posted by Tom Moertel at 10:22 PM /
This article is part of a series examining how Mt. Lebanon is likely to be affected by the recent county-wide reassessment. For other articles in the series, see Blog-Lebo’s Reassessment Series. —Tom
Update 2012-02-22 00:10: I’ve updated the map to show some properties that were previously not showing up.
Update 2012-02-24 19:50: Map change: I was getting feedback that the colors were too subtle and that patterns in the more moderate property-tax changes, which affect the majority of residents, were hard to see. To make these patterns more visible, I’ve revised the color gradient to focus on the range –50% (blue) through +50% (red). If you’ve looked at the map before, the colors should now seem more vivid.
Now that the new property assessments for Mt. Lebanon are out, everyone is wondering what they mean. To help make sense of it all, I’m planning on doing a few articles on the subject.
First off: How do the assessments affect your taxes and, under the new assessments, who wins and loses?
Here’s my understanding of how it works. The county and municipal governments and, to a larger extent, the school district all collect taxes based on the value of your property. The more valuable your property, the more you pay. (They also collect taxes based on how much you earn, but those taxes aren’t affected by the reassessment; I won't talk about them further.)
What determines how valuable your property is? The official county assessment. In theory, this assessment is supposed to reflect reality, but, in practice, assessments tend to get out of alignment with actual market prices. When they get too far out of alignment, people start complaining, and eventually there’s a big reassessment in which everybody’s property is supposed to be reassessed using the same standard.
One of those big reassessments just happened for Allegheny County, and yesterday the County released the results of those assessments for Mt. Lebanon.
I was able to analyze some of the new assessment data, and here’s what I’ve got so far. Understand, however, that I’m simplifying some of the calculations and making some educated guesses here; reality may differ from my predictions. For example, I’m sure there are some properties that get special tax incentives, but I’m not accounting for them. I trust that you have the good sense to take what I’m about to show you with a grain of salt.
With that out of the way, let’s get to the fun stuff.
First, for most property owners (82%) the reassessment won’t change their property taxes by more than 25%. About half of property owners will have their taxes increase; about half, decrease.
About 12% of property owners, under the new assessment, will have their property taxes go up by more than 25%. These are the people who “lose” under the new assessment. Only about 6% will “win” and have their taxes go down by 25% or more.
Perhaps the best way to understand the reassessment is to see its effects on a map. I was able to combine assessment data with GIS data to make a map of how things are likely to play out here in Mt. Lebanon. (I’d like to thank Commissioner Kelly Fraasch, the Mt. Lebanon GIS department, and researcher Christopher Briem for their generous help in getting the data I needed. I’d also like to thank James Fraasch and Bill Lewis for their feedback on earlier drafts of this map that led to substantial improvements. All errors in the map, of course, are mine alone. And if you find any, please let me know.)
In that map, hotter colors (oranges and reds) represent tax increases; cooler colors (purples and blues) represent tax decreases. There’s also a lot of gray, representing taxes that didn’t change much. You can also click on properties to see their details and get links to the county assessment web site to do deeper research.
Take a look at your home (or business) and see how the assessment is likely to affect you. Note that if your home’s assessment went up, your taxes could go up or down. It all depends on how much your assessment went up compared to the community, as a whole. The community-wide total increased by about a third, so unless your assessment went up by a third or more, your taxes will actually decrease. In the map, I’ve done the calculations for you: just click on your property and look for the line that reads “Estimated Property Tax Increase.”
There are a lot of interesting patterns in that map. What stands out to you? If you see anything you want to discuss, post a comment below.
As for me, I plan to look into the data further and post more about it soon. If you see anything you want me to look into, or can spot a problem with the map, please let me know in a comment.
Update 2012-02-22 00:10: I’ve updated the map to show some properties that were previously not showing up.
Update 2012-02-24 19:50: Map change: I was getting feedback that the colors were too subtle and that patterns in the more moderate property-tax changes, which affect the majority of residents, were hard to see. To make these patterns more visible, I’ve revised the color gradient to focus on the range –50% (blue) through +50% (red). If you’ve looked at the map before, the colors should now seem more vivid.
