There is a lot of confusion related to the new Allegheny County Reassessments that will be presented to county residents in the near future. Unfortunately a large amount of the information you hear will also be wrong. Here is a bit of the truth...
Myth: The reassessment will cause my taxes to go up.
Fact: Reassessment is a re-evaluation of what your house is worth.
Because of the states' anti-windfall law, the taxing bodies are not allowed to get a huge revenue boost when they do new assessments. In fact they are MANDATED to reduce the tax rate (millage) to keep the total amount of tax collected in line with the previous year. If your assessment goes up, but the millage goes down, you may actually end up paying exactly the same amount, or even less.
However, if you live in an area that had seen good appreciation, or if you have made major renovations or additions to your home, your could see a tax increase, but that is because you also have seen a real increase in the value of your property.
Myth: The goal of reassessment is for me to pay more.
Fact: The goal of reassessment is to distribute the tax burden fairly, based on the market value of your property.
Right now, Allegheny County is operating on assessments that were done in 2002. A lot has changed since then, some areas have seen appreciation and others have seen depreciation. Without a reassessment, those areas that have seen a drop in home values are paying more than they should, and the areas with appreciation are not paying their fair share.
Most politicians continue to argue that any reassessment will make everyone's taxes go up, but the reality is that reassessment will simply redistribute the tax burden fairly. The only thing that makes everyone's taxes go up is an increase in the tax rate (or a new tax), not a reassessment.
In 2006, a reassessment of county values was done, and then later thrown out due to a variety of political maneuvers. In 2007, those values were the subject of a study by CMU professor Paul Fischbeck. He looked at how those values would have affected the tax rates of Allegheny County residents. You can read the entire story here. His conclusion was that if the 2006 numbers were used, 75% of the municipalities in the county would have seen their residents get a decrease in taxes. Only 14 communities in Allegheny County would have seen a increase in their taxes of more than 5 percent.
Understand, this is not a decrease in the tax revenue brought in as a whole, but rather a redistribution where those municipalities that saw a depreciation in their home values would have also seen a reduction in their tax burden, while those homeowners who had assessments lower than their value would have seen an increase.
Myth: Whoever assessed my home made the value as high as possible.
Fact: The 2002 numbers that we currently work with were determined by a combination of 7 prices.
Based on 1 computerized estimate of value for your home + 5 comparable sales + one weighted value, with the 2 highest and 2 lowest of the seven thrown out, and then the remaining 3 averaged to get the amount used. It is likely that a similar method will be used to determine the 2011 values that will be coming out shortly.
Fact: The tax rate is going up.
This isn't related to the reassessment, although I am sure the politicians will be happy to blame it on reassessment, rather than take the blame themselves. Coinciding with both the reassessment and the new county administration is a brand new 1 mill tax rate increase for county property taxes starting in 2012. 1 mill is an increase of about $100 per $100,000 in home value. For more information on the increase you can read more here.
The bottom line:
For residents of Allegheny County who will be seeing the new reassessment values in the coming weeks, it is important to first calculate your actual taxes before jumping to the conclusion that your tax bill has gone up due to the higher assessment. This will be directly related to new tax millage rates for each municipality and school district, so be sure to get those before you worry about the bill. You just might be surprised at what you find.