Tribune-Review Friday September 17, 1999
Home Rule tax reform? Think again, says CMU prof
Robert P. Strauss
How a government administers and collects its real estate taxes is, in the final analysis, an empirical statement about the ethics of the government's elected officials. Taxation represents the government’s authority to compel the surrender of private resources for public purposes, and when such compulsion is unevenly applied it violates our basic sense of fairness.
Further, unethically administered real estate taxes can also signal how the moneys are likely to be used, for favoritism in how the monies are extracted is often accompanied by cronyism in how the monies are spent. No business can subject its owners to the capricious surrender of hard-earned monies to pay unreasonable or unethically administered taxes without being questioned about due-diligence, especially if few or no services are forthcoming.
While real estate taxes are deductible for federal tax purposes, paying off assessors for favorable assessments is not. Capriciously and/or unethically administered real estate taxes create resentment, uncertainty, and ultimately deter economic development.
TAXES AND JUDGES
Real estate taxpayers in Allegheny County do not have to rely solely on the ethics of their locally elected county commissioners to make sure that real estate taxes are fairly imposed and collected. The Pennsylvania Constitution contains a very strong fairness standard in its Uniformity Clause which real estate taxpayers have recourse to through the courts. Twice in the past 25 years, irate taxpayers in Allegheny County have successfully asked the court to wrench administration of the real estate tax out of the hands of their county commissioners, and put it under control of a judge to accomplish the fairness which the elected commissioners were unwilling to achieve.
Most voters in Allegheny County will be surprised to learn that neither the current commissioners nor the new County Executive and County Council will have anything to say about the $1.3 billion in property tax bills that will start pouring forth in January, 2000 to finance the County, schools and municipalities. The fairness of these tax bills, as a practical matter, will be the sole responsibility of Judge Stanton Wettich and Sabre Systems of Ohio.
Of course, nobody elected either to do this particular task. Neither the judge nor Sabre Systems is subject to any publicly discernible oversight. Representative democracy has thus taken pause twice in 25 years about the ethics of taxation.
REFORM? THINK AGAIN
For Allegheny County voters, the upcoming election of County Executive and County Council seemingly holds out the promise of finally straightening out the blatant inequities in the assessment and collection of real estate taxes in Allegheny County, and returning the power to assess the real estate tax and thus its ultimate fairness to democratically elected officials.
Sadly, this can not happen, because the political bargain struck in the Pennsylvania General Assembly in 1997 expressly prohibited any Allegheny Home Rule Charter from dealing with property tax assessments. This pessimistic appraisal is based on:
"B. Act 149 of General Assembly of 1997 Creating Second Class Charter Law and the Referenda:
§ 6107-C Charter Limitations
(h) With respect to the following subjects, the charter shall not give any power or authority to the county contrary to or in limitation or enlargement of powers granted by acts of the General Assembly which are applicable to counties of the second class:
(8)The assessment of real or personal property and person for taxation purposes
(9) Defining or providing for the punishment of any felony or misdemeanor "
Thus, better than $1.3 billion per year will continue to be extracted from Allegheny County's real estate owners (and indirectly renters of course) without any real prospect for eliminating the decades old inequities.
By error or forethought, the movers and shakers behind Allegheny County's Home Rule Charter froze current Pennsylvania real estate tax law so that, unless changed by the General Assembly, the assessment of real estate will continue to be the prisoner of Pennsylvania's Second Class County Assessment Code which has driven real estate taxpayers into the courts twice in the last twenty-five years.
ASSESSMENT LAW RULES
The Second Class County Assessment Law of 1939 established the Board of Property Assessment, Appeal and Review as the quasi independent agency composed of 7 members, appointed historically by a majority vote of the County Commissioners. Some pertinent parts of the code that severely inhibit improving the quality of assessments include the following:
Section 4 (a) " [the board shall] make and supervise the making of all assessments and valuations of all subjects of taxation in the county as required by existing law. [Comment: this statutorily commingles the appeal authority with the assessment authority, and, in effect, puts the appointed board members in the position of hearing appeals about the work product of their own employees.]
(e) To establish and maintain in its office records of…surveys, maps, sales and assessments and with the exception of the cubical contents, records and sales records, to permit inspection thereof by the public at all times during office hours.[Comment: the Board maintains the assessment records, not the County government; also, this provision does not preclude duplication of effort by both the Recorder of Deeds and the County Controller, who both are involved with parts of the assessment process]
Section 6. It shall be the duty of the recorder of deeds in each county of the second class to report every deed or conveyance of land which record shall set forth the following information…[Comment: this creates duplication in record keeping between the assessment function and the deed recording function, and does not obligate either to coordinate and integrate the databases or functions.]
Section 8. …Any assessor who shall fail to make such assessments and valuations and lists in the manner herein provided or who shall knowingly and willfully make any false assessment, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced to pay a fine not exceeding one thousand dollars, and in default of the payment of such fine and costs, to undergo an imprisonment of not exceeding six months…[Comment: this sets a very low punishment standard to deter "low-ball" assessments. A three thousand dollar bribe to an assessor to "low-ball" can compensate the assessor, pay the fine, and make a contribution to a third (political?) party with no more consequence than receiving a parking ticket. Moreover, this can not be addressed by the new Home Rule Charter because of the Charter Limitations in Act 149 as cited above. ].
The real questions to pose to candidates Roddey and Wecht, and those for County Council, given they are prohibited from reforming by local law the County’s system of property assessments, are:
The writer is professor of economics and public policy at Carnegie-Mellon University.