State ‘spot reassessments’ bring unpleasant tax surprises
HARRISBURG — Christine Joyce’s latest property-tax bill has dashed her dream to move from an old house with a tiny kitchen to a brand-new place in the country with a spacious yard.
Joyce and her husband, who live in Pottsville, were planning to build a house on land they bought in 2005 near the Blue Mountain ridge in East Brunswick Township. But the Blue Mountain School District is demanding $795 in taxes on the parcel this year, nearly double what the couple paid the previous year and almost $150 higher than the tax bill for their current home.
“These school taxes doubled with nothing on the land,” said Joyce, 38, a registered nurse. “When the house is built, they’ll be astronomical.”
The Joyces are victims of what lawmakers say is a broken property-tax system that has led some school districts and municipalities to pursue selective spot reassessments in order to collect more local taxes — causing tax-bill sticker shock for new owners of homes, businesses and farms.
The couple attribute their tax increase to a spike in their property’s assessed value that occurred after they bought it because the school district successfully argued to county tax officials the land was severely undervalued when compared to the market price.
Pennsylvania legislators have pushed this year to close a loophole in state law that allows school districts and local governments to seek an increase in a property’s assessed value if a sales transaction reveals a substantially higher market value.
Gov. Ed Rendell dealt them a setback last week. He vetoed a pair of bills that would have limited the ability of municipalities and school districts to make such appeals in most of the state’s 67 counties.
Just as taxpayers have the right to appeal assessments they feel are unfairly high, local governments are entitled to similar remedies if they believe the assessments are unfairly low, the governor said in his veto message.
Local school officials argue that in the absence of up-to-date countywide property valuations, they need to be able to pursue appeals of individual assessments to ensure that owners are paying their fair share.
Schuylkill County has gone more than a decade since its last reassessment, so the Blue Mountain School District has turned to individual assessment appeals in the past four or five years, garnering close to half a million dollars in the process, district business manager Andrew Smarkanic said.
“It allows us to bring extra revenue in, and it also keeps taxes stable for our senior citizens,” Smarkanic said.
It’s unclear how widespread the practice is, but the Pennsylvania Association of Realtors has identified at least eight other counties where it has occurred: Allegheny, Cambria, Carbon, Chester, Erie, Lehigh, Northampton and Washington.
Rep. Tim Seip, R-Schuylkill, a lead sponsor of the legislation, contends spot assessments are especially unfair to senior citizens who buy smaller homes in order to ease their tax burden, only to find themselves paying even higher property taxes instead.
“Ripping people off is no way to come up with the funding that you need,” Seip said.
Spokesmen for House and Senate leaders said Rendell’s veto took them by surprise, but they plan to work with the administration over the summer on a compromise bill for the Legislature to take up in the fall. Failing that, they could consider overriding the veto, a maneuver that would likely succeed because both bills passed by overwhelming margins.
A long-term fix will require forcing counties to reassess property values more frequently, Rendell spokesman Chuck Ardo said.
“The entire assessment issue needs to be addressed more broadly,” Ardo said. “This particular legislation was targeted and missed the mark.”
Accomplishing that goal is a more complicated proposition, but county governments are interested in starting a conversation about it, said Douglas Hill, executive director of the County Commissioners Association of Pennsylvania.
The biggest obstacles to re-evaluating property assessments more frequently are time and money; counties will need financial assistance and technical help to comply with any new mandates, Hill said.
The Pennsylvania School Boards Association, which urged Rendell to veto the bills addressing spot assessments, is interested in discussing mandatory county reassessments, Executive Director Thomas Gentzel said.
“It is a (political) third rail, but I think there’s an opening to deal with it now because there’s such a focus on property-tax reform,” Gentzel said.