Now that the new property assessments for Mt. Lebanon are out, everyone is wondering what they mean. To help make sense of it all, I’m planning on doing a few articles on the subject.
First off: How do the assessments affect your taxes and, under the new assessments, who wins and loses?
Here’s my understanding of how it works. The county and municipal governments and, to a larger extent, the school district all collect taxes based on the value of your property. The more valuable your property, the more you pay. (They also collect taxes based on how much you earn, but those taxes aren’t affected by the reassessment; I won't talk about them further.)
What determines how valuable your property is? The official county assessment. In theory, this assessment is supposed to reflect reality, but, in practice, assessments tend to get out of alignment with actual market prices. When they get too far out of alignment, people start complaining, and eventually there’s a big reassessment in which everybody’s property is supposed to be reassessed using the same standard.
One of those big reassessments just happened for Allegheny County, and yesterday the County released the results of those assessments for Mt. Lebanon.
I was able to analyze some of the new assessment data, and here’s what I’ve got so far. Understand, however, that I’m simplifying some of the calculations and making some educated guesses here; reality may differ from my predictions. For example, I’m sure there are some properties that get special tax incentives, but I’m not accounting for them. I trust that you have the good sense to take what I’m about to show you with a grain of salt.
With that out of the way, let’s get to the fun stuff.
First, for most property owners (82%) the reassessment won’t change their property taxes by more than 25%. About half of property owners will have their taxes increase; about half, decrease.
About 12% of property owners, under the new assessment, will have their property taxes go up by more than 25%. These are the people who “lose” under the new assessment. Only about 6% will “win” and have their taxes go down by 25% or more.
Perhaps the best way to understand the reassessment is to see its effects on a map. I was able to combine assessment data with GIS data to make a map of how things are likely to play out here in Mt. Lebanon. (I’d like to thank Commissioner Kelly Fraasch, the Mt. Lebanon GIS department, and researcher Christopher Briem for their generous help in getting the data I needed. I’d also like to thank James Fraasch and Bill Lewis for their feedback on earlier drafts of this map that led to substantial improvements. All errors in the map, of course, are mine alone. And if you find any, please let me know.)
The Blog-Lebo map of winners and losers in the reassessment game
Hotter colors represent property-tax increases; cooler colors, decreases.
Click on properties to see their details.
(Full Screen)
Hotter colors represent property-tax increases; cooler colors, decreases.
Click on properties to see their details.
(Full Screen)
In that map, hotter colors (oranges and reds) represent tax increases; cooler colors (purples and blues) represent tax decreases. There’s also a lot of gray, representing taxes that didn’t change much. You can also click on properties to see their details and get links to the county assessment web site to do deeper research.
Take a look at your home (or business) and see how the assessment is likely to affect you. Note that if your home’s assessment went up, your taxes could go up or down. It all depends on how much your assessment went up compared to the community, as a whole. The community-wide total increased by about a third, so unless your assessment went up by a third or more, your taxes will actually decrease. In the map, I’ve done the calculations for you: just click on your property and look for the line that reads “Estimated Property Tax Increase.”
There are a lot of interesting patterns in that map. What stands out to you? If you see anything you want to discuss, post a comment below.
As for me, I plan to look into the data further and post more about it soon. If you see anything you want me to look into, or can spot a problem with the map, please let me know in a comment.
Labels: assessments, blog-lebo-series-reval, property assessment, property taxes, reassessments
51 Comments:
This is incredible, Tom. Thank you!
Elaine Gillen
Tom, first, its really incredible the technology that exists today. This would have been impossible to do without millions of dollars just a few years ago.
Second, one of the patterns that stood out to me is that there is a section of Mt. Lebanon that seems to have more shades of red than others. That section is between Washington Rd and Cochran Rd and from Bower Hill over to Beverly Road.
If you zoom out on the map for the whole town you really see that affect. This also seems to be the case with homes on or near some of our more major streets including Gilkeson.
It was interesting to see how little impact the reassessment will have on some of what most would call the higher priced areas. Places like Hoodridge and Virginia Manor didn't seem to get too much red.
After spending some time today on this I know there are some very curious assessments but hopefully the appeals process will be painless (tongue firmly planted in cheek).
