Reassessment numbers may be happy addition
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This column is for homeowners. Renters, y'all can go straight to the funnies.
Allegheny County just went through a property reassessment that went about as smoothly as Middle Eastern diplomacy. Nearly 60,000 homeowners appealed their assessments, and nearly half of them won, many of them big.
Now comes the part where the county, the school board and the municipalities have to cut their millage rates so they get no windfall through a back-door tax increase. That's Pennsylvania law.
This is where it gets tricky, but I'll tell you right now the county has to cut its rate about 10 percent further. That's exactly what county Controller Chelsa Wagner said last week, and she's right. We both know that because we -- and you -- can go to an online property tax estimator provided by Carnegie Mellon University economist Robert Strauss and his scary smart team of number crunchers.
They've been working on a reckoning of how many county homeowners ought to be seeing a property tax cut this year. It wasn't available for this column. But, for thousands of county homeowners, the reassessment that so many politicians railed against with half-truths and misdirection should result in the best tax news they've gotten in years.
Before going into any detail let me attempt to explain why the numbers could work in your favor. A lot of people are freaked out by the math, so think of it this way:
Let's say you weigh 100 pounds. (G'head and dream.) Your weight goes up 50 percent, so you're tipping the scales at 150. How much would you need to lose to get back to even?
It's not 50 percent. You only have to lose a third, 33 percent, to get back to 100 pounds.
It's the same with taxes. Your assessment could go up as much as 50 percent and, as long as the rate is cut by at least a third, you're OK. (In fact, you're probably better off because your house is worth a lot more.)
Few understand this. Economists do. So www.propertytaxestimator.net has done the math so you don't have to. You can plug in your address and it will tell you, in that perfect world imagined by Pennsylvania law, what your property taxes should be.
According to its calculations, a revenue-neutral millage for the county can be achieved by cutting its rate from 5.69 mills to 4.25 mills. Right now, the county is proposing 4.73 mills, and Ms. Wagner says it should be 4.23 -- pretty much where Mr. Strauss' team put it.
If Ms. Wagner can get her way, the savings would be 50 bucks for someone living in what the county sees as a $100,000 house.
That county tax is, of course, just a fraction of the property tax bill. The lion's share comes from school and municipal taxes, but that property tax website offers one-stop shopping. One calculation gets you the tax bill for all three.
Mr. Strauss credited the city and its school board with doing a better job than the county in coming up with a revenue-neutral rate.
The city is cutting its rate 30 percent, from 10.8 to 7.56 mills -- pretty close to the 7.25 mills the CMU team figures it ought to be.
The city school system is also lopping off 30 percent, dropping the millage from 13.92 to 9.65 mills, not too far from the 9.22 Mr. Strauss suggests it should be.
Some might say those rates aren't all that much closer than the county to the magic number, but the school board also has proposed raising its homestead exemption to $28,685. That's the amount removed from the taxable market value before taxes are calculated. The county's homestead exemption is about half that at $15,000.
Mayor Luke Ravenstahl has proposed raising the city's homestead exemption from $10,000 to $15,000, matching the county. But city homeowners' participation rate in this tax break is far greater than for the county as a whole, Mr. Strauss says. Thus it gets closer to revenue neutrality.
It can all melt your mind, and it's further complicated because not every municipality has a homestead exemption. Those that are out there vary widely. But www.propertytaxestimator.net can help you cut through this fiscal thicket.
Knowledge is power. If you don't have access to a computer, try your local library. Your taxes pay for those, too.
First Published January 27, 2013 12:00 am