Appeals of Allegheny County property assessments, unleashed by a lawsuit, are starting to bite into the revenues of governments, notably in already strained Mon Valley communities. Pittsburgh, meanwhile, has stayed above water, because rising residential value has outstripped slashed skyscraper tax bills — so far.

Unbalanced
How property tax assessments create winners and losers

As thousands of pending appeals threaten to upend municipal and school budgets, County Executive Sara Innamorato is taking a cautious path on one of her key campaign planks supporting routine countywide reassessments.

A reassessment would come with political costs for Innamorato and monetary costs for some individual property owners. (It could also cost her personally, by boosting the low tax bill on her Upper Lawrenceville house.) But experts say it’s the cure for a defective system that currently overtaxes some and undertaxes others.

Even with most of last year’s appeals as-yet undecided, some municipalities saw a drop in taxable assessed value in the last two years, with much of the downturn coming in Mon Valley communities that are hurting economically. Fifty of the county’s 130 municipalities lost taxable value since the start of 2022; Homestead (10%), West Homestead (6%) and Clairton (4%) saw the biggest percentages of their tax base disappear.

Property owners filed an unusually large number of assessment appeals last year. That’s because a court ordered a change in the math used to calculate assessments determined by appeals, making it more favorable to owners.

Owners of large commercial buildings appealed en masse and are expected to win significant cuts to their assessed values, lowering their tax bills. Already, three of the dozens of Downtown towers have won appeals and seen significant tax relief. 

When big property owners saw the new tax math, “they jumped on it,” said Dominick Gambino, a local government consultant who managed the county’s assessment office from 2001 to 2003. He added that yet another change in the tax math, taking effect this year, could cause a fresh round of appeals.

While Pittsburgh’s assessed value rose 1.87% from 2022 to 2024, a PublicSource review found, a decline has already begun Downtown. 

Assessed value in the city’s 2nd Ward, which spans much of Downtown and the Strip District, dropped 3.73% during that time period, shedding more than $112 million in assessed value. Using current tax rates — measured in mills — that $112 million represents more than $900,000 in lost tax revenue for the city and $1.2 million for the city school district. And appeals for dozens more commercial properties are still pending. 

So far, value has increased enough in residential neighborhoods to make up for Downtown’s problems. The 6th Ward, in Lower Lawrenceville, saw a whopping 30% increase in assessed value ($130.2 million in taxable value). The 5th (Hill District), 16th (South Hills) and 17th (South Side) wards each increased between 9% and 13%.

But the math is unlikely to favor taxing bodies for much longer.

Looming crisis

The successful Downtown appeals are “just the beginning” of the wave of assessment cuts Downtown, said Chris Briem, a regional economist at the University of Pittsburgh’s Center for Social and Urban Research. “I think what’s in the news of late of the percentage declines in these big buildings are probably typical of what most Downtown buildings will get in the short term.”

Six-figure tax bill decreases for dozens of commercial properties would have a devastating effect on the city and school district. The city is facing a razor-thin budget in the near future with an operating surplus of just a few million dollars. The school district is already operating at a deficit and is considering plans to close school buildings to cut costs.  

“One way or the other, property values Downtown are coming down,” Briem said. “It’s probably going to force a millage increase on everyone else.” That would effectively raise tax bills on property owners throughout the city to make up for the lost revenue coming from Downtown.

While Downtown owners will see lower tax bills, Briem said they are hardly winners in the situation. 

“They’ve lost, they’ve lost a lot and they’re going to keep losing,” Briem said, because decreased demand for office space since the start of the pandemic has crushed commercial building revenue. The assessment cuts are “reflecting that reality.”

Pittsburgh Public Schools solicitor sounded the alarm in a January interview.

“If these large reductions that have occurred Downtown and will continue to occur, they simply do not have financial wherewithal to sustain that,” solicitor Ira Weiss said.

Pittsburgh Mayor Ed Gainey’s office took a less dire tone. 

“Budget wise, the team forecasted the possibility of reduced real estate tax revenue,” said city press secretary Olga George. “Currently, Finance and [the Office of Management and Budget] are watching how real estate collections are processing.”

The mayor’s 2024 budget does not forecast a drop in real estate tax revenue. This year’s budget plans for a number slightly higher than last year’s, and the city’s five-year plan projects increases each year.

George said the city is assessing new valuations and deciding whether to contest them in court. 

Peter McDevitt, the budget director for Pittsburgh City Council, said it’s too early and there are too many variables to “hit the panic button,” but the city could eventually be forced to find new revenue or cut services. “Raising millage is not the only avenue, but it’s the most viable one” to raise revenue, he said. 

The county’s $1.1 billion operating budget, which relies on property taxes for around 37% of its revenue, is not in danger of a shortfall, according to county spokesperson Abigail Gardner.

Reassessment vs. ratios

Experts including Briem and Gambino say the fix for the county’s assessment woes lies in conducting routine, countywide reassessments — a concept Innamorato has endorsed, as long as it can be done with new protections for vulnerable taxpayers. 

Gardner confirmed that Innamorato continues to believe “that a reassessment would be a more fair and equitable way to determine values,” adding that “there are no immediate plans to engage in a reassessment.” The real estate market is shifting, she wrote in response to questions, prompting “a reimagining of how to keep our Downtown thriving.”

The last time the county reassessed all its properties was in 2013,after a judge ordered then-County Executive Rich Fitzgerald to do so. Fitzgerald never did so again.

Pennsylvania allows counties to leave decades-old assessments in place, subject to appeals where there’s evidence of rising value. 

In counties that use this “base-year” approach, properties without improvements or recent sales generally keep the same assessments each year. Where there’s evidence of a change in value, the owner or a taxing body can file an appeal.

When an appeal is filed in Allegheny County, the Board of Property Assessment Appeals and Review assigns a new fair market value. That value is multiplied by the common level ratio [CLR] to come up with an assessment.

The CLR is meant to adjust appeal-generated assessments to resemble those last set in the base year. But a lawsuit revealed that the county submitted flawed data for the calculation of the CLR, and a judge forced its reduction. 

For appeals filed in Allegheny County this year, the fair market value will be multiplied by 0.545 to determine the assessment, meaning a property with a post-appeal value of $100,000 would be assessed at $54,500. By contrast, for appeals filed in 2021, the ratio was 0.875, meaning that same property would have been assessed at $87,500. 

Property owners whose assessments were boosted in prior year appeals may appeal now, and use the lower CLR to push their assessments down. The ratio, though, won’t help owners whose property values have soared.

Your tax depends on when you bought

Despite the change in the ratio, tax bills in Allegheny County continue to be driven less by the value of the property than the date of purchase. The wild variances in assessments are evident on the streets of the current and prior county executives.

Fitzgerald arguably benefits to the tune of thousands of dollars per year from his decision not to reassess.

He bought his house in Point Breeze in 1989 for $202,000. Because the county doesn’t regularly reassess, his tax bill has remained static, even as property values have soared.

A next-door neighbor bought a similarly sized house in 2021 for $970,095. That price drew an assessment appeal by the Pittsburgh Public Schools, and a resulting fair market value of $616,000.

The neighbor’s total annual tax bill — county, city and school district — is around $3,000 higher than Fitzgerald’s.

Innamorato could lose out financially under the scenario she proposed during her campaign for executive. She has said she'd like to reassess all properties, while increasing existing tax breaks for homeowners and seniors and adding protections for longtime owner-occupants.

Innamorato bought her row house in Upper Lawrenceville for $71,000 in 2015. On the same side of the same block is a house that’s around 20% larger (though it’s not a row house). Purchased during the Lawrenceville real estate boom, it is subject to a tax bill around five times higher.

Gambino said the current system, with no reassessments and one CLR for the entire county, is unfair because different areas have appreciated at different rates since 2013 — meaning homeowners in low-appreciation markets are subject to the same ratio as those in high-appreciation areas.

The base-year system is “something Robin Hood’s evil twin would condone,” Gambino said. “All this talk about reduction and refunds, these are all symptoms of a sickness called the base-year scheme.”

Plight of boroughs

Seth Abrams feels conflicted. On a personal level, a countywide reassessment would cost him money. He bought his home 13 years ago and said it has appreciated significantly since the last time the county assessed its value.

But Abrams is the borough manager for Munhall, a place that stands to lose a lot of money in pending appeals. Just one appeal, by the Lowe’s hardware store in the Waterfront, has already cost the borough $50,000 in annual revenue, enough to wipe out a cushion he had planned for the 2024 budget.

Now, the possibility of a millage increase weighs on him as more appeals, including some from U.S. Steel, are pending.

“If [U.S. Steel] got something along the lines of what Lowe’s got and they got their assessment cut in half, that’s another $60,000 or $70,000 loss that I’m trying not to factor into things right now,” Abrams said. “That would mean that we would have to dig into the reserves, we would have to look at all of our fees and our taxes.

“People will see increased costs if this trend of losing taxable value continues.”

Despite the implications to his personal tax bill, as a professional, Abrams wants to see a reassessment. 

“I need to look out for the needs of an entire community. In Munhall, I’m looking at 5,000 or 6,000 residences. For me, I’m looking at one.”

Assessed values dropped from 2022-2024 in numerous Mon Valley communities near Munhall, showing Abrams’ problems are shared by his peers in other towns. Many of those municipalities and the adjacent school districts already have some of the county’s highest millage rates, giving them less margin to raise the levy.

Clairton will have to deal with the outcome of 32 parcels under appeals filed by U.S. Steel, which operates the Clairton Coke Works there. Clairton Mayor Rich Lattanzi told PublicSource in April that the steelmaker accounts for about one-third of its tax base, and the revenue loss from appeals could “be catastrophic for the City of Clairton.”