For my house, while we should expect a 15% increase or so in real estate taxes, there is not too much to argue with as our assessment is right at our purchase price from 3 years ago.
Thanks for putting this together. It should be a real resource for Mt. Lebanonites. I look forward to hearing what other people find.
If you have this data in an easily parsable format, can you put it somewhere that would be publicly accessible?
Bill Dougherty
Bill, I've put my entire analysis, including raw assessment data, online: mtlebo-property-reval-analysis. But if you just want to skip to my processed data set, which includes my estimated property-tax increases, you can get it directly here: final data set.
Have fun with the data, and please do share anything you find.
Cheers,
Tom
This is truly impressive, thanks! Do you see a continuation of the patterns people complained about in the city; namely that expensive houses moved down and modest homes moved up, which appears to transfer the tax burden downward?
Eric Hiser
OUTSTANDING WORK!
After I picked myself up off of the floor having been overwhelmed by the shock of my new assessment, I spent some time reviewing your very interesting map. My reassessment seems to be one of the curious ones. Then again, streets like James Pl with its mix of old and new homes and McConnells Mill with its newer homes seem to be, reassessment-wise, rather curious streets.
My home (an older home) has somehow, per the reassessment, increased in value by more than double since I purchased it a few years ago while some of the much newer, much larger homes with larger lots have decreased, some reassessed quite a bit lower than recent purchase prices.
If the reassessment was accurate and my house had in fact more than doubled in value in a few short years, I would be patting myself on the back for my very wise investment, listing my home today, and using the significant profit to attempt to make another wise investment in real estate. Unfortunately, my home's smaller footprint, lack of brick exterior, small 1 car garage, and need for myriad updates make the reassessed value a highly improbable target...so no realtor calls will be accepted!
When I opened my reassessment, I was actually hoping to see some increase in market value because I bought the house hoping I was making a good investment, although I didn't expect anything close to double. What I received makes me scratch my head and question the process.
Thanks again for taking the time to develop and post this information!
Just a reminder: If you want us to publish your comment, you must sign it with your full name. (For more on our comments policy, click on the "Post a Comment" link and read the text above the comment box.)
If you tried to offer a comment recently but it didn't show up, it's probably because you forgot to sign it with your name. Try again and remember to include you full name at the closing of your comment.
Would it be possible to generate a map for the entire county? It would be interesting to see how neighborhoods far against those in other municipalities.
Jeffrey Eaton
This is AMAZING, great technology. I think this needs to be reviewed several ways before you can point to a pattern. It would be interesting to see how the land value changed across the community. I think that would put into perspective some of the increases. Finally, I think this map needs to be reviewed with all homes rolled back to their 2002 value for comparison. Many of the homes in the "higher priced areas" were reassessed between 2002 and now and the map shown does not reflect the increases they have already incurred. Is this data available? Finally, it would be interesting to put the increases/decreases in actual dollars and see how the colors on the map change.
Lynn McCabe
Thank you, Tom. Impressive. This map is very interesting. Given that the new values are to reflect market conditions and also given that there is a lot of hype about the dramatic increases over the past decade, how do these values compare with actual home sales that have occurred? Is there a way to show and compare the new assessments with actual sales prices for homes that have sold in our community since the last assessment? Generally, the new assessment should be the same as the sale price (or pretty close), right?
Lisa Brown
Lisa, you comment as to whether recent sale price was reflected in the assessed values caused me to take a look at sale price vs. Assessed value for one Mt. Lebanon street.
The one I chose has 96 homes, of which 19 sold between 2006 to 2011 for an amount other than $1 or 0.
The total actual sale price for those homes was $11,483,408.
The 2013 assessed values for those same homes is $10,132,300.
A difference of -$1,351,107 in the assessed value vs the real purchase price.
7 of the 19 are assessed at or above the actual sale price. Which tells me the other twelve paid way too much or are way under assessed. I'm open to a critical review of my assumption.
I'll leave it up to others to decide which is correct. Seems to me the school district/muni are missing out on a lot of tax money due to underassessed properties. This is just one street and an examination of a 5 year spam for recent sales.
