P-G: Property tax rate expected to drop in Mt. Lebanon

Mt. Lebanon property owners could pay less in real estate taxes next year if the recommended $29.6 million municipal operating budget is approved this winter.

Manager Stephen Feller said the municipality expects the tax rate will decrease from its current 5.43 mills to between 4.4 and 4.89 mills because of Allegheny County reassessments and state anti-windfall rules, which require governing bodies to lower millage rates to reflect higher overall property values.

Read the full article:

• www.post-gazette.com/stories/local/neighborhoods-south/property-tax-rate-expected-to-drop-in-mt-lebanon-661197 (Pittsburgh Post-Gazette)

P-G: Property taxes to rise a half mill in Mt. Lebanon schools

School directors in Mt. Lebanon voted Monday night to increase the property tax rate by a half mill in the district's proposed $80.6 million final 2012-13 budget.

The increase would mean an extra $50 on tax bills for a home valued at $100,000. With this plan, the district's millage would total 27.13

Read the full article:

• http://www.post-gazette.com/stories/local/neighborhoods-south/property-taxes-to-rise-a-half-mill-in-mt-lebanon-schools-632133 (Pittsburgh Post-Gazette)

Are the New Assessments Fair?

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

In our previous article, Reality-Checking the Reassessments: Part 2, we compared both old and new assessments to sales prices for homes sold recently in Mt. Lebanon. Our goal was to see whether the new assessments were closer to the market reality than the old. And, on the whole, they were.

But we noticed a concerning trend: Less-expensive properties were more likely to be assessed above their market prices, especially in comparison to more-expensive properties, which were more likely to be assessed below their sales prices. The following plot shows the trend, relating the degree of “over” or “under” assessment to a home’s selling price.

In our sample of recently sold homes in Mt. Lebanon, there is a clear regressive trend to the new assessments. On the x-axis we have the actual sales prices of homes sold in 2010 and 2011. On the y-axis we have the difference between the newly assessed values for those homes and their sales prices. Homes appearing above $0 on the y-axis were assessed at above their sales prices; those appearing below $0 were assessed below their sales prices. As properties become more valuable, they become more likely to be assessed at below-market values.

At a glance, it sure appears that there is some unfairness to these new assessments.

What’s “unfair”?

Before going further, I’m going to be clear about what I mean by unfair. I’m not interested in discussing, at least for now, whether the idea of property taxes is fair. Rather, I’m interested in determining whether (or not) the assessments allocate to the owner of each property a slice of the community’s overall property-tax burden that is proportionate to that property’s fair-market value, relative to that of the entire community. For example, if you own property that is truly worth 0.034% of Mt. Lebanon’s total fair-market property value, you ought to pay 0.034% of Mt. Lebanon’s total property taxes. If an assessment scheme causes you pay more, the scheme is unfair to you; if you it causes you to pay less, it’s unfair to everyone else.

By that standard, then, is the new assessment scheme fair? And, in particular, is it fairer than the one it’s supposed to improve upon?

Clumping it

Those are tricky questions. To answer them, we would need to know the true fair-market value of Mt. Lebanon’s properties. And, even with sales data, it’s hard to say what the fair-market value of a home is. If you recently bought a home for $100,000, is that its true fair-market value? Indeed, the sales evidence is consistent with the hypothesis that the home’s true value is $100,000. But, alas, it’s also consistent with the hypothesis that the true value is really $110,000 (and you’re a shrewd negotiator), and also with the hypothesis it’s really $90,000 (and you’re a sucker). They’re all realistic possibilities. Who’s to say which is true?

We can get around this problem by clumping properties together. If we clump, say, 100 properties together, and they had sales prices totalling $10 million, it’s hard to believe that those properties are truly worth substantially more or substantially less than $10 million. That’s because it’s hard to believe that all 100 of the people who bought those properties are suckers. Or all shrewed negotiators. Or all anything else. You’ll have some mix of suckers, shrewed negotiators, and every other sort of buyer and seller in the mix. And together their individual preferences tend to “cancel out” one another, and what we’re left with is the market price.