Charlie Wolfson is PublicSource’s local government reporter and a Report for America corps member. He can be reached at charlie@publicsource.org.

Rich Lord is PublicSource’s managing editor, and can be reached at rich@publicsource.org.

This story was fact-checked by Delaney Rauscher Adams.

The post Property tax appeals erode budgets as assessment burden shifts appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

Unbalanced
How property tax assessments create winners and losers

From the Rivers Casino Pittsburgh to U.S. Steel’s Clairton Coke Works, big commercial property owners are looking to take advantage of a unique tax appeal season to save money — at the expense of schools and municipalities.

An archaic property assessment system, now reshaped by lawsuits and resulting court rulings, has created “assessment chaos,” which is making it hard for governments to budget, said Ira Weiss, solicitor for the Pittsburgh Public Schools. “The bottom line is: It’s a mess.”

Allegheny County’s Board of Property Assessment, Appeals and Review [BPAAR] has received 11,660 appeals of 2023 tax assessments. That’s notably higher than the average of around 8,000 appeals per year filed from 2015 through 2021.

This year’s appeals are 1,000 lower than the number filed last year, but there’s a key difference. Last year, nearly 90% of appeals were filed by school districts hungry for more revenue as property values rose. Appeals of 2023 tax bills, by contrast, came in almost as heavily from property owners looking to lower taxes (44% of appeals) as they did from school districts (54%). Municipalities — the only other entities that can appeal — consistently account for around 2% of filings.

Driving the change in the mix is a judge’s decision in a taxpayer lawsuit that tilted the tax math in favor of property owners — but only if they appeal. And many sophisticated property owners are doing just that. 

U.S. Steel, for instance, is appealing the tax bills on 95 properties, virtually everything it owns in Allegheny County. The steelmaker has filed the most appeals of any property owner in the county, covering property assessed at around $58.5 million.

Clairton is home to 32 of the U.S. Steel parcels under appeal. The Mon Valley city relies on the steelmaker for almost one-third of its total tax base, according to Mayor Rich Lattanzi. 

To have all of that under appeal is “huge for us,” Lattanzi said. The revenue loss could “be catastrophic for the City of Clairton,” he said, adding that U.S. Steel has helped his government and he believes the company doesn’t want to hurt the home of its coke works.

U.S. Steel is appealing its assessments to “bring its property values back into proper alignment,” according to spokesperson Amanda Malkowski, and to correct the “improper calculation” that has affected the taxes of property owners for years. The steelmaker doesn’t intend to apply any savings it achieves until 2024, so it won’t upend the current operating budgets of schools and municipalities.

But after that? “We would hope to be assessed fairly moving forward,” Malkowski wrote.

School districts contend with ‘nitroglycerin’

The genesis of the property owner appeals is a lawsuit alleging that Allegheny County engineered years of unfair property taxation for thousands of properties. It led Common Pleas Judge Alan Hertzberg to change the common level ratio [CLR], a factor used in calculating the assessments of properties that are subjects of appeals.

The effect of the new ratio on assessed values will depend on an involved property’s market value and whether it has any tax exemptions, but could in many cases bring a reduction of around 20%. That reduction would carry into future years until another appeal or a reassessment occur. The reduction is only available to owners who file appeals and prove that the market value of their property warrants the reduction. The deadline for filing appeals was March 31.

Whereas appeals under the prior ratio often brought increased revenue to districts, now they could instead “knock 30% off of the value” used to determine the tax bill, according to Weiss. For school districts, he said, an appeal is now “like picking up a container of nitroglycerin and not knowing if it is going to blow up.”

The fact that 44% of appeals were filed by property owners represents “a dramatic shift in the breakdown from last year,” said Michael Suley, former manager of the county’s Office of Property Assessments and a consultant to the plaintiffs in the lawsuit. “The pendulum is swinging the other way.”

Why didn’t even more owners appeal in a county with some 580,000 properties? “What that tells me,” Suley said, “is that the property owners still don’t know how to do the math” to determine whether they can save money via appeal.

Most of the appeals involve residential properties, but the most consequential may be those related to commercial parcels. Countywide, owners of 877 commercial properties are appealing their 2023 tax bills.

One of those properties, the Rivers Casino, carries the highest assessment of any taxable property in Allegheny County, at $240,905,100. According to Pittsburgh’s property tax calculator, that likely means around $5.5 million annually in revenue for the city, county and Pittsburgh Public Schools. 

A Rivers Casino spokesperson declined to comment.

A significant recalculation of the casino’s tax bill alone could shave $1 million or more from public coffers. And that’s one property.

“The impact is going to be significant,” said Weiss. It could cut into the budget of not only Pittsburgh Public Schools, but of other districts with large commercial properties, including Montour and Upper St. Clair, which his firm also represents. Schools could theoretically make up lost revenue by raising tax rates, known as millage, but those increases are limited by state law. “You can’t tax your way out of this problem.”

In Clairton, ‘shoestring’ budgets and big steel

Mon Valley communities like Clairton are already feeling the economic pressures of a declining tax base and the rising costs of municipal services. Clairton City School District receives about 3% of its total budget from U.S. Steel, and lower corporate contributions could mean potential budget shortfalls, said Larry Nicolette, the district’s business manager. That’s made it difficult to build up funds or include any slack in their budgets. 

The district “started at less than zero and we’re building up,” he said. “We’re trying to provide a world-class education, but we’re on a shoestring budget as well.”

The City of Clairton was under Act 47 — the state program for municipalities experiencing “severe financial difficulties” — for over 25 years starting in the late 1980s. The city exited the program in 2015 after combining jobs, using the lowest responsible bidders for contract work and implementing other cost-cutting measures, said Lattanzi, the mayor. But things are still tight.

Going back into Act 47 is “always a concern,” he said. “It’s always in the back of your mind.”

“We’re probably at the end of the rope as far as our savings,” he said.

“The cost of everything is up,” Lattanzi said. “If we lose any additional revenue through taxes, we may have to do a tax increase for the City of Clairton.”

Lattanzi noted that U.S. Steel works with the city to build playgrounds and hang banners touting veterans, plus donates funding that has helped his administration to buy and renovate a community center, purchase a dump truck, build a baseball field concession stand and prepare land for redevelopment. Nicolette added that the company’s craftspeople have helped paint and lay carpet in the school.

“With U.S. Steel,” said Lattanzi, “it’s very important to have a relationship.”

In Munhall, paving and parks at stake

Further up the Monongahela River, U.S. Steel and affiliates filed 12 appeals on properties in Munhall. The borough’s current financial outlook is stable, according to borough manager Seth Abrams, but “I wouldn’t say we’re flourishing.”

U.S. Steel makes up about 3% of Munhall’s total property tax revenue, according to Abrams, much of which comes from one property in The Waterfront. 

Abrams said the borough is looking for places to potentially cut costs in the future.

“Overall, we are concerned about the appeals in combination with the CLR that the courts have handed down,” he said. “We did budget for a potential loss of some revenue and did proactively have a small millage increase.”

Abrams emphasized that Munhall has no concrete plans to trim services, but officials have begun to take note of services and investments that could be on the chopping block, like paving projects or a park rehabilitation.

He regretted, too, the practice of many school districts and some municipalities of appealing the assessments of new homebuyers, using the sale price as evidence to wring assessment increases from BPAAR. “We need the funds to maintain the services,” he said, “but to dump it on the people who are moving into town is not the welcome we want to give them.”

Potential fix not politically popular

Generally, property taxes are supposed to be based largely on the value of the property.

Allegheny County’s system — in which most tax bills are static while schools and municipalities appeal the assessments of recently sold properties — is rooted in the county’s decade-ago decision not to regularly reassess properties.

Other than Pennsylvania, “There’s no other state out there that allows counties to go 10 years without a reassessment,” said Dominick Gambino, owner of Diversified Municipal Services, a company that consults for schools, municipalities and counties regarding assessments. He managed Allegheny County’s Office of Property Assessments from 2001 through 2003, leading a reassessment of all properties.

The common level ratio is intended to achieve rough equality between years-old assessments — like the decade-old values that still determine the tax bills of most Allegheny County properties — and newer assessments based on recent sales. 

Gambino, though, said the ratio “does not achieve equity, and it’s kind of like a Rube Goldberg machine. They took something very simple and made it so complicated that people can’t even understand it.”

The only fair system, he said, involves routine reassessment of every property.

Weiss said the county’s decision not to reassess has left the property tax system “in a shambles. … It is my hope that whoever is elected immediately addresses this problem.”

Reassessments, though, have been politically fraught, as they tend to boost at least as many tax bills as they reduce.

At an April 19 town hall debate sponsored by PublicSource and NEXTpittsburgh, all of the candidates for county executive were asked whether they would reassess all properties.

One, state Rep. Sara Innamorato, pledged to “create a system that people have buy-in to, so it needs to be transparent. It needs to be regular. It needs to be without bias.”

No other candidate, though, expressed any intention to conduct a blanket reassessment.

“Let’s acknowledge that we have a horribly unfair system of taxation here in Allegheny County,” said city Controller Michael Lamb. “… I can’t support a reassessment until we can protect homeowners from these massive increases that are likely to happen to them.”

Julia Zenkevich is a general assignment reporter for 90.5 WESA. 

Rich Lord is the managing editor of PublicSource and can be reached at rich@publicsource.org.

This story was fact-checked by Dakota Castro-Jarrett.

This package was produced in a partnership between WESA and PublicSource.

The post From slots to mills, big property owners aim for smaller property tax bills appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

Through March 31, Allegheny County property owners have unusual opportunities to reduce their tax bills. But not everyone will benefit.

Unbalanced
How property tax assessments create winners and losers

Normally, owners have until March 31 of any given year to challenge the assessment underlying that year’s property tax bill. That remains the case this year.

