Pennsylvania: Local Governments Singling Out Specific Property Owners for Higher Tax Bills

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A couple of interesting articles out of Pennsylvania recently highlighted a disturbing feature in local property tax assessments: individual property owners are being singled out by localities for reassessment of their property in order to boost tax collections. The practice, done through tax appeal boards traditionally used by property owners to argue for lower assessments, provides a glimpse both into the flawed nature of Pennsylvania's assessment system, and into the unfortunate state in which this system has left Pennsylvania localities.

Aside from when a new home is built, or when major renovations on an existing home are completed, state law specifies that a property can only be reassessed for property tax purposes as part of a locality-wide reassessment of all properties. But reassessing all properties can be a daunting task for a locality, as evidenced by the fact that some localities haven't reassessed in over 30 years.

In the period between reassessments, properties that appreciate in value at an above-average rate can see significant tax benefits. And while "spot reassessments" of specific properties are technically not permitted, localities are allowed to request a "reverse appeal" of the original assessments of specific, apparently "under-assessed" properties. This practice has produced hundreds of millions of dollars in extra tax revenues for many localities (drawn mostly from people whose property tax bills were legitimately too low) though the piece-meal fashion in which those revenues have been raised creates serious inequities between people singled out for "reverse appeals", and those who continue to fly under the radar.

Pennsylvania legislators recently mustered overwhelming support for a bill ending this practice, though the Governor vetoed the bill on the grounds that it would significantly reduce localities' ability to raise revenue. The legislature likely has the support it needs to override such a veto should they try again, but some policymakers are hoping to take things a step further and use this unsettling practice as a springboard for enacting a more comprehensive, frequent, and rational property reassessment system. What precisely that will involve is unclear, though some local officials have already suggested that mandates for more frequent property reassessments should be coupled with state aid to cover the inevitable administrative burden of such a policy change.

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