Now we can return to the problem of measuring the fairness (or unfairness) of the new assessment scheme. If the scheme is fair, we should be able to grab the 1000 least-expensive properties in Mt. Lebanon, clump them together, and add up their actual sales prices to arrive at the clump’s fair-market value. And we can do the same for the 1000 next-most-expensive properties. Then we can see whether their respective tax burdens are proportionate to their respective fair-market values. And then we can repeat the process, right up to the 1000 most-expensive properties in town, to calculate fairness across the home-value spectrum.

Running the assessments in reverse

Which brings us to the next problem. We don’t have actual, recent sales prices for all of Mt. Lebanon’s properties. Not every home was put on the market and sold in the last year or so; only some were, and those are the only homes in our data set. And, among those homes, there are some weird transactions like foreclosures and sheriff’s sales, which probably don’t fully reflect market prices. For Mt. Lebanon, we would expect this weirdness to be small, so I’m not going to worry about it further. But we still have to figure out the market prices of homes that haven’t sold recently.

To figure out those prices, we’re going to mine our limited sales data for all it’s worth. Here’s the idea. If we have a clump of homes assessed at about $100,000 each, we’ll comb our sales data for homes similarly assessed at about $100,000 and see how much they sold for on the market. Then we’ll ascribe similar sales prices to the homes in the clump we’re trying to price. While this method would be unreliable for individual homes, we’re working with clumps of a thousand homes, over which we would expect errors to mostly cancel out. Still, there’s a reasonable chance that recently sold homes are somehow different from Mt. Lebanon properties in general, so we ought to take our extrapolations with a grain of salt.

The fairness comparisons

That said, after we divide Mt. Lebanon into clumps, estimate their fair-market values, and then compute their fair-share tax obligations, the results aren’t subtle. The new assessments seem notably more unfair than the old. You’d have to take them with a lot of salt before thinking everything was in fact peachy.

The following plot shows how we predict the new and old assessments to play out in terms of property taxes, distributed across the community’s properties by fair-market value. There’s a lot going on, so take a look, then meet up with me after the plot for some explanation.

(Click for larger version)

Running horizontally we have home prices, starting at a little below $100,000 and ending a little beyond $400,000. This price range covers the bulk of Mt. Lebanon homes. Running vertically we have the degree to which properties are predicted to be overtaxed because of inequities in the assessment scheme.

The lines on the plot trace out what we might call the “tax-fairness curves” of the different assessment schemes. The curve for a perfectly fair scheme would be a flat line at 0%, meaning that, across the pricing spectrum, properties would generally be taxed in equal proportion to their fair-market values. As you can see, however, the curves on the plot are far from flat, and some of them stray into overtaxed-by-10-percent territory.

For now, ignore the dotted lines and focus on the solid lines. The solid red line represents the tax fairness of the old assessment scheme. To my eye it looks pretty reasonable, generally within 2.5% of perfectly fair across the value spectrum, which is better than I would have expected.

Now look at the solid blue line. That’s the new assessment scheme. To use a technical phrase, it’s all over the place. Low-valued properties are getting overtaxed by up to 10%, and higher-valued properties are correspondingly undertaxed. That’s not good.

Now back to those dotted lines. I used two separate statistical models to predict market prices from assessed values. The first is more constrained and therefore “smoother” in its predictions. It’s represented by the solid lines. The other is less constrained and more “wiggly” (another technical term). It’s represented by the dotted lines. So go back and look at those dotted lines. While they look a bit different, their overall pattern is the same as before: the new assessments (blue) are more unfair than the old (red).

Which is pretty much the opposite of what everyone expected of the new assessments.

So it’s not looking good for the new assessments. If they were supposed to fix inequities of the old assessments, they’re not doing a great job at it, at least not for Mt. Lebanon.

As usual, comments are open. This is a complex subject, so feel free to ask questions and share your thoughts. All we ask is that you abide by our real-names policy: When you offer a comment, sign it with your real first and last name. (Otherwise, we won’t be able to post it.)

Blog-Lebo would like to thank the University Center for Social and Urban Research for making available their ever-useful data set of recent Allegheny County residential-property sales, without which this analysis would not have been practical. Any errors in this analysis are Blog-Lebo’s, not theirs.