But in addition to being able to challenge 2023 bills, property owners also have until March 31 to challenge their 2022 bills, if they desire. Links to forms to appeal both years are found here.

Why can taxpayers appeal two years in one season? Because a lawsuit successfully challenged the validity of data the county submitted to a state agency that calculates a ratio used in property tax appeals. County Council then voted to provide owners with a second chance to appeal their 2022 tax bills.

What did the assessment lawsuit do?

Allegheny County property tax bills are based on a decade-old mass reassessment using property values in 2012, except for properties for which the assessment has been modified through appeals. Owners, school districts and municipalities can file appeals — often after a property is sold — if they believe assessments don’t reflect market values.

The Common Level Ratio is a calculation meant to roughly equalize the assessments of similar properties whether they were last assessed during the base year (2012) or assessed more recently via appeals. The ratio is set by the State Tax Equalization Board based on data submitted by the county.

The lawsuit showed that the county submitted flawed data and pushed the ratio used in appeals of 2022 tax bills down from 81.1% to 63.53%. That means a property deemed, upon appeal, to have a recent market value of $100,000 would be taxed at $63,530, whereas it would have been taxed at $81,100 if the lawsuit had not succeeded. 

The ratio applied to appeals of 2023 tax bills is set at 63.6%, though that could yet be subject to legal challenge. 

The ratio affects only assessments determined through property tax appeals and is not applied to properties whose owners do not appeal.

Who will benefit from the new Common Level Ratio? 

Potential winners include owners of properties that could likely be sold today for an amount less than, equal to or not much greater than their current county assessments.

To find a property’s assessment, go to the county’s Real Estate website, search up the address, and under the “General Information” tab, look at the “Total Value” figures under the “Full Base Year Market Value” headings for each year. Those “Total Value” figures are the basis for the assessment and tax bill. (Note: The “Total Value” on the right takes into account a Homestead Tax Exemption, which is relevant to the tax bill, but not to the likelihood of success upon appeal.)

Appeals go before the Board of Property Assessment Appeals and Review. To appeal successfully, an owner needs evidence of the property’s market value, which may include its recent sales price, a professional appraisal or records showing sales of comparable, nearby properties.

What are some examples of potential appeal outcomes?

Example 1: If the county assessment totals $100,000, and the appeals board decides that the property would sell for only $50,000, then under the new Common Level Ratio, an appeal could result in a new taxable value of around $32,000. For an owner-occupied house in the City of Pittsburgh, that cuts the total city, county and school district property tax bill from around $1,790 to around $230.

Example 2: If the assessment totals $100,000, and the board decides that the property would sell for that same amount, an appeal could result in a new taxable value of around $64,000. For a homeowner, that $1,790 bill drops to just over $960.

Example 3: If the assessment totals $100,000, and the board decides that the property would sell for $150,000, then an appeal could result in a new taxable value of around $96,000. That’s a reduced assessment even though the value has gone up, but it results in only around $90 in annual tax savings for an owner-occupied house. For some homeowners, that might not be worth the time and effort or the optional expenses of an appraisal and a lawyer.

The new ratio, as it stands today, won’t help owners whose properties could be sold in today’s market for a lot more than their county-assigned Total Value.

Example 4: If the assessment totals $100,000, and the board decides that the property would sell for $200,000, then an appeal could result in an increase in the tax assessment to around $128,000, resulting in a higher tax bill by about $650.

In fact, school districts often appeal — jacking up tax bills — when they see a property sale price that is far higher than the assessment.

The Allegheny County Controller has set up a worksheet to help property owners to estimate whether they might save money through a property tax appeal.

Which neighborhoods might be ripe for successful appeals?

Assessment appeal results depend on the evidence regarding the market value of the individual property. Properties in some areas, though, may be more likely to be good candidates for downward adjustments, for a variety of reasons. If a neighborhood’s market values have stayed close to 2012 values, then the new ratios driven by the lawsuit may result in reduced assessments for those who appeal. Similarly, if appeals filed in recent years by school districts or municipalities have pushed assessments up close to market values, then the new, lower ratio could bring tax bills down.

PublicSource and WESA analyzed 7,305 residential properties throughout Allegheny County which sold from Jan. 1, 2022, through Sept. 1, 2022, at what the county considers “valid sales” prices — meaning they are deemed representative of market values. 

In the maps below, red areas saw sales prices that were relatively close to county assessments, suggesting that appeals are more likely to lead to tax bill reductions. Blue areas had 2022 sales prices that were significantly higher than assessments, suggesting that appeals are more likely to lead to higher tax bills. Areas in the middle are colored white. Gray areas saw fewer than 10 “valid sales” during the time period studied and were not analyzed.

Rich Lord is PublicSource’s managing editor. He can be reached at rich@publicsource.org or on Twitter @richelord.

Charlie Wolfson contributed.

This story was fact-checked by Betul Tuncer. 

This package was produced in a partnership between WESA and PublicSource.

The post Assessing the odds: This year’s unusual property tax appeal season, explained appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

When Aaron DeLeo bought his house in Verona in October 2020, he thought he’d lucked into a great deal.

Unbalanced
How property tax assessments create winners and losers

DeLeo had been looking for months and hadn’t found anything suitable. But the owner of the house in Verona was in a hurry and accepted DeLeo’s offer at the asking price, even though many other homebuyers at the time found themselves in bidding wars. 

The house had everything DeLeo wanted. Close to work, with a fenced-in backyard and an extra garage, it featured cherry kitchen cabinets, hardwood floors and a gazebo in the backyard.

For a decade, DeLeo had been trying to put himself in a position to buy a house. He worked in a science lab and made an extra $100 a pop leading local trivia games at night. He even sold some of his oldest and most valuable Magic: The Gathering game cards to pay the down payment. 

His monthly payment would be just under $1,000, and he thought he could handle it. He didn’t factor in Allegheny County’s property assessment system.

Soon after moving in, DeLeo started receiving letters from lawyers offering to help him appeal his tax bill. He didn’t know what they were talking about until he received another letter saying that the Penn Hills School District believed his house should be valued for tax purposes at $126,000 — a 64% increase – if he didn’t challenge the new valuation. 

DeLeo expected his monthly payment to go up, maybe by $100 a month or so. Instead it jumped by $400 a month, a 44% increase. 

“The value of my house is more than when the last person lived here. I get that part of it. So, yes, I think the taxes should go up partially,” he said. “But not that outrageous amount.”

DeLeo received a new letter in the mail last year from a lawyer letting him know that after a lawsuit ruling, he would be in a good position to lower his tax bill by well over $1,000 per year.

Things are looking up now for DeLeo and potentially thousands of other homeowners like him across the county, after a lawsuit last year changed how some properties are assessed. DeLeo and people like him have until March 31 to appeal and potentially lower their tax bills by hundreds or thousands of dollars per year. If many of them do appeal, school districts and municipalities could be facing a major shock to their finances.

A generational change in property taxes

A judge ruled last year that the county had skewed a calculation known as the Common Level Ratio [CLR], meant to roughly equalize assessments determined through appeals and those the county assigned a decade ago.

As a result, a home that sold for $100,000 — if it became the subject of a property tax appeal — would likely have been valued at around $81,000 in 2022 for taxing purposes. But after the judge’s ruling, it would be valued around $64,000 this year. For a house in Penn Hills, that would mean a savings of more than $700 per year.

“It’s like a generational drop” in the ratio used in assessment appeals, said Jason Yarbrough, a Pittsburgh lawyer who has worked on real estate appeals for more than a decade. “I don’t think there’s ever been as significant of a drop year-over-year than what we are seeing in 2023 as we try to catch up to years of adjustments that should have been made.”

DeLeo is one of many new homeowners across Allegheny County who had been paying what is sometimes referred to as the “newcomer tax” in recent years. 

The average home price in the county has increased by more than half since the last time the county conducted a full reassessment of properties in 2012. The ratio applied in appeals did not keep pace. So it had become increasingly lucrative for school districts to appeal the assessments of newly sold homes in order to tax them at higher values. Between 2015 and 2021, school districts across the county tripled the number of assessment appeals they were filing on homes in an attempt to collect more tax revenue.

The lawsuit has reversed that calculus. Tax experts say that many people who bought their homes in the past couple of years will have an opportunity to appeal their assessments and reduce their taxes. 

“Most people in the real estate world are predicting there will be many fewer school district or municipal-initiated appeals in 2023 and many more property-owner appeals,” said Michael Werner, a lawyer who has been working on appeals for two decades.

In a more typical year, most property assessment appeals would target properties sold in the previous year. But Werner thinks that homeowners who have bought in the last several years — and saw their assessments increase through appeals — might be in a position to appeal this year. It will be more difficult for people who purchased homes five years ago, when prices and resulting assessments were lower, he said.

The new math will be especially beneficial for commercial property owners, which have more ways of appealing their property values than relying on a recent sales price, Yarbrough said. For example, commercial properties may be able to use a loss of revenue since the pandemic to argue that their properties are not worth as much now. Some of his larger corporate clients could save hundreds of thousands of dollars per year with an appeal. 

But both commercial and residential owners have one thing in common, he said: “I think some people believe that this will happen automatically,” he said. “It won't, and it will require them to take some kind of an affirmative step and filing an appeal if they think that their number is wrong.”

Who is most likely to win a property tax cut?

People who bought houses in the last two or three years could have an easier time winning an appeal, according to Werner. That’s because it will be easier to show that their house now is worth a similar amount to what they paid for it. And then they could get their tax bill reduced by applying the new, lower CLR.

Owners of property in areas that have had more real estate transactions in recent years and have seen a lot of appeals will tend to benefit the most.

“You have to look at Lawrenceville. You have to look at Squirrel Hill. You look at probably Point Breeze, Highland Park, Morningside,” said Michael Lamb, the City of Pittsburgh’s controller. “The Strip District would be probably the biggest one: People who bought homes or condos in the Strip during the pandemic paid top price.”