Dean Spahr
Dean Spahr
Lisa, that's a great question about how the assessed values compare to recent sales prices. Chris Briem's group at Pitt's University Center for Social and Urban Research has published a data set of recent home sales (and a cool interactive map of the data). With it, I'll see if I can do some sort of comparison. Like you, I'm curious to see how the assessments compare to reality.
I purchased my house in January of 2011 for $117,000; $6000 of which went toward my closing costs. That means the sellers received $111,000 for the house. My new assessment figure is $156,000. I haven't done anything significant to the house.
Seems like quite a jump, right?
Josh Criswell
To the comment regarding the assessment values compared to actual sales prices, the housing bubble peaked in 2006 and has been declining since. Inflation adjusted numbers reflect a national decline of more than 35% from the peak to todays market. Considering the difference in your sales to assessed values of only 11% I'd say that those 19 homes were probably assessed fairly.
I think that everyone needs to understand that many homes were reassessed between 2002 and 2009 as an appeal from the school district. THese homes were in many instances reassessed at significant increases and only given 30 days to come up with the new tax. These interim reassessment appeals filed on behalf of the school district are not considered in this map and if they were, you would see many more red and orange properties in the "higher priced areas".
While this map is quite good, it does not take into account the homes that were reassessed in the interim and therefore does not show a complete picture of the change. If all homes were evaluated at their 2002 value and compared to the 2013 assessment, it would be a truer picture of the increase across the board.
lynn mccabe
An anonymous commenter asked the following. Since many people might be wondering the same thing, I'm going to quote it here (but, in general, if you want me to publish your comment, you must sign your full name to it).
The commenter writes:
Great article. What about a comment on the millages? My understanding is that the millages would have to be revised to stay within the "windfall" laws. I.e., the increase in overall taxes collected can not exceed 5%, therefore, if the total sum of property values were to double after reasessment, then the millages would have to be approximately cut in 1/2 so that the overall new tax collected would be no more than a 5% increase over the previous amount of tax collected.
That's right. In my calculations I tried to estimate how much the total tax base would increase under the new assessments. (Of course, I can only approximate the increase because I don't know, for example, how assessment appeals are going to change the picture.) Then I applied a corresponding and counterbalanced "anti-windfall adjustment" to the county, municipal, and school district's millages to keep the reassessment's effects revenue neutral.
To estimate your increase in property taxes due to the reassessment, I applied this same adjustment to your newly reassessed property value. The result appears in the "Estimated Property Tax Increase" line of the details window that pops up in the map when you click on a property.
(I should point out that I'm calculating the increases due to the reassessment only. If the county squeezes in a 5% tax hike as well, that's a separate increase that's not factored into the map.)
Anyway, you asked about millages. Based on my estimates about the reassessment's effect on the overall tax base, I expect the millages to decrease by about a fourth.
Cheers,
Tom
Tom,
Would you please quantify your statement, "In that map, hotter colors (oranges and reds) represent tax increases; cooler colors (purples and blues) represent tax decreases. There’s also a lot of gray, representing taxes that didn’t change much." It appears that taxes which increased by up to 25%, an upperbound that you observed for 82% of those with an increase are colored "gray". This gives a graphical illusion that many homes were not impacted using your color scheme, but in your comments you said that about half of the property owners received a tax increase.
Would you please consider posting this same information with a stark color contrast of red for a tax increase and blue for a tax decrease so that the residents can see exactly where the burden of the tax was felt? I am sensing from your comments and your "massaged" data set that the unfortunate reality is that the lavish spending of our school district hit those on the bottom of the property value distribution the hardest - and hence our Board's tax policies have been very regressive.
Lynn, you may be right, I really have no experience in this sort of thing.
This info comes from RealStats."Mount Lebanon Summary
"The median sales price for homes in Mount Lebanon PA for Nov 11 to Jan 12 was $228,865. This represents an increase of 4%, or $8,865, compared to the prior quarter and a decrease of 8.5% compared to the prior year. Sales prices have depreciated 27.3% over the last 5 years in Mount Lebanon. The average listing price for Mount Lebanon homes for sale on Trulia was $247,748 for the week ending Feb 15, which represents an increase of 0%, or $33, compared to the prior week and a decline of 3.9%, or $9,980, compared to the week ending Jan 25. Average price per square foot for Mount Lebanon PA was $118, an increase of 2.6% compared to the same period last year."