Reality-Checking the Reassessments: Part 2

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

In our previous article, Reality-Checking the Reassessments, we compared the new assessments to recent residential property sales in Mt. Lebanon to see if we could learn whether they fairly represented actual market prices. Taken as a whole, they seemed reasonable (“not horrible” was the technical term I used), but for many individual properties, they seemed far from reality. Also, it seemed that less-expensive properties tended to be overassessed and more-expensive properties underassessed. So there seems to be some cause for grumbling.

Now we perform a second reality-check: Do the new assessments do better than the old assessments? (Recall that the motivation for the new assessments was to remedy the inequities of the old assessments.) To help answer this question, we return to our data set of recent Mt. Lebanon residential property sales (courtesy UCSUR) and compare recent sales to the new assessments. But this time, we also compare them to the old assessments, to see whether new or old are closer to the actual market.

The easiest way to see how new compares to old is, well, to see how they compare. So here’s another statistical plot, much like the plot from our previous article, but this time with two dots for each home sold in Mt. Lebanon in 2010 or 2011. Take a look and then I’ll explain more below.

(Click image for a printable high-resolution version in PDF format.)

Here’s what’s going on. For every home sold in Mt. Lebanon, there are two dots, one red and one blue, connected by a horizontal gray line. The vertical position of that line gives the home’s actual sales price. The horizontal positions of the dots give the old and new assessed values of the same home. The red dot represents the old assessment; the blue, the new assessment. You can think of a house’s assessed value as having “traveled” along the horizontal line from the red dot (old) to the blue dot (new). The question, then, is whether they traveled toward (or away from) fair-market prices.

To help answer that question, we have added a 45-degree reference line to show where the assessed values would line up if they perfectly reflected market prices, as estimated by our recent sales data. To the extent that a home is underassessed, it will appear to the left of this line; to the extent it is overassessed, to the right. The actual market is a bit of a moving target, so we won’t worry too much about assessments near the reference line, just those far from it.

So what can we see? First, the blue dots are almost always to the right of the red dots. That means that most of the homes had their assessments increase. And that’s what we would expect, given that property values have generally increased since the old assessments took place. So far, so good.

Second, the blue dots are closer to the 45-degree reference line than the red dots. That means the new assessments are closer to actual market prices than the old. In other words, the new assessments seem to be closer to reality than the old assessments. That’s a clear improvement.

Okay. So the new assessments are truer.

But are they fairer? We’ll look into that question next time.

Until then, comments are open. Let us know your thoughts.

Reality-Checking the Reassessments

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

In our previous article, Making Sense of the New Assessments: Winners and Losers, we looked at the reassessment’s likely effects on your property taxes. In this article, we look at the assessment, itself, and ask whether it’s likely to do what it’s supposed to do – make all property owners pay a fair share of property taxes based on the actual market values of their properties.

To help answer that question, let’s look at the selling prices of Mt. Lebanon residential properties on the market in 2010 and 2011 and compare them to the newly assessed values of the same properties. Selling prices make a good reality check because they define the market. Sellers aren’t willing to sell for less than they think the market will bear, and buyers aren’t willing to pay more than they think they must. If the new assessments reflect the market reality, they should be similar to their respective sales prices.

Using a data set of recent Allegheny County residential-property sales provided by the Pittsburgh Neighborhood and Community Information System at the University Center for Social and Urban Research, we identified 1,184 Mt. Lebanon residences sold in 2010 and 2011 for between $50 thousand and $500 thousand (our Mt. Lebanon–specific data set). We then merged that sales data with our previous data on property reassessments and compared the sales prices to the corresponding newly reassessed property values.

Overall, the homes in the data set sold for an average of 4% above their newly assessed values, which supports the notion that the new assessments are generally close to actual market prices and therefore not horrible. For individual properties, however, some of the new assessments are hard to fathom.

