This article is part of U.S. Democracy Day, a nationwide collaborative on Sept. 15, the International Day of Democracy, in which news organizations cover how democracy works and the threats it faces. To learn more, visit usdemocracyday.org.
Allegheny County’s property tax assessment system will effectively be on the November ballot as political and governmental calendars align to give voters a clear choice on the future of the problematic property levy.
Even as the system appears ripe for change amid litigation and criticism that it unfairly taxes lower-income communities and new homebuyers, voters are set to choose a new county executive for the first time in 12 years this November.
Out goes incumbent Executive Rich Fitzgerald, who vowed never to seek a countywide property reassessment and kept that promise for a decade. In January, either Democratic nominee Sara Innamorato or Republican nominee Joe Rockey will take over for Fitzgerald.
Innamorato said she would work toward regular countywide reassessments, with programs in place to protect certain groups from large tax bill increases. She said she sees the idea as “a way to create more consistency and transparency and predictability in the process, whereas what we have right now isn’t.”
Rockey said he opposes a countywide reassessment altogether.
“What a countywide reassessment is going to do is raise the taxes of people who are on a fixed income living in their homes in Allegheny County,” Rockey said. “And that is not in the best interest of our county, to be forcing people, retired individuals … out of their homes because their income didn’t go up but their taxes went up.”
In neighborhoods like Mount Washington, Lawrenceville and the South Side, where property values have surged, a decision not to reassess would lock in the current situation in which neighbors often pay starkly different tax bills, while a decision to reassess would hike the levy for some and shave it for others.
Reassessing would also have big implications for municipalities and school districts that now rely on property tax appeals to raise revenue, and some of which face losses as the appeals math shifts.
The experiences of the state’s biggest municipal government, the combined city-county-school district of Philadelphia, suggest that any decision would be fraught, but that there are tools — some new and untried — to make property tax changes less jarring for residents.
Assessments, appeals and dangerous politics
For half a century, politicians in Allegheny County have struggled over when and how to reassess, torn between the desire for revenue to fuel government, fear of voter anger over tax bills and outside pressure to make the system fair.
Today, the county’s property assessment system is a subject of lawsuits and tens of thousands of unresolved appeals.
In July, the county’s Board of Property Assessment Appeals and Review [BPAAR] was still just beginning to wade through around 30,000 appeals filed last year and this year by either property owners or taxing bodies who were alleging that tax values didn’t reflect market values. Of the 31,450 appeals of 2022 and 2023 tax bills, only 1,690 had been decided. (In 3,035 of the cases, the appellant withdrew the appeal or did not appear for the hearing.)
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The appeals stem in part from the county’s decision not to systematically reassess property over the last decade, relying on individual appeals filed by school districts and municipalities to boost assessments on properties with rising values.
Because Fitzgerald has opted not to reassess since 2012, properties that haven’t been subjects of appeals continue to be valued based on the 2012 market. State law requires that counties using “base year” assessments adjust the values generated by appeals to reflect changes in the overall market. That’s done by multiplying new, appeal-generated values by the Common Level Ratio, a calculation meant to roughly equalize the values of similar properties, whether they were generated a decade ago or via a recent appeal.
A lawsuit, though, revealed that the county’s ratio had been miscalculated in a way that inflated the assessments resulting from appeals. A judge’s order lowered the ratio, to the advantage of property owners. As a result, taxpayers ranging from homeowners to U.S. Steel and the Rivers Casino filed 44% of the appeals of 2023 tax bills.
The turmoil unleashed by the litigation and appeals places the issue of property taxes at the center of the race to replace Fitzgerald, who is barred from running for a fourth term.
Rockey, a retired PNC executive, favors reform of the existing system rather than a prompt reassessment. Innamorato, a state legislator, believes the county should reassess to bring justice to the property tax system, but should look to a program used in Philadelphia that protects longtime homeowners from jarring hikes in their tax bills.
“These are ways to balance out the system and ensure there’s not displacement,” Innamorato said.
From left, Allegheny County Executive candidates Sara Innamorato (Democrat) and Joe Rockey (Republican) waving at events in August 2023, in Pittsburgh. The two have differing policy proposals for approaching property tax reassessments. (Photos by Stephanie Strasburg/PublicSource)
Philadelphia: Hikes, but also exemptions and LOOP
Philadelphia has roughly the same number of properties to assess — around 580,000 — as Allegheny County, but a very different philosophy: Reassess with some regularity, and take steps to reduce the likelihood that homeowners suffer steep tax hikes.