Like I said, I have no experience in this sort of thing.
If the above statement that sale prices have depreciated 27.3% over the last 5 years is true - that is alarming.
Do the 2013 assessments overall reflect this 5 year drop?
Dean Spahr
In other words, not a color spectrum, but only two colors: red (for an increase) and blue (for a decrease). I have a strong feeling that the story that is locked inside of the data will reveal a much different perspective if we use a two color scheme.
This time let's define an increase as any change in property valuation that is greater than $0; and let's define a decrease as any change in property values that are less than or equal to $0.
John, the color map is a linear gradient representing property tax increases in the range [-100%, 100%] over the colors [dark blue, light purple, white, light orange, dark red]. So each color ought to correspond, roughly, to a quintile, with the center quintile being mostly whitish.
If you want to see the actual distribution of properties over tax increases, I have prepared a cumulative distribution plot for commercial and residential properties.
Cheers,
Tom
Nope - you're missing the story that is locked inside of the data. This tale can not be told from a single perspective - you need to examine the segements and reveal the truth that is within the clusters.
The reality is that the burden of this regressive tax increase hit those who were the least able to afford it.
I will applaud your graphics though - I liked them. Did you use R?
Tom, this is some first-rate journalism! Thank you.
I wonder if the reason the more expensive neighborhoods weren't hit as bad, percentage wise, is because their prices took the hardest hit in the past few years?
I am confused. According to the map you posted, my estimated property tax decreased 14% but the numbers that I see there and the ones on my letter show an increase of 14%. When the 2013 numbers in both categories (muni and county) are higher than the corresponding 2012 value, how can that demonstrate a decrease? It makes the whole map look suspect. Please explain. Thanks!
Tom,
Conclusions can be deceptive when they are based on a faulty analysis. For example, I was just looking at a Forbes Magazine article about the twenty most miserable cities in the USA. The list included Chicago and Miami.
Come on... Miami and Chicago? Miami, with its proud history of police corruption , has transformed itself into a popular hot spot for hotties who will tell you that unlike the LA scene, bikini's reveal all - and as a former Chicago resident I thorougly enjoyed the arrival of spring with all the women in bikini's on the roof-tops sunning themselves on those early hot days in March...
So, my point is, we need to examine the data more carefully under the headlines and then the truth will emerge. In this case, my opinion is that our Board, who is so concerned with equity and political correctness hit the weakest people in our community with the greatest burden for their lavish comforts.
The AZ Republican debates are starting... got'ta run.
Ciao.
Elizabeth,
Your 14% increase in your letter was in your assessed value as I don't believe there was a number that showed the increase in taxes.
So, since your assessed value increased less than the Mt Lebanon average, your property is going to see reduced taxes.
As Tom pointed out in his article, some homes (like yours) will see a decrease in taxes and those homes that had their assessment increase more than roughly 30% will see an increase in taxes.
The hardest disconnect to make is that an increase in assessed value does not necessarily result in an increase in your taxes. This is due to the anti-windfall provisions of Act 1 (which restricts school districts to realizing a very small gain in revenue due to reassessments). So, if the assessed values of all of Mt. Lebanon increase by $100,000,000, then the District must lower the millage rate to make its revenue generated from RE tax neutral the same as it was before the reassessment.
Hope that helps!
James
Thanks for this wonderful analysis - I'm looking forward to your other posts about it.
I'm interested to see whether, as other posters mentioned, places like Virginia Manor would look a little less "unscathed" if you compared it to the 2002 assessments. As it looks now, the tax increases appear pretty regressive.
Jen Curran
John (Kendrick), I agree, there's lots of interestingness waiting within the assessment data. But I just got the data set less than 48 hours ago! Give me a little time :-)
The first thing I wanted to do – and the only thing I've had time to do so far – was answer the question everyone asks after receiving the assessment letter in the mail: How is this going to affect me?Are my taxes going up? Down? And by how much?
A guy's gotta do something first, and I think I made the right call.
Cheers,
Tom
P.S. I published the data set (see my earlier comment), so don't wait for me. Jump in and start looking for the interesting stuff!
