One of the things that has many homeowners on edge here in Mt Lebanon and all around Allegheny County is the 2012 Reassessment. In an effort to have our residents better understand what this will mean to them, I decided to try to tackle the topic at the May 27th Audit Finance Committee Meeting.
Perhaps the most important take away from the analysis is to understand that just because your assessment increases, your taxes do not necessarily increase along with it. As you will see in the Powerpoint slides below (or available here), how the reassessment impacts you will be determined by how much your reassessment changes in relation to the Mt. Lebanon mean change.
Here is the presentation (click here if the presentation below does not show):
Basically, here are some highlights:
Slide 2- The Allegheny County real estate tax system is based on a 100% of assessed value model. Other counties determine market value and then base their assessed value on some ratio of the market value (Washington County does this). There is no inherent advantage or disadvantage to using any particular method. Personally I prefer the Allegheny County system since there is no calculating ratios to figure out what it is you owe. The thing that made Allegheny County out of compliance with the Pennsylvania Constitution was the "Base Year" Model. Tying market values to what your home would have been worth in 2002 meant that, as a home on one side of town appreciated in value and a similar home on another side of town depreciated in value, after ten years these homes would still have the same tax. That is a violation of the Commonwealth's Uniformity Clause and is what is forcing the 2012 reassessment.
Slide 3- There will be a parcel by parcel reassessment in 2012. The plan for reassessment uses County employees to perform the reassessment.
Slide 4- The Anti-Windfall provisions from Act 1 restrict school districts and municipalities from gaining any revenue due to reassessment over and above Act 1 limits. Act 1 limits have been very small the last few years due to very small CPI increases. As long as CPI stays in check, the maximum increase in revenue to the school district will be less than 3%. The school board will have an opportunity to determine whether they want to gain any additional revenue or not.
Slide 5 and 6- These slides try to mathematically show the impact on real estate taxes for fiction town. The important thing to realize here is that in the two slides you see that the revenue to the town is the SAME before and after the reassessment. This is because the millage rate is lowered to compensate for any increased assessments. The other point to take away is that homes that have their assessment increases more than the average for the community will have their taxes increase. Homes that have their assessment increased less than the community average will have their taxes decrease. And homes that have their assessed values increased the same as the community average will see no change in tax.
To further understand this point, let's look at a Mt. Lebanon home assessed at $120,000. This same home was purchased in 2009 for $180,000. If collectively assessments in Mt Lebanon increase by 50%, then in theory this home should have the same exact tax as before the reassessment. If instead the collective reassessed values of all properties in Mt Lebanon increase by less than 50%, then this home will have increased taxes due to reassessment.
The problem here is that nobody will know how much assessments will change until they actually happen. Suffice it to say that any home that has had significant upgrades to it that has not been reassessed recently will have an increase in taxes. Since the school district cannot see an increase in revenue due to reassessment (or a very small increase) this necessarily means that some other home will have their tax bill reduced.
In conclusion, the reassessment is an attempt to more fairly assess homes across Allegheny County. This will most definitely mean a change in the tax bill makeup of Mt Lebanon. There will be some homeowners that will be shocked to see their new tax bill and this shock will be from both those that have an increased tax bill and a decreased tax bill. The best way to determine the reassessment impact on your individual home is try to think about how your home value has changed versus the rest of the homes in Mt Lebanon since 2002.
The last page of the presentation has the sources I used for the meeting. They are listed below:
* http://www.youcontrolyourmoney.org/ (search for “real estate assessment process”)
* http://money.cnn.com/magazines/moneymag/bplive/2007/snapshots/PL4251704.html
* http://pubs.cas.psu.edu/FreePubs/pdfs/ua308.pdf
* http://www.alleghenycounty.us/munimap/profile.asp?muni=73
* http://www.klgates.com/newsstand/Detail.aspx?publication=5381
* http://www.post-gazette.com/pg/09339/1018698-455.stm
* http://www2.county.allegheny.pa.us/realestate/Search.aspx
* http://www.city-data.com/housing/houses-Mount-Lebanon-Pennsylvania.html
Please take a look at some of the links above. The PSU document is a great one and is where much of the information for my presentation came from.
Thanks for reading.
James
