Home >  Local News

Wednesday, July 02, 2003

By Mark Belko and Eleanor Chute, Post-Gazette Staff Writers

Four of 43 Allegheny County school districts violated the state's anti-windfall law by collecting more property tax revenue than was permitted as a result of the 2001 countywide reassessment, county Controller Dan Onorato said yesterday.

	Online Chart: Millage watch

In a long-awaited report, Onorato said the Duquesne, Steel Valley, Mt. Lebanon and South Fayette districts had property tax revenues in the 2002 fiscal year that were more than 5 percent greater than what the districts collected in the previous year.

By law, school districts are not allowed to realize a tax windfall of more than 5 percent as a result of property reassessment. The anti-windfall law is designed to prevent school districts and other taxing bodies from reaping a "backdoor" tax increase through a reassessment.

The report found the county's other 39 school districts in compliance. Thirty-two districts did not exceed the 5 percent cap, while seven others voted publicly for a tax rate increase, giving them legal authority to go above the threshold. The four districts that violated the cap did not vote to raise tax rates.

Of the 43 districts, only nine collected less revenue in the fiscal year ending June 30, 2002, than in the previous year.

Another 23 districts took advantage of the state law to collect up to 5 percent more in revenue than they did in the 2001 fiscal year. Three of the districts -- Northgate, Riverview and Deer Lakes -- also raised tax rates.

Onorato criticized the anti-windfall law, saying it entitles school districts and municipalities to 5 percent increases during reassessment years without having to vote to raise tax rates.

"I view the entire 5 percent as a back-door tax," said Onorato, a Democrat who is running for county chief executive. "They provided for a legal back-door tax."

The law limits districts and municipalities to 105 percent of the previous year's revenues. According to Onorato's calculations, Duquesne collected 119.72 percent; Steel Valley 112.10 percent; Mt. Lebanon 108.54 percent; and South Fayette 106.89 percent.

The state law, however, does not provide for any enforcement mechanism for taxing bodies that exceed the cap.

Onorato recommended that the affected districts take steps to comply with the law, perhaps by offering or expanding senior citizen discounts or homestead exemptions during the next fiscal year.

He urged residents in the affected districts to put pressure on their school boards to develop plans to rectify the excessive collections. He said Mt. Lebanon already has reduced taxes in its 2002-2003 budget to account for excessive collections.

The other three districts disputed Onorato's findings.

William McNamee, business manager of the Duquesne city schools, said the district, which is overseen by a state board of control because of financial woes, has not received a windfall because it has had to give so many tax refunds when assessment appeals were won.

He said that Sabre Systems and Service, a county contractor, valued Duquesne property at about $115 million in 2001-02, but appeals have lowered the value to about $98 million. He said Sabre particularly overvalued commercial properties.

He said the district collected $1.96 million in taxes in 2001-02 -- some of which it later had to refund -- and never realized the 119 percent listed in Onorato's report.

He said receipts in 2002-03 were down to about $1.58 million, which he said would be about 96 percent of the figure before the reassessment.

Steel Valley School Board President Joseph Bonacorso said the district sent Onorato a letter explaining several errors in Onorato's calculations.

In the letter, John Yaklich, the district's director of operational services, said Onorato failed to account for the tax increment financing program for the developers of the Waterfront.

That is money that would have gone for taxes but instead is being spent to pay off the bonds the developers took out for the infrastructure.

In addition, Yaklich wrote, Onorato didn't give enough credit for the value of new construction as well as for the amount of tax refunds. New construction is exempt from the anti-windfall calculations.

"I believe we are within the 5 percent," said Bonacorso.

South Fayette officials also believe that Onorato missed some key information in his calculations.

Maria Brewer, director of finance in the school district, said Onorato did not take into account $157,000 in tax refunds for the 2001 tax year that were paid after June 30, 2002.

"I think we came very close for all the guessing that had to be done," she said. "It was truly a guesstimate. Everybody knows the reassessment did not go smoothly."

She said the county also didn't give the district clear guidance on how to handle interim tax collection for new construction.

While only four districts were to be found in violation of the law by his calculations, Onorato said he believes his report had merit, if only to "clear up all the gray issues and the innuendoes thrown around out there."

"I think that it is very healthy to have people know what's happening out there," he said. "I think it was very worthwhile."

Correction/Clarification: (Published July 4, 2003) The Chartiers Valley school board did not vote to increase taxes in the 2002 fiscal year. A story in Wednesday's editions, based on a report released by Allegheny County Controller Dan Onorato, stated otherwise.