Here is a plot showing how each home’s sales price compares to its newly assessed value. Each point on the plot represents a home that was sold in Mt. Lebanon in 2010 or 2011. Its horizontal position gives its new assessment value, and its vertical position gives its actual sales price. If the two are the same – and they ought to be close if the reassessment is working properly – the point ought to fall on the gray reference line running across the plot at 45 degrees. To the extent a point misses the line, its corresponding assessment can be said to be “over” or “under” its market price. Points to the left of the 45-degree line represent underassessment; to the right, overassessment.

As you can see, most of the points are reasonably close to the reference line. But many aren’t.

Those far-away points represent properties that sold for considerably higher or lower than their supposedly true-to-the-market assessed values. Those are the properties we ought to start asking questions about. Likewise, some of the owners of those properties have a good reason to appeal their new assessments. Conversely, some of those properties seem to be way underassessed. The local taxing bodies might want to look more carefully at those deeply discounted assessments.

To see if there are any geographic patterns in the under/overassessments, let’s put all 1,184 of those properties on a map.

The Blog-Lebo Reassessment Reality-Check Map



Blues represent assessments below sales price; red, above sales price.
Click on properties to see their details.
(Full Screen)

Overall, things look pretty evenly distributed. But, if you look more closely, you can see some small patterns in certain areas. For example, on the north side of Scrubgrass Road, nearly ten recently sold properties were assessed at considerably higher than their sales prices, but their neighbors on the south side of the street had relatively gentle assessments. Anybody know what might be going on there?

Take a look at the map and let me know what you find. As usual, discuss it in the comments section. Let me know if you see anything interesting or want Blog-Lebo to take a look at something else about the reassessments.

Blog-Lebo would like to thank reader Lisa Brown for suggesting that we compare the assessments to recent sales. (Got an idea for an interesting analysis? Let us know in the comments.)

Making Sense of the New Assessments: Winners and Losers (Updated 2)

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.)

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)

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.

New Court-Ordered Assessments for Mt. Lebanon are now online

The county has just posted to its web site the new, court-ordered assessments for Mt. Lebanon. You can search for your new assessment here: Court Ordered Reassessment Values.

Please remember that these assessments won't take effect until the 2013 tax year, at the earliest.

Also, don't freak out if your assessment is higher. Most properties will have their assessed values go up. What matters is how much yours goes up compared the community as a whole.

I hope to do a deeper analysis shortly, when I can get some more data, and then I’ll post more on how the new assessments are likely to affect Mt. Lebanon – and you. Stay tuned.

Act 25: a different perspective

Over on her blog, Josephine Posti, school-board president, writes about the recent passage of Senate Bill 330, now Act 25 of 2011.

The legislation, depending on who you ask, is either good or bad. The “good” view is that Act 25 closes loopholes in the “Taxpayer Relief Act” of 2006, loopholes which school districts have been exploiting to increase their spending beyond what is sustainable. The “bad” view is that Act 25 removes important safety valves that allow school districts to function while under financial pressures from sources they cannot control, such as unions and legislated mandates.

Unsurprisingly, Mrs. Posti subscribes to the view that Act 25 is bad, writing, “My immediate reaction concerning how this will effect [sic] education in the Commonwealth is: negatively.”

This view focuses on the short-term, direct effects of the legislation, without giving consideration to long-term, total effects. When you consider the bigger picture, the legislation appears both bad and good: bad at first, but good in the long run. In the short term, yes, it will force spending cuts on many school districts which are unprepared for them, and there will be collateral damage. Some students and parents are going to get hit. That’s bad. In the long term, though, it will force school districts to finally do something, however painful, to reduce their spending growth, which is probably unsustainable. That’s good. Pain now is better than collapse later.

So the question is, Are you willing to take some pain today to avoid disaster tomorrow? If you’re a school director or other elected representative, you have a strong incentive to answer No. That’s because, when things get painful for the community today, who’s going to suffer the public wrath? You are. Immediately and intensely. But years later, when things don’t go wrong, who’s going to remember to say thanks? Nobody. That’s because nobody notices when disasters they weren’t looking for don’t happen. It's perverse: if you do the right thing and then succeed at it, most people will think you made them suffer for nothing. So, if you're an elected representative, choosing the short-term pain for the long-term gain has a strongly negative payoff.