The more expensive the home, the more savings potential. For example, the owner of a home that sold for $700,000 in Pittsburgh and saw its assessment hiked to that level through an appeal could save about $6,000 per year in taxes by appealing and applying the new CLR.

Lamb warns that people need to carefully look at their own situation before deciding to appeal. 

“This could backfire on you,” he said. “You can go in and come out of there with a bigger valuation.”

County Controller Corey O’Connor’s office held meetings last year about changes to property tax assessments. O’Connor said the most well-attended meetings were in the North Hills. His office has created a calculator to help residents decide whether or not to appeal.

Longtime homeowners could benefit, too, if they live in an area where prices have remained flat or have been falling through time. But if they purchased their home five years ago or more, they may have to get an appraisal or research sales of similar houses during the appeals process to prove how valuable their home is now.

The biggest losers? Governments, especially schools

School districts and other taxing bodies, which have relied on property appeals to increase tax revenue in recent years, could lose out on millions of dollars in the coming years. They may have to pay refunds to people like DeLeo, and they won't reap new revenue because the appeals they file won't be as lucrative under the new ratio.

The sticker shock that homeowners like DeLeo have been hit with in recent years will instead fall on municipalities and school districts. Ira Weiss, whose law firm represents a half-dozen school districts in the county including Pittsburgh Public Schools, said this has “put every school district and every municipality in Allegheny County on knife's edge.”

“They're going to have to wrestle with the fact that they're going to lose real estate tax revenue” when they set their budgets in 2023, he said.

Appeals filed by owners of commercial and industrial properties alone could reduce tax collections across the county by tens of millions of dollars, Weiss said.

“We have told clients that they have to be very conservative in their budgeting for next year,”  he said. 

Many school districts will have to raise their tax rates to make up the difference, he said.

“I'm not saying they're all going to do it,” he said. “But if they don't do it, many local governments — that is, municipalities and school districts — will have to cut programs.”

Lamb, the city controller, said he’s not sure how many individuals will end up appealing, so it’s difficult to say how big of a hit Pittsburgh’s finances will take. But he said he expects most longtime residents will not appeal and some newer homeowners will. 

“I don't know that we have a sense of the full impact of it, but it could be a pretty major hit to what is our biggest revenue source,” he said. 

The city's $686 million budget relies on $159 million from the property tax.

The county’s current property value assessment system has led to stark inequality. Owners of similar homes in the same neighborhood and even on the same block can be charged radically different tax bills, largely depending on when they bought their houses, or in some cases, when they did serious renovation work. Neighborhoods like Lawrenceville have become centers of inequality, where some homes are still valued at 2012 prices and others are taxed at much higher rates.

The current system also has led to inequalities between municipalities and neighborhoods. Areas with depressed home values should have seen their tax bills go down, as richer areas take up a larger share of their tax bills, according to Lamb. But this hasn’t happened. 

“Generally what you see is that you've got very wealthy communities that are assessed at a fraction of their value, and you have poorer communities that are assessed at most of their value,” said Lamb. “So it's unfair.”

The lawsuit that changed everything isn’t over

The lawsuit that brought property owners the new ratio and the opportunity to lower some tax bills continues. The Pittsburgh Public Schools have appealed the finding that compelled the new CLR. The plaintiffs, meanwhile, have filed motions alleging that the county's newly hired chief assessment officer fails to meet a requirement in the county code that demands 10 years of property valuation experience.

The case started in the summer of 2021, when a group of residents and a property investment firm filed a lawsuit challenging the county’s assessment practices.

The plaintiffs had recently purchased properties in Wilkinsburg, McKeesport, Pittsburgh, Forest Hills and Franklin Park. Not long after, local school districts or municipalities had appealed their property values.

The lawsuit alleged that the county had submitted incorrect real estate data to the State Tax Equalization Board in a way that “artificially overstates, or inflates” the Common Level Ratio.

Plaintiffs claimed that sales records sent to the state board weren’t an accurate sample of arms-length transactions between buyers and sellers, but instead were chosen because the sale prices were close to the assessments, according to John Silvestri, a lawyer for the plaintiffs. Because the data was skewed toward properties with sale prices that were close to their assessments, the state board calculated a CLR that didn’t reflect rising property sale prices. That kept the CLR high and exposed new homeowners to much higher property taxes than neighbors who purchased their houses years ago.

At stake were millions of dollars’ worth of property taxes. With an increased CLR, the county, school districts and municipalities were able to increase revenues without increasing the tax rate by filing appeals against owners of recently sold properties.

Allegheny County Common Pleas Judge Alan Hertzberg ultimately ruled that the county “failed to administer the property tax assessment appeal system in a just and impartial manner” and ordered officials to send new data to the state.

Evidence showed “there could be no doubt that Allegheny County’s Office of Property Assessment had been ‘cooking the books,’” Hertzberg wrote in his opinion. He ordered a CLR of 63.53% instead of 81.1%.

A spokesperson for the county declined to comment, citing pending litigation.

Lawmakers push for reforms — but not mass reassessments

The litigation also spurred lawmaking efforts that continue, and that could further improve the landscape for property owners.

Last year county council President Pat Catena created a Special Committee on Assessment Practices to hear evidence from the lawsuit and gather information about county assessments in the past.

In January, council passed an ordinance to create a second-chance window for taxpayers to challenge recent property assessments. Those who want to appeal their 2022 property assessments now have until March 31 to do so.

If a court orders a change in the 2023 common level ratio, the ordinance would also give homeowners a second chance to appeal assessments from this year.

Two additional pieces of legislation were introduced but are still sitting in a county council committee.

If a court adjusts the CLR again, one proposed ordinance would direct the county Office of Property Assessments to identify affected properties and recalculate their assessed values. It would also direct the office to alert property owners, municipalities and school districts to any such change and require that the county issue refunds for taxes it collected based on appeals decided using any incorrect assessments.

Another ordinance would allow council to appoint a candidate to the post of chief assessment officer if that position is ever vacant for 90 days or more.

The litigation and legislation are altering a system that has frozen many property owners’ tax bills for a decade. But so far, the changes do not entail the kind of full reassessment of all properties that has proved contentious in decades past.

Oliver Morrison is a general assignment reporter at WESA and can be reached at omorrison@wesa.fm.

Julia Zenkevich is a general assignment reporter at WESA and can be reached at jzenkevich@wesa.fm.

This story was fact-checked by Sophia Levin.

This package was produced in a partnership between WESA and PublicSource.

The post Tables turn on Allegheny County assessments, as new math favors owners over tax collectors, schools appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

The air you breathe. The way the government treats incarcerated people. How taxes are assessed. The very borders and links that bind – and divide – the county. 

The next Allegheny County executive will have an array of weighty issues on their plate when they take office just over one year from now. Next year, voters will choose a new course for county government for the first time in 12 years; County Executive Rich Fitzgerald is term-limited, clearing the way for the first wide-open contest for the office since 2011.

Mayors, governors and presidents have come and gone since Fitzgerald was elected that year. Pittsburgh and Allegheny County have fundamentally changed since then, as has the region’s political environment. The campaign to choose his successor likely won’t resemble any past contest for county executive.

Issues that weren’t part of the region’s political lexicon in 2011 are now central to many conversations about governance.

“I didn’t think as much about equity early on,” Fitzgerald said of the beginning of his tenure, “which I do now over the last five or six years.”

The region’s political climate has changed drastically since 2011, with a progressive shift emanating from Pittsburgh moving numerous elected offices to the left. A movement for racial and economic justice built during the Trump years and picked up even more speed during the 2020 George Floyd demonstrations. 

Fitzgerald said he thinks “equity will be a big part of [the campaign]” to replace him. “How do we bridge the gap between the haves and the have nots?”

Unlike municipal governments that are responsible for local staples like paving, waste management, fire and police, county government focuses on forces that cross the region with no regard for municipal borders: Air quality, public health, criminal justice and human services are under the county’s purview. Its annual operating budget is more than $1 billion, and that figure doesn’t include all of the state and federal dollars that flow through its agencies. 

PublicSource asked readers, advocates and potential candidates what issues they think will define the campaign in 2023.

Push for clean air

Reader priority: “Environmental quality. Our new economy can’t grow if we again become a poisonous backwater.”

The days of big steel and “Hell with the lid off” Pittsburgh may be long gone, but Allegheny County still has some of the worst air quality in the country. Just this October, the county issued two air quality warnings, when pollution was so significant for multiple days in a row that vulnerable populations were urged to stay indoors. 

“I think the county executive race is going to be a huge opportunity to educate the candidates and the public about the county’s role in protecting the environment and protecting public health,” said Ashleigh Deemer, deputy director of PennEnvironment. Noting the county’s record of poor air quality, she said, “The county has some power over whether that continues.”

She said the county could beef up its Clean Air Act enforcement against major polluters, strengthen pollution limits on certain facilities and look into expanding the rule that requires polluters to ease up when air quality is particularly poor. 

Patrick Campbell, the executive director of the Group Against Smog and Pollution [GASP], said on top of exercising those formal powers, he hopes the next executive engages more with community groups.

“They should be hearing directly from residents about concerns related to air quality,” Campbell said, noting the community groups like GASP, academic experts and monitoring networks that exist in the region.

Deemer acknowledged that the health department has made significant strides recently in assessing fines against polluters. The county fined U.S. Steel $4.5 million this year for pollution rule violations at its Clairton plant.

Sara Innamorato, a state lawmaker who told PublicSource she is considering a run for county executive, said “environmental justice” should be a top priority for the county’s next leader.

