The property tax code prohibits spot assessments, but one lawmaker says a loophole long exploited by school districts and municipalities means the practice still occurs — and it unfairly shifts the tax burden.
“It’s just really about a taxpayer fairness measure and that’s what I think really is the guiding principle here,” said Rep. Duane Milne, a Chester County Republican who sponsored House Bill 2348 in June. “The intent really is to try to have, in my mind, all taxpayers be treated consistently and uniformly in terms of how we look at these assessment issues.”
Milne’s legislation would limit a local taxing authority’s right to appeal property values to just two scenarios: after a county-wide reassessment or if a property is subdivided or when improvements are added or removed.
Currently, local taxing authorities can appeal an assessment for a variety of reasons, including a change in use or ownership.
The idea isn’t new to legislators, who sent a similar bill to then-Gov. Ed Rendell’s desk in 2008. Rendell vetoed the bill, citing its disadvantages to school districts which may have no other way of challenging property values in the absence of a county-wide reassessment, which sometimes don’t occur for decades.
“This right to appeal assessments is a fundamental structure of our property tax law since it ensures that taxpayers can seek redress if they believe that assessors have undervalued, or overvalued, the fair market value of properties in their communities,” Rendell wrote in his veto message. “Undervaluing of properties may result in a higher millage rate being imposed on all taxpayers.”
Rendell, at the time, appeared to heed the warning of school district officials who said the legislation would increase property taxes and cause millions in lost district revenue.
Six years later, the sentiment remains the same.
“By limiting the right to initiate appeals, particularly with large commercial properties, school districts will experience losses in revenue that will be very significant,” said John Callahan, senior director of government affairs for the Pennsylvania School Boards Association via email Aug. 13. “This restriction in the ability to generate future local revenues will harm schools that are already grappling with declining state aid and unfairly shift the property tax burden to homeowners”
Callahan said under-valued properties force all properly-assessed property owners, not just school districts, to share the tax burden in the form of increased millage rates.
“House Bill 2348 would take away the only voice on behalf of other homeowners and businesses being forced to subsidize under-assessed properties,” he said. “The fact is that House Bill 2348 is not taxpayer-friendly legislation. It not only restricts school districts’ rights of uniform review of residential properties, but also commercial properties. Those commercial properties that are undervalued will not be billed for their fair share of school property taxes.”
“Issues with property assessment appeals by taxing bodies are merely a symptom of the state’s broken assessment laws,” Callahan added, noting that without reforms requiring counties to perform assessments on a regular basis, the appeals will persist.
“Without a reliable system for accurate reassessment of real estate throughout the Commonwealth, House Bill 2348 would leave school districts without a large portion of available revenues for many, many years,” he said.
Jay Pagni, spokesman for Gov. Tom Corbett, said HB 2348 isn’t far enough along in the process to comment, but says the governor remains committed to policies that protect taxpayers.
During its June 17 meeting, the House Finance Committee reported HB 2348 to the floor on a vote of 21-4, with Minority Chairwoman Rep. Phyllis Mundy, D-Luzerne, Rep. Sid Kavulich, D-Lackawana, and Montgomery County Democrat Reps. Mary Jo Daley and Madeleine Dean casting no-votes.
The bill now awaits consideration in the House Rules Committee, but Milne says he hasn’t heard when — or if — it will return to the chamber floor for a full vote before the end of the year.
“It’s hard to gauge,” he said. “We don’t have a lot of session days this fall. I’m continuing to work on it.”
Milne said he would reintroduce the bill in the next session, if necessary.
–Christen Smith, Capitolwire