This story originally appeared on Spotlight PA.
Property taxes are a critical source of revenue for Pennsylvania municipalities and school districts, but political inertia and fear of rising costs can prevent communities from keeping rates updated.
The taxes are determined by assessments, which dictate how much a property is worth and shape how much property owners must pay.
So when assessments are outdated, funding for schools, roads, and other essential services potentially falls short. Local leaders have the ability to adjust taxes and ensure assessments happen regularly, but because such tweaks can raise costs for constituents, the issue is touchy. Some officials have been voted out following changes.
Spotlight PA Local Accountability Reporter Min Xian spoke with a panel of experts about outdated assessments and how they affect Pennsylvanians.
Here are five key takeaways from the panel discussion, which can be viewed in full at spotlightpa.org/events:
Property taxes are the lifeblood of local government.
Property taxes are calculated by multiplying the assessed value of a home or piece of real estate with the tax rates — also known as millages —set by county governments, local municipalities, and school districts.
Each year, those bodies come up with budgets and decide how much revenue they need to provide essential functions like public education, police, and human services. They also set their own tax rates and rely heavily on property tax as a steady source of income.
Outdated assessments flout the tax uniformity rule.
Counties conduct assessments, which serve as the basis for different property taxes levied by various levels of government. The Pennsylvania Constitution requires that taxes be uniform, meaning the tax burden must be equitably shared among residents.
When counties have uneven taxes, they can be taken to court. A 2009 Pennsylvania Supreme Court decision determined that the use of an outdated assessment in Allegheny County to establish the tax liability for a property violates the uniformity clause of the Pennsylvania Constitution. Allegheny underwent a countywide reassessment following the outcome of the case. The next year, the county’s overall assessed value increased while tax rates went down.
Counties differ in population, property types, and market values, so the threshold for when a property reassessment is necessary varies geographically, said Lisa Schaefer, executive director for the County Commissioners Association of Pennsylvania.
In a housing market that has remained relatively unchanged, an older assessment does not necessarily mean it’s less fair, she added. Without a mandate for regular assessments, counties make their own decisions about when updates are needed.