“We have an unprecedented amount of money coming from the federal government,” said Innamorato, a progressive Democrat from Lawrenceville. “It will be important to use those monies to grow the green economy and green manufacturing, and invest in job creators that could take root in our county.”

Reforming ACJ

Reader priority: “The next candidate should commit to changing the jail culture that has allowed inhumane conditions to exist for years.”

The Allegheny County Jail has been the subject of relentless negative attention in recent years. Incarcerated people have decried inedible food, inhospitable temperatures and inadequate medical care. The warden caused an uproar, and a rare rebuke from the Jail Oversight Board, when he contracted with a controversial training provider last year. And most somber of all, there has been a string of deaths in the jail, raising alarm in the community and leading the Fitzgerald administration to hire a contractor to conduct a “historical review” of fatalities.

The next executive will inherit an understaffed jail and a warden whose removal has become a goal of advocates and the correctional officers’ union. 

The executive by statute has a seat on the Jail Oversight Board. Both jail critics and the correctional officers’ union leader concurred that they want the next executive to end Fitzgerald’s practice of sending a proxy to the board’s meetings in his stead.

Tanisha Long, an organizer with the Abolitionist Law Center, said, “The first step, and this is such a low bar, is showing up. We need somebody who shows up and listens to the families … If we start there, we can start getting somewhere.”

“What we would like to see is [the next executive] to take their duties and responsibilities seriously,” said Brian Englert, the president of the correctional officers’ union.

Erin McClelland, a county human services contractor who is the only person so far to formally announce a campaign for executive, said she would “be at every jail board meeting, having conversations,” and she would strive for an environment where incarcerated people would suffer “zero harm.”

“We will build a culture where hurting our constituents is not appropriate. It will not be part of who we are anymore,” McClelland said.

Englert said a top concern for future leaders should be bolstering the number of correctional officers, which has been in decline in recent years and has resulted in Englert’s union members working forced overtime frequently.

“People can’t keep working 80 hours per week,” Englert said.

The Fitzgerald administration has undertaken some initiatives to broadly reshape criminal justice in the county, but without much tangible outcome as yet. 

The next executive “will need to focus on rethinking the structure based on providing public safety and not just putting people [in the jail] because they’re poor and they can’t afford to pay bail,” Innamorato said. 

Dave Fawcett, an attorney and former county councilor who is considering a run for executive, said the county should focus on reducing the jail population and diverting people who need treatment.

“We’re cycling addicts and mentally ill people through the jail,” Fawcett said. “It’s not right. It makes no sense.”

The Fitzgerald administration awarded a contract this year aimed at designing a jail with a lower capacity. But it’s unclear how the county plans to reduce the jail’s population or if the administration expects the plan to proceed before the next executive takes over.

‘Conflict of interest’ with property taxes

Reader priority: “Address changes to the property tax assessment system.”

Fitzgerald’s tenure has been bookended by property tax-related controversies. He almost ran afoul of a court in 2012 when he tried to avoid conducting a countywide property reassessment and then later tried to throw out reassessment data.

In 2022, the county is the defendant in a lawsuit alleging that it systematically overcharged property taxpayers whose assessments were appealed, which may well lead to government revenues being slashed and mass refunds coming due from school districts and municipalities.

The next executive will have to address what appears now to be a broken system.

“Blow it up,” suggested Michael Suley, a real estate consultant who led the county’s Office of Property Assessments from 2006 through 2012. (Suley is working with the plaintiff’s lawyers in the suit against the county.)

Suley said the assessment office, whose determinations affect county revenues, must be insulated from the executive branch, whose budget stands to benefit from assessments rising.

“If the county is a taxing body and an assessor, there’s a conflict of interest there,” Suley said. 

Values have not been reassessed across the board since 2013, but owners or taxing bodies can appeal for spot reassessments of individual properties. School districts file appeals when homes are sold, raising the tax on the unsuspecting buyer, in what Suley calls a “newcomer tax.”

Suley said while he doubts a politician would favor a mass reassessment for fear of political blowback, the perception that reassessment would lead to higher taxes is a wrong one. By law, if assessed value in the county goes up, the millage rate must decrease. “The majority of people will not see their taxes go up,” he said.

One executive, 130 municipalities

Reader concern: “Merge city and county Governments. We don't need both.”

In 2008, then-County Executive Dan Onorato and Pittsburgh Mayor Luke Ravenstahl agreed to push for a city-county merger. It went nowhere and since then, proposals to address the region’s famous fragmentation have been much less ambitious.

Pittsburgh Controller Michael Lamb, who told PublicSource he is considering running to succeed Fitzgerald, said the next county executive will need to be a facilitator between municipalities, many of which struggle to provide services to shrinking populations. 

“We are going to over the next 10 years have serious discussions about how we provide various services to our citizens,” he said. He pointed to the patchwork of hundreds of emergency service providers in the county. “These are things that any reasonable person looks at and realizes, something’s got to be done.”

Lamb was an early supporter of the initiative to annex Wilkinsburg into Pittsburgh, and said there should be broad discussions around consolidation among the county’s 130 municipalities. But the Wilkinsburg effort, spurred largely by a community development group, devolved into a polarized, bitter fight, rather than illuminating a path for other struggling towns to cure their ills.

“Any of this change has to bubble up from the citizens themselves,” Lamb said. “It can’t be the next county executive coming out and saying, ‘OK, we’re going to merge this, we’re going to do this.’ It’s got to be organic. … I think part of the job of county government is to start to facilitate that discussion.”

Chris Briem, a University of Pittsburgh demographer who has studied local government, said Pennsylvania goes further than other states in assigning responsibilities to municipalities. That makes things more difficult in Allegheny County, where many municipalities struggle financially. He said there is precedent, though, for the county taking on functions — like health and human services — that formerly rested with cities.

“As issues have become broader geographically and broader generally, the county evolved to provide those services,” he said. He later added, “If there was going to be fundamental change, it would only happen with the strong support of the county executive.”

The county government has no formal power to merge municipalities or their services. Observers agreed that the post is an intermediary, a unique facilitator between municipal governments and a conduit from local leaders to Harrisburg and Washington, D.C.

“The authority of the office is the ability to bring everybody to the table,” Fitzgerald said. 

Parties will nominate candidates for the office in primary elections to be held on May 16, 2023. 

Charlie Wolfson is PublicSource's local government reporter and a Report for America corps member. He can be reached at charlie@publicsource.org or on Twitter @chwolfson.

This story was fact-checked by Jack Troy. 

The post Executive Decision: These issues, questions and people may define Allegheny County’s next big election appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

Pittsburgh’s ‘eds and meds’ are economic drivers. But their tax status largely passes the bill for government to the rest of us. Explore the series.

Pittsburgh Mayor Ed Gainey is in the process of conducting private talks with UPMC and Allegheny Health Network leaders in an effort to get the hospital giants to “pay their fair share” to the city. While Pittsburgh officials have wrestled with the issue for decades, they need only look about 100 miles north for an example of what a solution can look like.

The city of Erie has long-standing agreements with hospitals owned by UPMC and AHN for payments in lieu of taxes, or PILOTs. Under the agreements, the nonprofits pay half of what they would owe in property taxes if they were not exempt from them. 

All told, the two major nonprofits are set to pay more than $1 million into Erie’s 2022 budget — a larger revenue source than the city’s deed transfer tax, amusement tax or parking tax. The sum is greater than the budgets of many city departments and is about 1.1% of all revenue. 

Erie is noted as among the top U.S. cities when it comes to collecting PILOT money. Pittsburgh, meanwhile, saw its once-considerable PILOT income dwindle in the new millennium, down to less than half a million today — while booming hospitals, universities and other nonprofits own up to a fifth of Pittsburgh’s property and don’t pay taxes on it. In 2020, Erie collected $13.39 per capita in PILOT contributions. Pittsburgh collected $1.07.

Could Pittsburgh, with Gainey at the helm, obtain PILOT agreements similar to the ones Erie has? Doing so with the five largest nonprofits would net the city $17.3 million annually, according to a report by the city and county controllers. 

There are several reasons Pittsburgh’s situation is different from Erie’s. Not least of which is that Erie’s major PILOT agreements were created when UPMC Hamot and AHN Saint Vincent hospitals were independent. They were later bought by UPMC and AHN in 2011 and 2013, respectively, and the two chains continued honoring the PILOT agreements. 

An AHN spokesperson told PublicSource in an email that the group uses different strategies to support the different cities it inhabits.

“Our significant investments in and contributions to the health and vitality of the greater Erie region (including the PILOT agreement), for example, have been proportionally matched, if not exceeded, by the similar investments” in Pittsburgh, wrote Dan Laurent, AHN’s vice president for corporate communications.

A UPMC spokesperson did not answer whether their Erie PILOT deal could be replicated in Pittsburgh, and pointed out that the Erie deal was in place long before UPMC was involved there. Gainey’s office did not respond to a request for comment.

In chains

Several experts and local officials said the independence of the hospitals in the 1990s contributed to the ease of creating the PILOT agreements.

“It’s possible that for a smaller hometown organization, they are more in tune with what’s needed in the hometown,” said Paul Lichtenwalter, the finance director for Erie since 2004. 

Michael Hicks, a professor and local public finance researcher at Ball State University, said he thinks it’s easier to negotiate with independent hospitals because they have lower profit margins.

“When the stakes are lower for everyone, the negotiations are easier,” Hicks said. “When you’ve got $100 million or $200 million on the table, that makes it very high stakes.”

Large hospital chains have far greater ability to wage legal battles, which may make them less likely to settle on a PILOT agreement rather than risk losing their nonprofit status in court.

“Now it’s far more difficult [than in the ’90s] because the hospitals have huge, huge revenues and they’re aggressively protecting those revenues,” Hicks said. “And they’re fighting a rearguard effort by cities around the country trying to challenge nonprofit status.”