Philadelphia’s Office of Property Assessment evaluated all properties within that joint city-county in 2019, raising the tax values of around two-thirds of parcels effective in 2020. The city paused for the early COVID-19 era, then reassessed again in 2022.
Last year’s reassessment, coming on the heels of surging property values, doubled the taxable values for around a quarter of Philadelphia homeowners, and boosted the assessments on the city as a whole by 21%. The city, though, said it was taking the worst of the sting out of the assessment hikes with four measures:
- Philadelphia boosted the homestead exemption from $45,000 to $80,000, meaning that owner-occupied properties don’t get taxed on that portion of their values. (Allegheny County has an $18,000 homestead exemption, but school districts and municipalities aren’t bound by it.)
- Philadelphia expanded an existing freeze on senior citizen property tax bills.
- The city expanded its Longtime Owner Occupants Program [LOOP] for homeowners who have lived in the same property for 10 years or more. The program doesn’t freeze their assessments, but limits the rate of increase.
- Wage taxes dipped slightly.
Innamorato, during an April debate, touted the LOOP approach, and more recently said she would consider increasing the county’s homestead exemption and expanding an existing senior property tax relief program.
“There’s going to have to be a robust conversation with the community … so they’re not surprised, they’re not blindsided, they understand the programs that they qualify for and how to enroll in them,” Innamorato said.
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Rockey panned the Philadelphia plan, saying it pushes the burden to younger people who are already saddled with student debt and adding “that we’re pushing all of our expenses to the youth of America.”
While he does not think mass reassessment is the solution to disparities in the current system, he did concede that something proactive may need to be done: “Where there are potential, over time, disparities that occur with that, I do think you have to pause and look at how you could address those. So I will acknowledge that they certainly can and do happen.”
A very expensive garden
The Philadelphia model hasn’t taken all the pain out of reassessment.
Patricia De Carlo has lived in Philadelphia’s Norris Square neighborhood and once ran its community organization. The neighborhood had been beset by drugs and vacancy, De Carlo said, but community-driven development restored it, and its designation as an Opportunity Zone brought even more growth.
Effective this year, she saw the assessment on her house rise from $138,300 to $306,400 — a surge partly mitigated by the city’s taxpayer protection programs. But the value of a next-door side yard she purchased in 1997, and uses for gardening, surged from $59,800 to $408,000. Because it is a parcel distinct from her home, the taxpayer protections don’t apply, and the bill for her garden is $5,711.
“The explanation is that because it’s a side yard, it doesn’t have a building on it,” De Carlo said. “It means it can get developed. So a real estate investor can come in and build on it, and that would be the value.”
She admits she could probably cash in by selling the side yard. “Excuse me, I don’t want to! When I decide that I want to, then you can tax me at that level. But I don’t want to. I don’t want to destroy my garden. I don’t want a developer coming in and building a four-story building full of apartments.”
She has not paid the hiked tax bill on her side yard, hoping that Philadelphia City Council will do something.
The side yard problem is one of several gaps in the system Philadelphia set up to protect homeowners.
“We have a lot of clients who don’t quite qualify for LOOP, they may be a few years from qualifying for the freeze,” said Kate Dugan, a staff attorney with Community Legal Services of Philadelphia. Still others aren’t getting LOOP because they inherited their homes and never bothered to get their names put on the deeds.
Dugan said her organization is pushing the city to make use of the state’s Affordable Housing Unit Tax Exemption Act, passed last year.
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Among other provisions, the act allows governments that levy property taxes to essentially freeze the bills of households making incomes below $33,500 for a single person, or $41,500 for a couple — limits set for an unrelated state program and adjusted regularly.
“With the recent [reassessment] in Philly, we have faced some really serious property tax hikes,” said state Rep. Jared Solomon, D-Philadelphia, the prime sponsor of the law. “Let’s say you have a single mom with two kids … This is another burden. So if we can sort of ease that burden a bit and keep those property taxes level, then we’re allowing people to save money, and that money can be diverted to meet the needs of their families.”
Neither Innamorato nor Rockey endorsed an income-based cap on property taxes.
To date, no municipality has yet adopted the option, Solomon said.
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 Tanya Babbar.
This article is part of U.S. Democracy Day, a nationwide collaborative on Sept. 15, the International Day of Democracy, in which news organizations cover how democracy works and the threats it faces. To learn more, visit usdemocracyday.org.