That’s why legislation like Act 25 is necessary. It’s virtually impossible for school directors, the community’s elected representatives, to do what is best for the community in the long term. If they force reform on the community, they’re going to get clobbered. But, if the community forces reform on them, which is what Act 25 makes possible, then reform might actually happen.

If those are the short- and long-term perspectives of the legislation, there are also narrow and wide perspectives. In another part of her post, Mrs. Posti writes the following:

Critics might claim that if local communities support education they’ll support construction, especially when student populations increase, buildings become inadequate, or program needs evolve. The reality is, they don’t... School referendums often fail because the majority of any electorate do not have school-aged children and, when given the choice between raising their taxes or not, they choose not.

That’s the narrow perspective, focusing on how the bill will block school construction because voters almost always say No at these referendums, for what Mrs. Posti suggests are the wrong reasons. The wider perspective, however, takes in that these referendums occur within a democratic society, and when voters reliably say No to something, that’s not a failure of the system: that’s a message from the people, a message that the government is supposed to hear and take seriously.

In this case, what that message is saying is that the way our government runs and pays for public education is something that the public increasingly finds unaffordable. What that message is saying is that it’s time for reform.

But that message, for reasons I’ve explained above, is one that school directors have difficulty acting upon. Further, the reform we need is bigger than Mt. Lebanon. That’s why I can sympathize with school directors who take the short and narrow view of the situation. It’s not like they can do much about the long, wide view, themselves.

But, thanks to Act 25, citizens can do something about it. They can say No at the voting booth and force reform to begin, however painful.

Toward the end of her article, Mrs. Posti issues a challenge:

[If] you can help me understand how these cuts and restrictions are good for education and help school districts prepare kids to compete in a global market, please share your thoughts with me.

It’s easy to meet this challenge: just think long term, just see the wider picture. It’s not about what’s happening to our schools right now; it’s about what’s going to happen to our entire public education system in the coming years. If we don’t find a way to make it affordable, we’re not going to have a public education system.

Act 25 certainly isn’t a solution to the bigger problem, and it certainly isn’t without problems of its own, but it is a step toward much-needed reform. And if our elected representatives have trouble taking the next step on their own, we’ll probably see more legislation like Act 25 to help them along.

Letter: To Pay for Government Spending, Mt. Lebanon Should Boost Real Estate Values

In the following letter to Blog-Lebo, reader and frequent commenter John Kendrick offers an interesting analysis of Mt. Lebanon real estate. He argues that Mt. Lebanon ought to raise the value of its homes if it is to pay for its government’s spending habits:

To the Editors of Blog-Lebo:

Below are a histogram and descriptive statistics of all residential assessed property values in Mt. Lebanon. The data was generated on January 4, 2010. I would like to leave the interpretation of the data to the readers, but I would like to point out that:

1. The statistical distribution is not normally distributed (i.e., does not follow a normal curve);
   
2. We are 95% certain that the true mean of the population is between $164,021 and $167,283;
   
3. We are 95% certain that the true median of the population is between $144,500 and $147,000.
   

My personal opinion is that our community cannot absorb the tax burden to pay for the looming school district and municipal expenditures. Therefore, we will need to enact economic development policies that will increase property values. I would like to know what the community would like to suggest, and I will offer two ideas of my own. My suggestion is that we think of a ways to increase the value of Mt Lebanon real estate. These are my two ideas:

Idea 1: The School District and the Municipality enact policies and programs to move the properties that have an assessed value in the first quartile of the distribution to the fourth quartile of the distribution. One approach would be to initiate a program that would do the following:

When any person voluntarily sells a home with an assessed value less than $115,000 and the buyer agrees to tear-down the home and replace that home with a new home, then the school district will abate the property tax for 5 years. This program would be open to 50 homes per year for 5 years. In the end we would have replaced 250 homes in the first quartile with an assessed value under $115,000 with 250 homes having an assessed value over $199,600. In principle, the tax revenue from each home site would double.