Pittsburgh was part of that effort in the 2010s when then-Mayor Luke Ravenstahl sued to revoke UPMC’s tax-exempt status. The next mayor, Bill Peduto, withdrew the lawsuit, insisting it was not likely to yield results for the city.

Mutually beneficial

Ravenstahl’s lawsuit contributed to a less-than-adoring relationship between the city and the nonprofit. Eight years later, Gainey’s campaign rhetoric about UPMC needing to “pay its fair share” renewed the discussion.

Erie officials say a friendly relationship has been key to maintaining PILOT agreements after all these years despite legal changes that might allow the nonprofits to end them. 

“We have great relationships with both hospitals,” said Erie Mayor Joe Schember. “I know both CEOs, we’re together a lot, they invite me to things, I invite them to things. … I believe what we do together works for what’s best for Erie in the long term.”

Schember, who became mayor decades after the agreements were formed, said municipal leaders would be well advised to focus on building relationships before making firm monetary demands. He said in his five years as mayor, he’s never heard a conversation about ending the agreements.

“We’re hoping they see the value in what the city does for them and we can continue to work together in a mutually beneficial way,” he said.

Nonprofits consume city services without paying property taxes to fund them. Schember cited Erie’s public safety and homelessness issues, saying that budget cuts forced a reduction in the city’s police force decades ago and that PILOT revenue allows the city to avoid further cuts.

“I’m hoping that most nonprofits will want to help keep Erie a safe place to live, work and play,” Schember said.

Another Western Pennsylvania city, Altoona, has a significant PILOT agreement with UPMC. The Blair County city of 43,000 is budgeted to receive more than $225,000 from UPMC’s hospital there this year, about $5.25 per capita and more than the city pays for tax collection, legal services, engineering services, waste management or public transit.

‘A better balance’

While UPMC and AHN don’t provide large sums of cash to Pittsburgh, they do provide community benefits. UPMC lists food assistance, care for low-income and homeless people, substance use treatment and elder care as some of its charitable endeavors in the Pittsburgh region. 

Leaders in Pittsburgh and Erie alike say cash payments are nonetheless needed.

“They are in many ways a good neighbor and excellent for our region,” said acting Allegheny County Controller Tracy Royston, who co-authored a report this year outlining the need for PILOT agreements in the region. “But as much as they do, they also put a demand on our resources and our services. So I think there needs to be a better balance there.”

The report released by Royston and City Controller Michael Lamb referenced nonprofit investments in The Pittsburgh Promise (a scholarship program for city students) and OnePGH (a fund established for voluntary contributions from nonprofits) as considerable benefits. But, they wrote, “It is important to stress that neither relieve residents of the burden of financing local government nor do taxpayers have input or oversight as to how funds are spent.”

The controllers proposed a PILOT model wherein nonprofits would pay 25% of their exempted real estate tax burden. This is half the 50% rate paid by the Erie nonprofits, a decrease that could partially offset the drastically higher amounts of money involved in Pittsburgh.

“We were just thinking that to go from zero to 25% would be significant,” Royston said. 

The controllers’ report advocates for taking a systematic approach to setting up PILOTs in the region — something Erie has succeeded in doing.

“At least the last 30 or 40 years, it’s been the way business is done,” Schember said. “Both sides accept it. Both sides see the value of it.”

The Allegheny County controller’s office recommended a decade ago that the county real estate team evaluate which nonprofits should have their tax-exempt status challenged. Royston said the idea never took off in the county administration and she was told there weren’t enough resources. 

Erie officials say they couldn’t easily do without the payments.

“I think it would create a pretty major problem if all of a sudden we lost that revenue,” Schember said, noting that it would hamper efforts to “rebuild Erie” after decades of population decline — an existential task that Pittsburgh is facing, too.

Charlie Wolfson is PublicSource’s local government reporter and a Report for America corps member. He can be reached at charlie@publicsource.org and on Twitter @chwolfson.

This story was fact-checked by Punya Bhasin.

The Jewish Healthcare Foundation has contributed funding to PublicSource’s healthcare reporting.

The post Gainey wants Pittsburgh healthcare giants to pitch into the city budget. In Erie, they already do. appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

Wilkinsburg’s unusually high property tax rates have long been a pain point for its residents. A local group focused on economic development is pitching annexation of the borough into Pittsburgh as a solution to that.

While there are many complex issues to sort out when weighing annexation (municipal employee contracts, schools, development and zoning to name a few), it is clear that Wilkinsburg residents’ property taxes would drop significantly if it happened. 

Much of the reduction would be caused by the Wilkinsburg school district being absorbed into Pittsburgh’s school district — which four local lawyers and others involved in the process told PublicSource is a legal certainty if annexation takes place. 

PublicSource took a closer look at local tax obligations to find out how they might change for Wilkinsburg residents if the push for annexation is successful. Property taxes would decrease significantly, but income taxes would rise from 1% to 3%. Just 35% of Wilkinsburg housing units are owner-occupied, and the property tax savings would not directly flow to the borough’s many renters.

Which rates apply?

Property tax rates have three components, each set independently: the county rate (the same for every homeowner in Allegheny County), the municipal rate and the school district rate.

Wilkinsburg homeowners pay 48.23 mills, or $48.23 in taxes on every $1,000 of their property’s assessed value. So if a resident’s home is valued at $100,000, they would owe $4,823 in property taxes each year. 

That $48.23 includes $4.73 for Allegheny County, $14 for the borough of Wilkinsburg and $29.50 for the Wilkinsburg School District.

In Pittsburgh, homeowners pay 22.74 mills, or $22.74 per $1,000 of assessed value. Pittsburgh’s rate includes the same $4.73 to the county, $8.06 to the city government and $9.95 to the city school district. The biggest difference is that the Pittsburgh Public Schools’ tax rate is about a third of Wilkinsburg’s. 

So how would Wilkinsburg’s tax rates change to match Pittsburgh’s if the borough is annexed? 

There’s no question that if Wilkinsburg is annexed, its residents would begin paying Pittsburgh’s municipal property tax rate. That change alone would bring Wilkinsburg’s 2021 rate down from 48.23 mills to around 42. 

While there’s a lack of local precedent, lawyers told PublicSource that annexation would cause the Wilkinsburg school district to immediately be folded into Pittsburgh Public Schools and, therefore, change to paying the Pittsburgh district’s much lower tax rate.

“There’s a lot of unanswered logistical questions, but one thing is very clear,” said Ira Weiss, a longtime municipal and education lawyer. “If this annexation is approved, the Wilkinsburg School District automatically becomes part of Pittsburgh’s. That’s very clear.”

Weiss represents the Pittsburgh school board but said he was not speaking on its behalf for this story. 

School districts in Pennsylvania are sorted into classes based on population. A 1949 state law establishes that when an area with a school district of Wilkinsburg’s class is annexed into a territory of Pittsburgh’s class, the smaller district automatically becomes absorbed into the larger one.

While there may not be any case law using this statute in Allegheny County, a 1953 court case in Dauphin County appears to show a similar situation. In it, a state court ruled that because Lackawanna Township voted to be annexed into the city of Scranton, its school district would follow suit. 

Wilkinsburg Mayor-elect and current school board member Dontae Comans, who has so far remained neutral in the annexation debate, said he views the law the same way. 

Wilkinsburg’s middle and high school students already attend Pittsburgh schools through a partnership that dates to 2016. The Wilkinsburg School District pays the Pittsburgh district for each student attending city schools.

Currently, nearly 500 students attend Wilkinsburg schools.

Could there be reassessment?

Some in Wilkinsburg fear that their property’s assessed value would be raised if annexed by Pittsburgh, potentially resulting in even higher taxes than before.

Outgoing Pittsburgh Mayor Bill Peduto raised some eyebrows in June when he told WTAE that Wilkinsburg’s property values would have to be reassessed if the borough is annexed.

“I can’t speak to why the mayor would say that, but it’s not correct,” Weiss said. “The reassessment is a county function and the only change will be how the millage is applied. It would have nothing to do with assessments.”

E.J. Strassburger, a longtime local lawyer in commercial and municipal law, also said Wilkinsburg can’t be reassessed outside of a countywide reassessment. Taxing bodies, like school districts, and homeowners can appeal for a spot reassessment of an individual home. 

A countywide reassessment is possible, but County Executive Rich Fitzgerald fought court orders to enact the last one in 2013 and has announced no plans to do another one. He will be in office until the end of 2023.

Even if Wilkinsburg’s values were reassessed after an annexation as Peduto suggested, Philadelphia-based tax lawyer Stewart Weintraub said assessments likely wouldn’t skyrocket simply because of the new municipal lines. He said assessors use comparable sales to appraise residential property “almost exclusively,” and that the process gives more weight to comparable sales near the property in question.

“Post-annexation, are they going to be looking at expanding the inventory of sales that they can use as comparable sales? They could,” Weintraub said, “But the bottom line is that the best comparable sales of residential properties within the borough are going to remain the same after annexation.”

Could Pittsburgh’s rates rise?

If Wilkinsburg residents eventually begin paying property taxes at the same rate as Pittsburgh residents, there’s still a chance that those rates could go up for everyone involved. 

“The Pittsburgh school district is going to be absorbing greater costs,” Weintraub said, “and whether or not the tax base in Wilkinsburg is going to be sufficient to cover those costs, I don’t know.”

It's highly unlikely for the rates to go up to match present-day Wilkinsburg levels, though. Annexation would grow the city’s population by less than 5% and would add fewer than 1,000 students to a district with more than 21,000. 

Weiss pointed out that annexation could increase school transportation costs for Pittsburgh Public Schools because school districts must provide transportation to charter and private school students 10 miles beyond municipal borders, and Wilkinsburg would extend Pittsburgh’s border further east. He did not estimate how the cost increase could impact taxes. 