James and Tom,
If our school district chooses to file for an Act 1 exemption next year like they did this year for say, PSERS or the renovation project, the school district can actually raise the millage, compounding the high assessments.
There is no averaging of assessments or lowering of millage.
An exception is exactly that- an exception.
David Huston
Dave,
What the school district does with its millage rate is a completely different discussion than whether or not a person will see a change in their taxes due to an assessment change that was done by the county.
There is no way for the data to predict whether or not the school district and/or the municipality will raise taxes and, if so, by how much.
This exercise is strictly looking an the reassessment impact on one's property tax.
James, too many property taxes. Are you saying this map shows county tax changes only? That it has nothing to do with Lebo taxes?
Elaine Gillen
One more way to clarify this as I have had an email or two about how this all works.
Here is the explanation I gave to a friend. Perhaps others will find it useful:
This is the explanation behind the revenue neutral aspect of the reassessment.
First, an example with one home.
2002 Assessed value is $100,000 and pays $2,800 in tax.
2012 assessed value is $1,000,000 and the home will still pay $2,800 in tax.
Conversely, if the 2012 reassessed value was $1,000 dollars, that one home would still pay $2,800 in tax.
That is what revenue neutral means to the real estate tax. No matter the change in assessed value, all homes in Mt. Lebanon will collectively pay the same amount as before.
Let me put an example out there with two homes.
House 1 2002 Assessed value is $100,000 pays $2,800 in tax.
House 2 2002 Assessed value is $100,000 pays $2,800 in tax
School District receives a total of $5,600 in tax revenues
House 1 and House 2 total assessed value is $200,000. Since their homes are each 50% of the total assessed value of the town, they each pay 50% of the total tax.
After the reasessment
House 1 2012 Assessed value is $125,000
House 2 2012 Assessed value is $175,000
The assessed value of both homes went up substantially. But since the district can still only receive $5,600 in tax revenues from these two houses, house 1 will have it's taxes DECREASE. So if the total assessed value is now $300,000 instead of $200,000 then house 1 equates to 41% of the new total assessed value ($125,000 is 41% of $300,000) and house 2 equates to 59% of the new total assessed value ($175,000 is 59% of $300,000), then house 1 will pay 41% of the $5600 tax and house 2 will pay 59% of the $5600 tax so...
House 1 2012 assessed value is
$125,000 pays $2,296 in tax
House 2 2012 assessed value is $175,000 pays $3,304 in tax
The total tax paid is still $5,600 ($2,296 + $3,304=$5,600)
On a much grander scale, this is what happens in all of Mt. Lebanon where thousands of properties are measured against eachother and the total taxable assessed value of all Mt. Lebanon properties is greater than $2,000,000,000.
Elaine, what this maps shows is how the reassessment, and only the reassessment, will affect your property taxes. If the school district or the county or the municipality raises its tax rate to squeeze in a 1% or 5% tax hike at the same time as the reassessment, that hike won't show up on the map. (But it's also not interesting to map those hikes because their relative effect on everyone in Mt. Lebanon is the same: it's going to be the same percentage for everyone.)
Cheers,
Tom
Let me clarify something from my previous comment. The map shows the effects of the reassessment process, which not only includes your house getting reassessed but also requires the taxing bodies to correspondingly lower their tax rates so that total tax revenue for the community as a whole remains about the same.
During a reassessment, the laws on the books allow the taxing bodies to also raise their taxes a little. It's this extra additional hike that the map doesn't try to show because it has nothing to do with the reassessment. It's just a good old-fashioned tax hike, only it happens concurrently with the reassessment so it lands on your tax bill at the same time.
Cheers,
Tom
Since the map shows "...how the reassessment, and only the reassessment, will affect your property taxes," I will respect this thread and wait for a more auspicious time to go into the insanity of using the residential property tax as a funding vehicle for governments; except to point out now that Mr. Moertel's excellent work, along with the detailed information available on the County's property assessment web site, are exhibits A and B in condemning this archaic, regressive, and error-prone method of shaking down the residential homeowner for tax revenue.
