Earlier this week, I told you that LC Exec Don Cunningham is not only proposing a 16.1% tax hike next year, but wants to do a re-assessment. Either one of these is enough to have him burned in effigy, and he's doing both. He must have a death wish.Commissioners will chip away at his budget, but in the end, a tax hike is coming. The only question is how much. But does the political will exist for a reassessment? In 2007, NC Exec John Stoffa floated the idea, but it went nowhere fast. Northampton County has now gone 15 years without a reassessment, which by law must be done at least once every ten years. Lehigh County is in the same boat. Many other counties have gone much longer without reassessment, like Blair (1958), Butler (1969), Lackawanna (1973) and Forest (1974) Counties.
Stoffa's 2007 argument for re-assessment is simple: "Paying tax is the price you pay for living in this country. We have to keep it as fair as possible."
All too often, people in the Taj Mahals and McMansions do not pay their fair share. In 2006, for example, Lower Saucon resident Andrew Wilt described Northampton County country estates that are worth $1.7 million, but are valued at just $516,000. Ironically, it is people in more modest homes who worry they'll be the ones who suffer.
One of the best indicators of the need for re-assessment is the number of assessment appeals each year. In Lehigh County, there were 190 appeals in 2008. That increased to 450 in 2009. This year, there are 700 appeals, and the County is losing them. Northampton County lost $4,754,310 in real estate value in 2008 and another $6,063,700 in 2009. This is the direct result of assessment appeals, although some of that is property that is exempted and taken off the rolls.
Last year, the Supreme Court rejected a base-year system of re-assessment, ruling that it was unfair to owners with stagnant or falling property values. The Court called on the state legislature to come up with a more comprehensive "scheme." That hasn't happened.
9:00 AM Update: The Morning Call's Jenna Portnoy has a more detailed account about re-assessment.
12 comments:
In all honesty, John Stoffa has floated more idea's than there are balloons at a hot air festival. Unlike those balloons, Stoffa's never get anywhere or even come back to Earth.
The guy is like a circle, no beginning no end, just constant white noise, non-offensive, non decipherable and useless. If you search long enough, John Stoffa has proposed everything from world peace to flying cars, all with the same result.
Unbelievable! Is there anyone more inept at a job.
disappointing that dean browning keeps ending up on the same page as cunningham. first of all the new mcmansions get no break, because their assessment is based on the construction cost. second of all, the appeal process is a joke; in 91-92 the appeal board said no to everyone, except those represented by a tax lawyer (btw, greg feinberg worked overtime on hundreds of appeals). state law caps the total revenue increase to 10% for reassessment; for 10% these pols would sell your organs.
Mike:
I'm sorry you are disappointed, but my position on reassessment has nothing to do with what Don Cunningham thinks about it. I happen to believe that reassessment is necessary as a matter of fairness to all taxpayers. While this maybe viewed as a County issue, the fact of the matter is that the assessed value of someone's property impacts other taxes such as those paid to municipalities / townships and to school districts. For many individuals, school taxes are one of their largest tax bills (ranking up their with what they pay in state income taxes). For seniors, this is often their largest tax bill. Without a reassessment you have a continuation of the current situation where large entities appeal their assessment and are successful in getting a lower assessed value. Examples of a few of the companies that have recently done this in Lehigh County are:
Lowes
Home Depot
Kmart
Wal-Mart
Target
Nestle
Fuller Company
Mack Trucks
Air Products
The net effect of their successful appeals is that they pay less in property taxes and those that have not appealed their assessment (the vast majority of home owners) pick up the shortfall. As an example, if someone lives in Allentown School District (Lowe's and Fuller) they will assume any shortfall resulting from the appeal (over $200,000 in this example) if school property taxes stay the same and they will assume a disproportional larger percentage of any school district tax increase than will those that have successfully appealed their assessed value.
To me, this is inherently unfair to those that lack the knowledge, time and resources (as is the case with many of our seniors) to go through the appeal process. So I believe the answer is to setup a process to do a periodic, county-wide reassessment of property values.
Dean
Bernie
Maybe you will if time permits
actually teach those of us who never quite understood the process that goes into real estate reassessments. Does someone actually come out to a house and walk around to check on out buildings, garages, pools, etc., or
is it strictly an on-paper 10%
or whatever that goes into calculations.
Also, if Cunningham plans an almost 20% tax increase plus at least a 10% real estate assessment, that will be 30% or more increase in an annual tax to be paid by residents. Who will be able to afford to keep their home?