Other taxes

Comans noted that many Wilkinsburg residents aren’t homeowners and, therefore, would see no direct benefit from decreased property taxes. They would be subject to some other changes.

Renters and homeowners alike would see their municipal income taxes go up if the borough joins Pittsburgh, from 1% to 3%. But they would stop paying a $200 annual fee to the borough for trash and recycling collection. The deed transfer tax would rise from 1% to 4%.

Pittsburgh’s $52 local services tax would simply replace a similar one that now exists in Wilkinsburg.

Business owners would also be subject to Pittsburgh’s 0.55% tax on payroll costs.

Those who favor annexation face a long process, with months of public meetings and questions about key issues, and the challenge of getting a petition, Pittsburgh City Council vote and referendum vote all passed. If it does go through, it will be a historic moment for the region, and leaders won’t be able to rely on precedent to make decisions.

“I don’t think anyone in Allegheny County is an expert on municipal annexation or mergers,” Strassburger said. “We still have 130 municipalities here.”

This story was updated to include more context in the introduction.

Charlie Wolfson is PublicSource’s local government reporter and a Report for America corps member. He can be reached at charlie@publicsource.org and on Twitter @chwolfson.

This story was fact-checked by Amelia Winger.

This story was made possible with financial support through the American Press Institute.

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The Fox Chapel Area School District needs to replace its English Language Arts textbooks to align with Pennsylvania Core standards — a purchase that will cost the district nearly $1 million.

Superintendent Gene Freeman said he worries if a push to eliminate school property taxes proves to be successful that all large purchases, like the needed textbooks for student education, could become so challenging that students don’t get what they need in a timely fashion.

Currently, under the state’s Act 1, known as the 2006 Taxpayer Relief Act, districts are only allowed to raise property taxes to a state-set index rate based on average weekly wage increases, according to the Pennsylvania Department of Education. Each district’s market value and personal income aid ratio is also taken into account.

If districts wish to go above the rate, they can apply to the Department of Education for special exceptions that include pension, special education or construction costs, or seek voter approval for higher taxes through referendum.

Under the Property Tax Independence Act, or House Bill/Senate Bill 76, which Sen. David Argall said he plans to reintroduce to the state Senate within weeks, districts would receive the same funding through a shift in taxation that would eliminate school property taxes and increase the personal income tax rate and sales tax.

If districts need more money than they are receiving from the state, the plan would allow them to seek a referendum and have local taxpayers vote on an increase in personal income tax.

That ties the hands of school leaders, according to multiple superintendents and business managers from Western Pennsylvania. They said this legislation would mean losing local control and handing it over to the state.

“If this property tax (bill) came into effect, I’d have to go to a referendum to buy those books. What if the community didn’t want to buy the books?” Freeman said. Referendums take time to write so the public understands and then they must be filed based on the election cycle, not students’ needs. Then there’s all of the administrative work that needs to be done behind the scenes to make it happen, he said.

Under the proposal, the Fox Chapel Area School District would keep only about 1.3 percent of its property tax rate to pay for existing debt. Fox Chapel would have the second lowest school property tax rate in Allegheny County and the 18th lowest in Pennsylvania if the property tax elimination proposal were to pass, based on an analysis by the Pennsylvania Association of School Business Officials [PASBO]. The analysis showed that, overall, less affluent districts would maintain a higher property tax rate to pay off debt under the proposal.

So what if the voters don’t want to buy things like new textbooks or vote against fixing a leaking pipe?

Since 2006, when Act 1 went into effect, 18 school districts in Pennsylvania have sought voter approval to raise taxes above the state-issued index, said Jeff Ammerman, PASBO director of member assistance. Only two have passed, he said. Both were for building projects.

Yet, David Baldinger of the Pennsylvania Taxpayer Cyber Coalition, who helped draft the legislation to eliminate property taxes, said it puts the power right where it should be: in the voter’s hands.

“The only local control this sends away is the control of nine school board members to raise taxes at will. … There’s no loss of local control, unless you want to count the ability to tax people out of their homes,” he said.

Steve Robinson, spokesman for the Pennsylvania School Boards Association, disagrees.

“It’s often asked, ‘Shouldn’t the voters have a say?’ They do have that. They elect nine people to the school board that align with their views. … We don’t have a referendum at the state level to make these kinds of decisions,” he said.

All of this could affect how schools operate.

School officials could have to wait months to find out if they’re going to get the green light from voters to increase personal income taxes so they can make purchases or other capital improvements, Freeman said. And what if it’s a situation they can’t control, like a special education student that requires half a million dollars in support, Freeman asked. How can he explain that to the voters, when he legally isn’t allowed to talk about the student?

Stable funding

The West Mifflin Area School District relies on the state for between $7 and $8 million in basic education funding a year, Superintendent Daniel Castagna said. If the legislation were to go through, the $34 million the district now receives in local taxes would be coming from the state.

School leaders across the region said they’re afraid to rely on the state for funding, citing multiple instances where they were left to fend for themselves or pick up the pieces after pension and budgetary issues at the state level.

“If you asked me right now, ‘What is your number going to be in basic funding for the 2017-18 school year?’ I can’t tell you,” Castagna said. “Now I’m going to be waiting on a much larger number to see how the state is going to a) collect it and b) distribute it. Every decision we make will be delayed because we won’t know if we have the funding to support it.”

Argall and Baldinger both said districts will receive funding equal to what they are getting now from local property taxes. School officials from across Allegheny County said they worry that might not happen.

“When you give that local control to the state, now you’re at the whim of politics, you’re at the whim of favoritism, you’re at the whim of agendas,” Castagna said. “I think that’s where it makes a total mess of a lot of public money.

Castagna also wondered what would happen in the event of another months-long state budget stalemate similar to the one that occurred during Wolf’s first year in office. The stalemate prevented state education subsidies from being allocated to districts.

Baldinger said this is an unfounded concern, adding that the money will be kept in a separate fund that won’t be harmed by Harrisburg politics.

“They can’t mess with it. The money goes in, it comes right back out again,” he said.
But what if the economy tanks? What if people stop buying? Those concerns also linger for school leaders across the region.

From 2007 to 2009, sales tax and personal income tax revenues decreased between 6 and 9 percent due to the recession, Ammerman said.

While the legislation requires that districts receive at least the same funding as they had the previous year, Baldinger admits a recession could affect the annual adjustment for inflation in a “worst-case scenario.” If the state doesn’t collect enough in sales and personal income tax to pay districts what they received the previous year, it would be required to tap into the general fund to pay the school districts, Baldinger said.

The Education Stabilization Account would operate with a “small fund balance” to prepare for these types of situations, Baldinger said. The fund balance would not be greater than 8 percent of the $14 billion collected in sales and personal income taxes, he said.

The proposal replaces a stable funding source with a much less stable one, Ammerman said.

Ultimately, if the money doesn’t come in, school officials said, it could boil down to cuts in the classroom.

Elizabeth Klamut, a parent and president of the Fox Chapel Area District Forum, a parent and community group geared to support Fox Chapel Area students, said she worries the proposal will hurt all children across the state, not just those in her district.

The Fox Chapel Area District Forum hosted an “emergency meeting” in January, with more than 200 attendees, to discuss concerns about the planned legislation.

“Any program cuts would be a detriment to our student population,” Klamut said. This comes down to: “Would this hurt our funding? The answer is yes. Therefore, we have to oppose it.”

Stephanie Hacke is a freelance journalist in Pittsburgh. She can be reached at stephanie.hacke@gmail.com or on Twitter at @StephOnRecord.

The post Under proposal to eliminate Pa. property tax, you might have to vote on new textbooks appeared first on PublicSource. PublicSource is a nonprofit news organization serving the Pittsburgh region. Visit www.publicsource.org to read more.

David Seropian fears a proposal to eliminate school property taxes across Pennsylvania would send McKeesport Area School District residents packing.

While the proposal — likely to be reintroduced in the state Senate within the next few weeks — vows to rid residents of their hefty school property tax bills and replace them with higher sales and personal income taxes, school districts across the state still could collect property taxes to pay off existing debt.

What does it mean? It means that in some districts, especially those with higher debt, residents could be paying nearly double in taxes until their local school district pays off its debt. In some districts, that will take more than 20 years.

“This is not tax relief for them. This is like piling taxes on to them,” said Seropian, business manager in the McKeesport Area School District.

And it’s hurting residents in some of the state’s least affluent districts, like McKeesport where the district is $106 million in debt due to past building projects, Seropian said. The district pays about $8.6 million a year to its debtors, yet receives about $10.7 million from local property taxes. The district operates on a $62.6 million budget, with about 65 percent of its revenue coming from the state.

If the proposal to eliminate property taxes gets the go-ahead from the state Legislature and Gov. Tom Wolf, residents in the McKeesport Area School District would be paying nearly 80 percent of their property taxes for the next 22 years, while still paying the added sales and personal income tax like everyone else.

“They’re going to be getting a double whammy,” Seropian said. “It makes no sense. It’s almost the reversal of who they ought to be helping – the districts that are less able to afford this kind of thing.”

The legislation, which Sen. David Argall (R- Schuylkill) said he plans to reintroduce to the state Legislature “any day now” is a “tax shift.”

The $14 billion funding shift would include an increase in personal income tax from 3.07 percent to 4.95 percent. State sales tax also would increase from 6 to 7 percent under the proposal and expand to include items not currently included in Pennsylvania’s sales tax, such as food, personal hygiene products, horses and clothing when a garment costs $50 or more. Sales tax in Allegheny County, which has a 1 percent county sales tax, then would increase to 8 percent.

The legislation, deemed the Property Tax Independence Act, or Senate Bill 76, failed to pass the Senate when it received a 24-24 tie vote on Nov. 23, 2015. The lieutenant governor broke the tie against the bill.