Tom and James, here is where you lose me. Say the reassessment went up $50,000. When you say governing bodies, you are speaking of Lebo governing bodies adjusting the millage up or down, correct? The county does not adjust anything - you're now paying county taxes on property that increased in value by $50,000, yes? So we all got a 21% increase for 2012, but next year the increase includes the higher assessed value. So if reassessments increased, county taxes are going up again?
And when you factor in the + or - figures in your calculations, that means if nothing changes with tax increases by the Lebo governing bodies, right?
Elaine Gillen
Elaine, for each each taxing body – county, municipality, and school district – the reassessment is supposed to be "revenue neutral." That means the total tax revenue collected by each taxing body is supposed to be the same before and after the reassessment. If the total assessed value of properties across the county increases by, say, a third (to 4/3rds of what it used to be), then the county is supposed to reduce its millage by a fourth (to 3/4ths of what it used to be) so that the total tax revenue for the county will remain unchanged ((4/3) * (3/4) = 1 = 100%).
What complicates matters is that sometimes governments need to raise taxes during a reassessment year. So, after they change their millages to remain revenue neutral, they add in a little tax hike to boost their revenues.
As you might imagine, it's a confusing time for the public and therefore an easy time for politicians to raise taxes and blame it on the reassessment. That's what so-called "anti-windfall" legislation is there to prevent. It restricts, during reassessment years, taxing bodies from raising their total collected taxes by more than a little bit beyond the revenue-neutral millage.
Got all that?
In sum, during a reassessment year, your property tax bill, from each taxing body, is going to be affected by two things: (1) the reassessment and (2) any tax hikes beyond the revenue-neutral millage. The reassessment's effects will be unique to your property and determined by how your assessment changed with respect to everyone else's in the tax pool. The tax hikes, as usual, affect everybody the same way: we all pay more.
Does that make sense?
Cheers,
Tom
Yes it does, Tom. Thank you.
Elaine Gillen
Tom and James,
Read this:
http://alleghenyinstitute.org/administrator/components/com_policy/uploads/Vol12No8.pdf
Mt. Lebanon School district has a history of ignoring the anti-windfall law:
http://www.alleghenycounty.us/controll/rpt03a.pdf
What leads you to believe MTLSD will be in compliance now?
David Huston
How about this tax windfall:
P-G http://www.postgazette.com/pg/06061/663200-55.stm#ixzz1nJLJe04F
In the last three years [2004-2006], the municipality has appealed roughly 1,100 home assessments, which grossed the town about $250,000 more in revenue.
The Mt. Lebanon School District and Allegheny County also benefited from those appeals if the municipality won because the assessment is used to calculate bills for all three taxing bodies.
David Huston
David, I don't make any claims about the school district being in "compliance" or not. It's just that, if they raise taxes beyond the revenue-neutral rate, I'm not calling it part of the reassessment but a plain-old tax hike. In other words, the changes to my property taxes are going to be described by this equation:
(total change) = (reassessment effect) + (tax hikes)
What I'm saying is that a tax hike is a tax hike, not a reassessment effect. So let's not conflate the two.
Cheers,
Tom
Tom,
You don't understand assessments, appeals, millage and taxes are forever related and can never be separated.
They are all part of the same equation.
David Huston
David, I didn't say that assessments and tax hikes should be separated. I said they shouldn't be conflated. And I have know no idea why you would tell me they are part of the same equation since, in fact, I did put them in the same equation. Here it is, again:
(total change) = (reassessment effect) + (tax hikes)
Maybe you ought to read what I wrote more carefully before schooling me about things I didn't write.
Cheers,
Tom
It's clear to everyone now that when assessments increase, taxes increase.
It is also clear from the data that the megaphones in our community who wanted: the lavish school building, athletic facilities, and exorbitant teacher pay won't be getting an invoice. Instead, the weakest people in our community, those least able to pay, will get kicked - right in the teeth!
Lebo should abolish the school district property tax and replace it with a three tier progressive wage tax: 5%, 10%, and 15%. We've all heard for years about the litigators of certain large law firms with their $350,000 base income and 7-8 figure annual bonus checks - so let them pay and get the government off the rest of our backs!
If these movers and shakers move because they don't want to pay - fine! We can take want revenue remains and right-size the district in proportion to the revenues that are collected.
