By Elizabeth Perry
A recent legal judgment about the constitutionality of the Allegheny County property tax system could be a boon to homeowners but could throw school districts into uncertainty about future funding. Many are waiting to see what a final judgment will be.
In an initial April 28 ruling, Judge Alan D. Hertzberg deemed the current system of calculating property tax in Allegheny County unconstitutional.
“At this time, the county is in the process of reviewing the sales data and codes to determine the validity of the [Common Level Ration]. The results of the review will be taken under consideration by the court. Until then, districts and municipalities await their fate and acknowledge the potential impact a change to the CLR would have on revenue,” said Danielle Guarascio, legal consultant for the Sto-Rox District.
The suit rests on a calculation of the gap between the assessed value of a property and how much houses are selling for in any given area.
The lawsuit alleges, “as real estate sale prices increase in the aggregate, as they have every year since 2012, the CLR should decrease.” That isn’t the case.
Reassessments of older properties haven’t occurred since 2012. Although housing prices continue to increase, the CLR has remained stagnant from 2016, leading to soaring taxes for new homeowners.
The judgment found that the state, which sets CLR, must recalculate it using updated 2020 sales data.
Currently, this ratio is set at 81.1% of the current assessed value of a home. The suit contends the county was negligent when coding sales, and that the ratio instead should be set at 63%.
For example, if a house sold for $100,000, it would be taxed as though it were worth $81,100 dollars. At the revised level, the house would be taxed at a value of $63,000.
While this outcome sounds great for recent homebuyers, school districts that create operation budgets based on property tax collected are not so enthused.
The Sto-Rox School District in particular is faced with a make-or-break financial crisis and may be impacted by the change. The district is on a five-year recovery plan to pay back years of budget deficits, imposed by the Commonwealth of Pennsylvania.
Sto-Rox School District Superintendent Megan Van Fossan said in a recent meeting that superintendents in different districts were discussing how to grapple with the issue. Later, Van Fossan declined to comment further.
Carlynton Solicitor William Andrews said the district was aware of the situation and is taking a wait-and-see approach.
“Until we know what the final judgment will be, there’s nothing much we can do or say on the subject,” he said.
Patrick Berdine, business manager and board secretary for the Cornell School District, said via email that residents should not worry about tax increases in relation to the CLR issue.
He said the district usually has between 20 to 30 properties that they are appealing the value of and the amounts in question would not significantly impact the school’s budget.
“Our solicitors have initiated the appeals process on certain properties that exceed our $25,000 variance between assessment and sale price. Any appeals that have been settled will be held until a final decision is reached on the CLR percentage,” he said.
If the new percentage rate creates a new value less than our $25,000 criteria the appeal will be removed with no consequence to the taxpayer, said Berdine.