With a shift in the Legislature, Argall said he’s hopeful the bill will pass this time around.

“The way that we’re funding the public schools today is rotten at the core,” Argall said. “It dates back to the 1830s. The world has certainly changed. We just can’t continue to fund the public schools based on this, outdated, archaic, unfair property tax.”

While eliminating school property taxes may sound simple, “The devil is in the details,” said Steve Robinson, spokesman for the Pennsylvania School Boards Association.

Concerns related to the proposal from school district officials across Allegheny County are vast: Will funding be stable? How will decisions be made? How can they pay for needed expenses? Will property taxes truly go away? And how can they make any major repairs to their buildings without what they see as a stable funding source?

How it came to be

David Baldinger, a retired radio personality and longtime television producer from Reading, has dedicated more than a decade to getting school property taxes eliminated in Pennsylvania.

“It’s been my full-time, unpaid job since September 2004,” he said.

Baldinger, who says he got involved for selfish reasons, at first, because he wanted to see his own property taxes go away, worked with his state representatives and senators in Berks County, sometimes sitting in their offices several days a week, to craft a bill he says would bring more fair taxes to all of Pennsylvania.

“Think of the other taxes that you pay, the income tax, sales tax. They grow over time as the economy grows. So you don’t have to raise the rate,” he said. “If you want more money out of the property tax, you’ve got to raise the rates and it’s killing people. They just can’t afford it anymore.”

Pennsylvania residents will pay an estimated $13.87 billion in school property taxes in 2016-17, based on a forecast done by the state’s Independent Fiscal Office in January. That number likely will jump to about $14.3 billion by the 2017-18 school year and $16.45 billion by 2021-22, the forecast shows.

Baldinger launched the Pennsylvania Taxpayer Cyber Coalition in 2004, one of the six founding groups of the Pennsylvania Coalition of Taxpayers Association. The association that now has 87 local tax groups from across the state supporting the effort. Baldinger says he can’t even count all the ways property taxes hurt Pennsylvanians.

“People can’t buy homes anymore because of the property taxes,” he said.

He tells the story of people that come to him, forced from their homes because they couldn’t pay their property taxes and their home was taken from them.

The coalition drafted the bill now known as House Bill/Senate Bill 76 and presented it to Argall in 2011, said Jon Hopcraft, Argall’s executive director. The bill required compromise on many issues, Baldinger said.

“If it was up to the Republicans, it would all be in sales tax. If it was up to the Democrats, it would all be income tax. We said, if we’re going to get this done, we’re going to have to compromise,” he said. “The best part is, you can’t lose your home. Nobody is going to take your house because you didn’t pay your sales tax.”

The issue has reached a “fever pitch” level in the eastern part of the state, Hopcraft said.

The senator said: “It’s the single largest issue in the district that I represent in Berks and Schuylkill counties. I can’t go anywhere in the district without someone asking me about it.”

He admits that Western Pennsylvania isn’t as caught up on the matter.

Under the proposal, school districts would receive the same amount they are collecting at the time of the bill’s passage from property taxes through the increased sales and personal income tax collection. The districts also would receive an annual adjustment for inflation that could equal a 2.5 to 4 percent increase each year in what they receive, Baldinger said. Money collected from sales tax and personal income tax would be distributed quarterly to the districts from an Education Stabilization Account that would not be impacted by the state’s general fund, he said. However, school officials said they worry the annual adjustments in funding could be impacted by fluctuations in income and spending habits.

Allowing districts to continue collecting property taxes to pay off their debts stemmed from a compromise made to move the bill along, Baldinger said. It’s only fair, he said, that the districts that racked up the most debt pay it off themselves.

Elimination could take years

Pennsylvania has 500 school districts. Residents in 488 of the districts would continue paying property taxes even if this bill to eliminate property taxes passes.

That irony is brought to you through an analysis of 2014-15 data by the Pennsylvania Association of School Business Officials [PASBO]. Essentially, the vast majority of districts have debts to pay off, so it could take years for residents to realize the benefits of the proposal.

Forty-three percent of the districts in the state would continue collecting at least 20 percent of their property taxes under the proposal, based on the PASBO analysis. In Allegheny County, 13 of 43 districts would continue collecting at least 20 percent of their property taxes, PASBO asserts.

“We’re looking at it as double taxation,” said Amy Burch, superintendent of the Brentwood Borough School District.

It’s been more than 20 years since the Brentwood Borough School District has made any major upgrades to its three school buildings, located in the heart of the 1.5-square-mile, single-town district, where students still walk the borough’s hilly terrain to get to class each morning.

Yet, the district still pays more than $1.8 million a year for past debt, including renovations and additions of all of the buildings in the 1990s.

“Do we think [we have] the perfect system? No. But the one thing was that it was stable. We could estimate from year to year what we were anticipating,” Burch said.

As Brentwood undergoes a feasibility study to review what upgrades are needed in the district’s three buildings, Burch said she worries about stable funding for improvements if this legislation were to pass.

The legislation would allow the Brentwood district to keep 22.23 percent of its current millage rate of 29.5332, or 6.5647 mills, to pay off its existing debt. The debt lasts until 2023. Residents would be required to pay that, plus the increased sales and personal income tax.

As it stands for 2016-17, the owner of a property of median value in Brentwood ($83,200) will pay $2,457 in school property taxes. Under the new plan, they would be responsible for about 22 percent of that (about $540) along with the increased sales and income taxes.

Brentwood has the second highest school property tax rate in Allegheny County, according to county records.

“I do not feel that that’s fair and I think that’s going to hit the middle class the hardest, which is what the Brentwood community is right now,” Burch said. “I’m concerned if they’re paying more at the cash register when they’re checking out that when it comes time to pay their school taxes that they might not have the money to be able to pay that as well.”

Residents in the Pittsburgh Public School District would continue to pay 32.14 percent of their school property taxes to pay off existing debt, per the PASBO analysis.

Residents in West Mifflin would continue to pay about 30 percent of their property taxes under the proposal, Superintendent Daniel Castagna said.

“It’s not going to be an elimination. It’s going to be a reduction. I think there are clear winners and losers in this, but the winners aren’t anybody who is working in the community. The clear winners are the retirees and the business owners, in my opinion,” Castagna said. He’s referring to the fact that seniors and businesses won’t be impacted by the increase in personal income taxes.

He fears, if passed, the legislation will chase residents from homes in districts that currently have more debt.

“What’s that going to do to families? That’s going to push them out of districts with debt service. It’s going to give them another reason to want to leave,” he said.

Castagna, too, worries the proposal would have a greater impact on students in poorer districts.

McKeesport Area School District would go from one of the lowest property tax rates in Allegheny County, at 16.74 mills, to one of the highest as it would still collect about 80 percent of property taxes under the proposal, Seropian said. In 2016-17, a resident with a median property value of $60,000 will pay about $1,000 in district property taxes. If they qualify for a homestead exemption, their bill will be reduced to $680.

“If you’re going to pay 80 percent of your tax bill in the McKeesport Area School District and only 20 percent somewhere else, where are you going to live? Why would you live here? I don’t even think they thought this through. It just doesn’t make any sense the way it’s designed with keeping the portion for the debt,” Seropian said.

How much Allegheny County school districts would still owe in property taxes under the Property Tax Independence Act

Source: Pennsylvania Association of School Business Officials analysis of 2014-15 property tax data.

Residents in the Duquesne City School District would continue to pay 100 percent of their property taxes while paying the added sales and personal income taxes if the proposal moves forward. PASBO’s analysis shows Duquesne’s debt payments equal 203.72 percent of what the district collects in property taxes.

Jeff Ammerman, director of member assistance for PASBO, said this is likely because the district receives a greater percentage of its funding from the state than local property taxes.

“It certainly varies greatly by district. Duquesne is an outlier,” Ammerman said.

Baldinger said school districts would not be allowed to collect more in property taxes than they are currently collecting to pay off debt. Under the proposal, districts would be required to declare all outstanding debt with the state on the bill’s date of enactment. That number, divided by the number of years of debt service remaining, would determine how much districts would be allowed to collect in property taxes to pay off the debt service, he said.

Will it pass?

The bill has come a long way since Baldinger began working on it nearly a decade ago, he said. The tie vote in late 2015 “woke some people up,” he said.

When it was announced earlier this year that the bill would be reintroduced in the state Senate, “It brought the cockroaches out of the nest,” Baldinger said. He called many of the concerns from school district officials “unfounded.”

Gov. Tom Wolf has met with advocates on both sides and plans to monitor the bill, along with any other proposed property tax reform, as it works its way through the Legislature, said J.J. Abbott, Wolf’s press secretary.

Wolf is focused on getting more state dollars to public education, Abbott said. While he supports property tax reform, he doesn’t want to see increased sales tax on food or clothing, he said.

“He’s in a place where he could be supportive of elimination. It’s just really how you get there,” Abbott said. “At this point, he just wants to have productive conversations with people, see what other ideas may be out there.”

While Baldinger says most Pennsylvania residents will end up paying less with the tax shift, local school officials are urging people to see if that’s true.

School officials in the region say they’re not sure if the bill will pass this time around, but if it doesn’t, they’re certain it will be back again for another try. They’re urging taxpayers to see for themselves if the proposal would be a benefit to them.

“It’s important that everybody runs their own numbers,” Castagna said. “Look at what the increase in the income tax is going to do to you. Look at your local district and see what your property tax reduction is going to be. I think for a lot of people they’re going to see this is not a win.”

PublicSource’s Interactives and Design Editor Natasha Khan produced the graphics for this story.

Stephanie Hacke is a freelance journalist in Pittsburgh. She can be reached at stephanie.hacke@gmail.com or on Twitter at @StephOnRecord.

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