Assessments aren't tax rates. They provide the ratio of taxes one property owner pays relative the other property owners in the same taxing entity (municipality, school district, or county for example).
The only way one's taxes go up or down based on assessments is if one's property value was assessed out of sync with values on other properties in your community--higher or lower.
If assessments are done well, all properties of a similar market value will pay the same (or similar) taxes to the taxing body. For example, two homes assessed at 100,000 will pay the same amount. A house in the same scenario assessed at 200,000 will pay twice as much in property taxes to that same taxing entity. Further, a house assessed at 1,000,000 will pay 10 times more in property taxes as the 100,000 home and so on.
Tax rates are the millages required to generate the revenue needed to cover the municipal, school district or county budget. (I have oversimplified in that other types of taxes and revenue--e.g., wage taxes--will affect the extent to which property taxes specifically cover the budget but the concept holds true.)
Finally, while our taxing entities may generate extra revenue via property taxes in a reassessment year that is their choice to do so. They could choose to stay revenue neutral because those who put them in office expect them to do so. Or they could opt to take any amount up to what the state law allows (a 5% windfall in an assessment year). And that allowance is the responsibility of the legislature and their law, not reassessments. If the taxing body exceeds the 5% windfall, the citizens need to call them on it and get it corrected. Again, the problem would be in the decisions and actions taken by that group (commissioners, council members, mayors, school directors, county council, etc.) not the reassessment itself.
Lisa Brown
And, the reason I asked Tom in an earlier post if there was a way to compare assessed value with actual market value on homes recently sold is that it's important to get the ratio correct among all property owners when doing a reassessment. If we were to compare calculating property taxes to wage taxes, we don't allow someone with a $100,000 income to call it $50,000 for the purpose of calculating how much they owe. Conversely, we don't expect someone who makes $50,000 to base his wage tax bill on a $100,000 income.
Lisa Brown
Lisa,
Take some graduate courses in public finance like I did and then give me a call when you have the education to have an informed exchange with me.
JDK, if you've got something to add to the conversation, then add it. But please don't take a person-to-person pot-shot and then leave without explaining what, specifically, you believe was wrong with the claims someone else made. Better yet, skip the personal attacks and stick to arguing the claims on their merits. Because, as far as substantive arguments go, a pot-shot against a person holds no persuasive force. (And kinda makes you look like an ass.)
Cheers,
Tom
It's clear to everyone now that when assessments increase, taxes increase.
I suspect I have a few graudate classes in public finance along the way and that statement in itself makes no sense in our context.
Lebo should abolish the school district property tax and replace it with a three tier progressive wage tax: 5%, 10%, and 15%.
Pennsylvania law would not make that possible in any form and there is little likelihood that any proposal that would enact enabling legislation for going to come out of Harrisburg anytime soon.
apologies for being the non Lebo interloper here. Great map from Tom.
We're getting a lot of first-time commenters. If you're one of them, welcome!
But I must make clear that we can't post your comments unless you sign them with your real full name. We don't post anonymous or pseudonymous comments on Blog-Lebo.
If you offered a comment and it didn't show up, that's why. Please resubmit your comment and be sure to close it with your real full name. Then you can join in the conversation.
And we'd love to have you.
Cheers,
Tom Moertel
One of the friendly Blog-Lebo editors
Unfortunately, advanced education, while for the most part beneficial, is not a guarantee against every possible folly.
For example, you can oppose higher taxes without opposing everything tangentially related to higher taxes.
Also, you don't need "graduate courses in public finance" to see that Lisa Brown (no relation) gave a perfectly reasonable explanation of the difference between assessments and taxes.
Is anyone able to create a simple calculation to reflect what the millage changes (to be made) will make one's property tax "look like?" As far as I understand, the county is seeing a 35% increase in assessments, thus millage will be reduced by 35% (I think - but also knowing that there is a 1 mil increase next year). Also, my school district has seen an average 35% increase, so I am assuming a 35% decrease) - my municipality has seen a 60% increase, so I am assuming a 60% decrease in millage. First of all, is it this simple (i.e., a millage for a municipality is at, say 10.00 mills, would a 35% increase in property value mean the millage would go down to 6.5?) That is the first thing I need to find out, then hopefully I can proceed from there.
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