Pennsylvania Judge Strikes Down Property Tax System

June 18, 2007

There are many stories in the news about property taxes lately. To raise this important source of local revenue, counties and states have varying ways of assessing land and improvements for tax purposes.

Allegheny County, Pennsylvania, uses a “base year” (2002) for calculating taxes, so changes in value from 2002 to 2007 are not considered. With the recent fall-off in housing prices, this has created disparities within the county. For example, in Edgewood borough, prices have risen by 36% since 2002, while in the neighboring Pittsburgh suburb of Braddock, prices have fallen by 16% over that same period. But property owners in both boroughs pay taxes according to 2002 values.

But on June 6, a Pennsylvania judge ruled that the system violates the state constitution:

Assessment laws that allow the use of a base year assessment without requiring reassessments violate the Uniformity Clause because (1) base year assessments are not intended to assess all properties at the same percentage of assessed value to actual value, (2) base year assessments inherently cause significant disparities in the ratio of assessed value to fair market value, and (3) base year assessments inevitably discriminate against owners of property in lower-value neighborhoods.

The judge’s opinion includes an exhaustive study of how other states assess property, and how that squares with similar Uniformity Clauses. He noted that many states have created exceptions to constitutional uniformity, such as California with Proposition 13 in 1978. But because Pennsylvania has not done so, Allegheny County must now redesign its system. The judge did, however, stay enforcement of his judgment to give the city time either to rework the system or appeal the decision.

The full opinion can be accessed here. For more on property taxes, click here.


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