Thursday, June 07, 2007

Pittsburgh Property Tax Fiasco in the works

The most reliable political landmine in Allegheny County politics is not failure to provide good care to the area's seniors, or running your municipality into bankruptcy or defunding the public employees' union pension funds or all three at once. Instead the biggest and most predictable landmine in the region is the property tax re-assessment debacle.

The Post Gazette has a history of the recent re-assessment schemas in place:

From a 1996 assessment freeze, to two years of court-imposed across-the-board increases, to two rounds of annual reassessments, to a three-year "breather," to a "base year," property owners have seen just about every trick or technique in the book except one: stability.

Everyone one of these systems has produced massive political outcries as someone's house is bound to be over-assessed, correctly assessed after being under-assessed, or magically relocated into another county by a drunk assessor. The current county executive, Dan Onorato, won his first term by running against the incumbent's failure to get a 'good' assessment in. Part of the 2002 assesment problem was that it showed rising property values for likely voters which neccessitated higher taxes if no other action was taken.

Onorato instituted a 'base year' system where all property values in the county were frozen at 2002 levels. Therefore the only way communities could raise new revenue was by increasing the millage rate. Local homeowners sued saying that the static picture does not capture the changes in value and thus effective tax rates as neighborhoods improve or decline.

The judge agreed with the homewoners in a massive ruling (big PDF) that also declared the base year system unconstitutional due to the Pennsylvania uniform taxation provision.

This will become a massive clusterfuck to end all regional clusterfucks, including the decision to raze a good chunk of the Central Northside to build Allegheny Center. As the Angry Drunk Bureaucrat points out, no one wants to be identified as being responsible for anything concerning a new property tax system:

Now, here's the bad news to homeowners: there is not going to be a simple resolution to this problem that actually complies the State constitutional uniformity clause. Somebody's going to be pissed no matter what decision and somebody is going to get screwed. No politician is going to take the blame for how screwed up everything is. It's an unwinnable situation....

The political impulses to run and hand this problem off to someone else will overwhelm the public policy interest of having a tax code that is reasonably fair, reasonably easy to implement, and reasonably transparent. No one will have any predictabilty for their property tax payment profile for the next five years.

Instead, everyone will blame Judge Wettick and he'll become the evil boogeyman. In a way this will be a good thing as the evil boogeyman role can be a useful advancer of needed public policy reforms when the individual political incentives are to demagogue against those reforms. However I also predict that there will be a significant and well supported recall effort against him the next time that he is up for retention. Additionally, the local political response will also include several variants of the plans in Harrisburg to abolish property taxes and replace the revenue with a combination of new income taxes, sales taxes, unicorns, and consumption taxes.

The Pennsylvania Supreme Court will have to review and hear the appeal. If they decide to re-affirm the portion of the decision that declares a base year assessment scheme to be blatantly non-uniform and thus unconstitutional, Allegheny County's political food fight will be a mild affair compared to some counties such as Mercer and Butler County that have not re-assessed since 1969 or 1970. This should be good blogging grist for the next decade at least as it works its way out.

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