Idea 2: The School District would abate the school district real estate tax for any residential homeowner over the age of 59-1/2 years. This should impact about one-third of the homes in Mt Lebanon. For many years our community has experienced “The Process” where people relocate to our community to educate their kids, and then the move upon graduation to avert the high school-district taxes. There are several aspects of this idea that appeal to me, but one is that I would expect the number of homes “coming to the market” every year to decline since the motivation to avert high taxes would disappear as the homeowners age. Basic supply and demand suggests that as the supply is curtailed then the price of the available property should increase.

Do either of these ideas appeal to the community? Would anyone else like to suggest any alternative approaches?

Sincerely,
John Kendrick

Letter: Senate Bill Would Require “Super Majority” Vote to Raise School Property Taxes

In this letter to the editors of Blog-Lebo, Sue Dixon writes about a Pennsylvania Senate bill that would require school boards to make a two-thirds majority vote before raising property taxes. —Tom


Senate Bill Would Require “Super Majority” Vote to Raise School Property Taxes

Dear Editors,

I spoke to Senator Rafferty's office today and they said this bill was sent from the Education Committee to the Appropriations committee on June 29th, 2010. Since legislators are on recess until September 20th at 1:00 p.m., nothing is happening with this bill until they return. I have found that legislators are very easy to work with and you can make changes in how your government is run through legislation. If this bill doesn't move forward before the end of November it will be unable to move forward because this will be the end of the legislation cycle for this year.

Senator Rafferty's office said that a few school board members (Senator Rafferty’s office did not say which school district the school board members were from and they could be from anywhere in the state) have contacted them saying this bill would hold their budgets hostage and they wouldn’t be able to pass budgets.

Everyone in this state should be contacting their legislator and the Senators on the Appropriations Committee to share their opinions regarding Senate Bill 553 moving forward. I have provided the Press Release, the Bill in its entirety, and the contact information for all of the Senators on the Appropriations Committee.

Sue Dixon
Mt. Lebanon

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For Immediate Release on June 8, 2010

Senate Education Committee Approves Rafferty Measure (Senate Bill 553) Requiring Super Majority Vote to Raise School Property Taxes

The Senate Education Committee today approved legislation sponsored by Sen. John Rafferty (R-Montgomery) that would require a "super majority" vote for school boards to raise taxes.

Senate Bill 553 would amend the Public School Code to require all millage property tax increases to be approved by a two-thirds majority vote by the members elected to the board of school directors.

"Taxpayers are rightfully concerned that property taxes continue to increase, as does school spending," Rafferty said. "Many tax increases are being passed by a single vote. I believe there should be a compelling need and strong support by the board before property taxes go up."

Rafferty said his legislation would provide greater taxpayer protections and ensure that school boards of directors first seek to control spending before raising taxes.

"Taxpayers have repeatedly told us that they want a stronger say in taxing decisions," he said. "My bill will provide an added protection against tax increases because it will raise the bar when it comes to voting for an increase."

"This is an important move to rein in property tax increase and control spending," Rafferty added.

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The exact wording of this bill follows:

THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL No. 553
Session of 2009

INTRODUCED BY RAFFERTY, FERLO, BROWNE, WASHINGTON, EARLL, WAUGH, WONDERLING AND BOSCOLA, MARCH 5, 2009

REFERRED TO EDUCATION, MARCH 5, 2009 - REREFERRED TO THE APPROPRIATIONS COMMITTEE, JUNE 29 2010

AN ACT

Amending the act of March 10, 1949 (P.L.30, No.14), entitled "An act relating to the public school system, including certain provisions applicable as well to private and parochial schools; amending, revising, consolidating and changing the laws relating thereto," in school finances, providing for millage rate increase. The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. The act of March 10, 1949 (P.L.30, No.14), known as the Public School Code of 1949, is amended by adding a section to read:

Section 602.1. Millage Rate Increase.--The millage rate of tax in effect in each school district on the effective date of this section shall not be increased in any succeeding year unless approved by a two-thirds majority vote by members elected to the board of school directors.

Section 2. This act shall take effect in 60 days.