Here's a good explanation of why reassessment is necessary:
http://tiny.cc/jbj9u
It's the right thing to do. But, we've got to keep pressure on the County Exec and Commissioners not to increase the millage rate after the reassessment. That's where it would be a political disaster for them.
Excellent post Bernie, and good points too from Dean. I think the key change that needs to be made is to try to remove the politics to the extent that is possible. Tie politicians' hands and make reassessments mandatory and automatic on predictable timetable. To me, every 7 years sounds fair, but I realize it would end up being 10. I'm not sure what the best way to enforce it would be. Maybe a good rule would be that counties that are late to conduct reassessments would be ineligible for any state funds until they re-asses. At any rate, the decision shouldn't be left to individual politicians to decide when to reassess, because it's political suicide, so the incentive is to just never do it.
Jonathan, you, Dean Browning, Cunningham, Stoffa and I are all on the same page. I've never seen clearer evidence that we must all be wrong. Excuse me while I drink hemlock.
Bernie,
I think we have to give kudos to Cunningham for (finally) pressing for a reassessment. We are in a time of crisis and will be for some time. We need leaders who will lead and who will make the hard decisions that may hurt in the short-term but will be good in the long-term.
While I have not been a fan of his in the past, specifically his years as Mayor of Bethlehem and the large increase to the debt he produced, his recent bout of realism is commendable. No one wants to see a smaller budget with less service and higher taxes ... but that's reality.
The reason Dean Browning is on the same page as Cunningham, Mike, is that they both get it. They seem to understand the situation and know that they need to tackle the fiscal realities and keep the politics out of it.
And Bernie is correct ... who would have thought that Cunningham, Stoffa, BOH, Jon Keeting, and D. Browning would be on the same page (I must include myself as well). The earth must have come off it's axis.
Question for Bernie: Where does Ron Angle stand on reassessment?
Publius.
dean, would you briefly elaborate on how county revenues are down when the county tax is based on real estate, not income. i suppose the assessment appeals you mentioned might be one reason, what are the others?
p.s perhaps some money could be saved by sparing the historic reading road stone arch bridge, weight restriction sign should suffice
Assessment appeals do reduce the amount of revenue coming in, but
County revenue comes from many places, not just real estate taxes. Taxes make up only 28% of total county revenue for the 2011 budget. The County collects a hotel tax, which is dependent upon hotel traffic, and is noticeably down in the recession. Grants and reimbursements make up the lion's share of revenue at 61%, and the rest consists of departmental earnings, costs and fines and other revenues and reserves.
Fees for the recorder of deeds are down, due to lower housing transactions, funding from the state for human services has been cut several times already in the past year, and interest earnings on any cash and investment returns are not adding to the coffers.
You can download the proposed 2011 budget at:
http://www.lehighcounty.org/Departments/FiscalTaxClaims/FiscalBudget/tabid/372/Default.aspx
Mike:
If property taxes from new homes and other construction is not enough to offset the property taxes lost due to appeals, then revenue would indeed be down. To give you an idea of the magnitude of what has happened over the past few years, the appeals that have been settled for 2008 and for 2009 have resulted in reduced property tax revenue through 12/31/09 as follows:
School Taxes = $4,600,000
County Taxes = $1,200,000
Municipalities/Townships = $800,000
So those that appealed have seen their tax property taxes reduced by a total of $6,600,000 in just the past two years. $4,200,000 of this came in 2009 and will carry forward into 2010 to be added to whatever results from the 700 some appeals that were made so far this year. As I'm not aware of any government entity that has reduced its millage rate during the past few years, that means any shortfall was covered out of existing fund balances (reserves) or is being passed on to the rest of us taxpayers.
Whether it is "political suicide" or not, my position is that this is unfair and needs to be changed.
anon 4:53 and dean, thank you both for your informative replies. i oppose the reassessment for two main reasons. in the course of business i have checked on hundreds of assessments in the last number of years. although at times they may have been far below market valve, i find them pretty accurate when compared across the board to other properties. of course the millage has gone up considerably since 1991, especially with the school tax. so if you spend the money on reassessment, which will most likely cost more than you estimate, and then the appeal process will just start anew. I remember the commotion from 1991. in my opinion it's really just a backdoor way to raise taxes. pol's can say the millage is the same or less, but take more in because of higher assessments. it takes years for the appeals to sort out the inequities of new assessment. so in my opinion, it's not at all more fair, it's actually less fair.
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