Taxing problem: Assessments complicate city school budget
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Pittsburgh Public Schools hold a rare distinction among Pennsylvania school districts -- the property tax rate has not been raised for 11 years. Now, though, uncertainty over pending assessment appeals has left Superintendent Linda Lane with little choice but to end that enviable streak and propose a small hike for 2013 -- just in case.
If the appeals aren't resolved in the district's favor, it could mean a difference of $3.6 million in how much revenue the district could receive next year. Unfortunately, the district cannot wait for the outcome of those court challenges to decide what its 2013 tax rate should be because state law prevents school boards from adjusting millage rates mid-year.
In order to provide a cushion, the superintendent is proposing an increase of 0.15 mills, which would bring the total property tax rate for schools to 9.48. The $3.2 million that would bring in would be set aside in a reserve fund, for the express purpose of paying any refunds to property owners who win their appeals.
Normally when a district raises its property tax rate, it's easy for homeowners to figure out how much they will have to pay. That's not so this year, and here's where things get really complicated.
Like all other school districts in Allegheny County, the effect of millage rates on the tax bills of individual homeowners will vary next year because that's when the results of the county's court-ordered assessments go into effect. Under state law, school districts are not able to reap a windfall from reassessments. That means that even though the total value of all property in the district has gone up, the district should not get more money out of it.
The biggest change in the tax bills of homeowners likely will be the result of changes in their assessments. A rule of thumb for city school tax bills is, if a home's assessment went up by more than 50 percent, the bill should go up, and if the assessment went up by less than 50 percent, it should go down.
A tax rate hike, though, would apply to all homes across the board. So, if a $100,000 home increased in value to $150,000, the taxes would go from $1,392 to $1,400 without the tax increase. With it, the new rate would be $1,422.
We have commended the board in the past for making the spending cuts and staffing reductions necessary to live within the means of city taxpayers. There is no place for irresponsible spending and reckless choices.
The superintendent's proposed tax hike is not a diversion from that sound approach, nor would it solve the district's long-term fiscal challenges. It is a necessary evil in a year when there are too many variables in the revenue calculations for the district to responsibly budget without the flexibility it would provide.
First Published December 6, 2012 12:00 am