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APPROPRIATIONS COMMITTEE

Officers
Corman, Jake , Chair
Tomlinson, Robert M., Vice Chair
Costa, Jay , Minority Chair
Stack, Michael J., Minority Vice Chair
Pileggi, Dominic, ex-officio
Mellow, Robert J., ex-officio
Scarnati, Joseph B., III, ex-officio

Majority
Argall, David G.
Baker, Lisa
Browne, Patrick M.
Brubaker, Mike
Gordner, John R.
Greenleaf, Stewart J.
Pippy, John
Rafferty, John C., Jr.
Smucker, Lloyd K.
Vance, Patricia H.
Waugh, Michael L.
White, Mary Jo

Minority
Boscola, Lisa M.
Farnese, Jr., Lawrence M.
Logan, Sean
Musto, Raphael J.
Stout, J. Barry
Tartaglione, Christine M.
Wozniak, John N.

School Board Director Fraasch's July Update: Now What?

On his blog, School Board Director James Fraasch has posted his July Update. In it, he offers a frank assessment of our community's current school situation – uncompetitively high taxes, declining student population, stalled high-school project, short-sighted policy changes by the school board – and tries to examine the question that most residents are probably asking themselves: Now what?

There aren't any easy answers. The problems Mr. Fraasch discusses are serious, but solving them won't be enough. That's because the real problem is one of leadership.

Our leaders, to be blunt, are how we got these problems. Our leaders, past and present, created these problems, grew these problems from seeds they themselves planted. Every time our leaders talked about hard decisions but failed to make hard decisions, a seed was sown. Every time our leaders spent boldly in good times but failed to cut boldly in bad times, a seed was sown. And every time our leaders "handled" the public but failed to hear the public, a seed was sown.

I'm not sure what to do about the seed-sowing – solving that problem is going to require our community to change in ways that I'm not sure it can – but I do know that the first step is to be honest with ourselves about our present situation. Read Mr. Fraasch's July update. Think about it.

Then, you tell me: Now what?

School Board’s 10.5-Percent Tax Increase Earns Another “Lancing”

Today, Mt. Lebanon got “lanced” again by the Tribune-Review:

Lance: To Mt. Lebanon. Its school board approved a staggering 10.5 percent increase in taxes this week. That's to pay for a poorly executed high school renovation project and to cover teacher pensions. And, apparently, there's a little something in there for a new contract with teachers, now being negotiated. The school tax bill on a $200,000 home will soar to more than $5,300 a year. And that great sucking you're soon to hear won't be the straw at the bottom of an empty cold coffee.

Over on his blog, School Board Director James Fraasch comments on the situation:

I can't say I disagree with the lances. It's unfortunate that for years this Board has known the day would come when taxes would skyrocket up in order to pay for the high school. Since the first day I sat down on this Board, I asked how we were planning to pay for it. The answer became so clear on Monday night. We decided to increase taxes to pay for 100% of the cost of the first set of bonds for the project.

Mr. Fraasch’s post is worth reading. He shows that the true problem isn’t the tax increase so much as the culture that created it, a culture that threatens to make Mt. Lebanon uncompetitive.

Making people pay more for what they can get elsewhere is not the recipe for community growth. It’s the recipe for decline.

KDKA Covers Mt. Lebanon School Taxes and High School Project

Mt. Lebanon's school taxes and high school project, always hot topics in town, are now attracting the attention of Pittsburgh-area television media. In a report aired earlier tonight, KDKA's Ralph Iannotti takes a look at both topics. His report touches on the petition movement, the effect of higher taxes on real estate sales, and the school district's new budget, which includes a planned property tax increase of 10.7 percent.

Video: Mt. Lebo School District To Raise Taxes (KDKA)

Updated 2010-04-21 00:01 to note that proposed tax increase is 10.7 percent, not 10.8.

Allegheny Institute: Mt. Lebanon School Taxes Becoming “Nightmare”

The newest policy brief from the Allegheny Institute For Public Policy is about a topic of frequent interest in Mt. Lebanon: school taxes. According to the brief, the effect of upcoming taxes on homeowners will be staggering:

In this budget forecast scenario a Mt. Lebanon household with the municipality’s 2008 median income of $77,167 and owning a home with the median value of $190,000 – that is correctly assessed – will see school real estate taxes go from the current $4,580 to $6,437, assuming the home’s assessed value stays at its current level. This will be accompanied by a $385 per year earned income school tax, more if the household is fortunate enough to have its income increase over the next five years.

