since 2002, while 57 kept them level and 11 cut levies.
The result is a lot of suffering, said Bob Logue, who leads Stop Taxing Our Properties, a grassroots group that favors abolishing property taxes on residents' primary homes.
Logue said high property taxes are hurting the local real estate market, driving people from Pittsburgh and even costing some residents their homes. He described cases where monthly escrow payments have risen by an unaffordable $100 or $200.
"We're hearing that from a lot of people and they just don't know what to do," Logue said.
The pain is unlikely to end soon, said Tim Allwein, assistant executive director of the Pennsylvania School Boards Association, because state education funding has not kept pace with inflation, and costs continue rising.
According to the association, the state picked up 46 percent of school instructional expenses in 1970, but paid for only 34 percent in 2001, the last year for which figures are available.
Increasing health care costs, rising utility bills and unfunded mandates from the state all increase costs, Allwein said.
When the value of the property being taxed can't rise beyond a certain point, he said, school districts have only one option to raise the money they need -- increasing tax rates.
"If you cap the assessed values, the only thing that's going to happen is the millage rates are going to go up," Allwein said.
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