Then there is the earned income tax paid to the municipality along with property taxes to the municipality and county: another $2,400 per year – assuming municipal and county tax rates do not rise. In sum, under the projected tax increases the owner of a median value house could be facing well over $9,000 in local taxes each year by 2015.

The full brief is available to the public: Mt. Lebanon Schools Becoming a Taxpayer Nightmare (PDF)

Read More:

• Future finances concern Mt. Lebanon resident (Pittsburgh Tribune-Review)
• School taxes increase 3.41 mills (Pittsburgh Post-Gazette)

Updated 2010-02-18 08:13 to include Read More section.
Updated 2010-02-18 17:21 to include link to Post-Gazette coverage of school taxes.

School Board Directors Get Their Messages Out

With the Act 34 hearing for the high-school renovation approaching, and with updated budget forecasts now available, school-board directors are trying to get their messages to the community.

On Friday, February 5, 2010, Josephine Posti updated her blog with a new article, “Bottom Line.” In the article, she discusses how the renovation will affect property taxes. Over the next few years, the project will cause taxes to increase by about 3.4 mills or 14 percent. To help residents understand how the increase works out for their own households, she links to a table of millage increases that shows the typical increase for various home assessments. For owners of homes assessed at around $200 thousand, the bill for the renovation works out to about $57 more per month ($675 per year). If the renovation comes in below the $113-million maximum, which Mrs. Posti expresses confidence that it will, the new taxes would be correspondingly lower.

On Saturday, February 6, 2010, James Fraasch posted “The Blitz Is On,” in part a response to Mrs. Posti’s article. He points out that any financial decision, while appearing sound on its own, may be unwise in light of the larger financial picture. He goes on to show that our school district’s financial picture, when considered as a whole, is concerning:

So when you see people say that the high school might mean a 14% increase in taxes ... and that’s the “Bottom Line”, it kind of misses the point entirely. The Bottom Line isn’t just a single expense. The Bottom Line is the forecast we received last Thursday. And that Bottom Line is ugly! From 2009–2010 to 2014–2015 the millage is projected/estimated to rise from 24.11 to 33.31, a 38.15% increase in taxes.

Neither of the directors’ blogs allows comments, so if you want to comment on either or both articles, feel free discuss them here on Blog-Lebo.

Court Orders Allegheny County Property Reassessment

The Pennsylvania Supreme Court ruled today that Allegheny County must reassess its property values.

The unanimous decision on the cases of Clifton et al and Pierce et al v. Allegheny County -- argued before the court in September -- states that the base year method for property valuation, as applied in the county, violates the uniformity clause of the Pennsylvania Constitution. In 2005 County Executive Dan Onorato set property values at 2002 levels to avoid a tax hike on property owners with rising values.

Link: www.postgazette.com/pg/09119/966406-455.stm

The Lebo Burden

From this past Tuesday's Pittsburgh Tribune-Review:

The Allegheny Institute for Public Policy says Mt. Lebanon municipal government and its school district "have become unnecessarily and excessively burdensome for the community's taxpayers." And proof of that is in the pudding -- or, in this case, the flight: Folks are leaving the South Hills community. One shocking statistic: Mt. Lebanon property owners are paying 50 percent more in school taxes per dollar of market value than Peters property owners. That's what we'd call out of whack.

Link: www.pittsburghlive.com/x/pittsburghtrib/opinion/archive/s_561139.html

Lebo Schools To Vote On New Budget

The $73 million preliminary budget the Mt. Lebanon school board will vote on next Monday is not expected to be substantially different from the version the board discussed Monday, which calls for a .62-mill tax hike.

That number is up slightly from last week's budget document, which set millage at .58. However, with some final tweaks to the document, the millage hike should come in somewhere between the two numbers, said Finance Director Jan Klein.

Link: www.post-gazette.com/pg/08101/871834-55.stm