The Pittsburgh Public Schools [PPS] board voted unanimously to take legal action against Allegheny County to compel a county-wide tax reassessment of properties.
The move comes after owners of several Downtown commercial properties won property tax appeals this year and many more are expected to follow.
Because of that, the district has seen its property tax base erode.
District CFO Ron Joseph said the reassessment appeal would not completely solve the district’s financial problems but is an attempt to stabilize the district’s tax base to improve accuracy in future budgetary predictions.
In an email statement, county spokesperson Abigail Gardner said county leaders are working to gather relevant data about the current state of assessments and engage stakeholders at the state and municipal level to create a more thoughtful and consistent approach.
“We recognize that several municipalities and school districts are concerned with dropping revenues. And we need everyone to recognize that the way we’ve done reassessments has been broken for a long time,” Gardner said.
Board members contacted for this story did not immediately comment.
Property tax appeals erode budgets as assessment burden shifts
In a budgeting workshop on March 4, Joseph said over 3,000 tax appeals were filed in the last two years, accounting for $3.5 billion in total assessed value in the district’s tax base. This assessed value represented $36.5 million in tax revenue. Currently, there are about 940 active appeals that represent $11.4 million in annual tax revenue.
In a worst-case scenario, the district will need to pay $13.4 million in tax refunds for the 2022 and 2023 tax years, Joseph said.
PPS faces stark budget realities, projecting a growing operating deficit of nearly $30 million in upcoming years. As enrollment continues to shrink and overhead building costs rise, the district is considering closing schools.
Lowered assessments and tax refunds could potentially add another $20 million to the projected $30 million deficit, said Joseph.
This might mean the district will have to raise taxes or do with less, in turn affecting programming and staffing in schools.
“We will need to take action sooner or later and make some reductions in the short term to be able to weather this,” he added.
District solicitor Ira Weiss said a reassessment is necessary because, without that, higher-end properties become under-assessed as their market values go up. Assessments on lower-valued properties, by contrast, may stay the same as their market values go down.
“What you have is you have those at the top paying less than they should and those at the bottom paying more than they should,” said Weiss.
During a board meeting last week, Weiss said this situation violates the uniformity provision of the Pennsylvania Constitution, which requires all taxes to be uniform.
The board’s vote on potential legal action comes roughly 18 months after a judge upended the calculation of property assessment appeals, tilting the playing field in favor of taxpayers. That ruling prompted big owners, from the Rivers Casino to U.S. Steel, to seek steep reductions in their property tax bills
Updated: A lawsuit could lower thousands of tax bills and threaten Allegheny County’s ‘house of cards’ property assessment system
A reassessment would aim to line up assessments with market values, likely raising some tax bills while lowering others. Reassessments have proved politically perilous to past county leaders. New County Executive Sara Innamorato, though, has said that a reassessment would improve tax fairness, though her administration has not yet taken steps to implement that.
Board president Gene Walker said to effectively manage its finances, the district will have to consider solutions, such as pushing the state legislature to reverse a diversion of wage taxes to the city, which costs the district $24 million, in conjunction with raising taxes. This might also mean making building changes through the district’s facilities utilization plan or future staff cuts.
“We have to be willing to kind of pull every lever that we can to, to kind of level off or help with our financing,” said Walker.
The district will first approach the county executive’s office to consider a voluntary reassessment. If they don’t consider it, PPS will then initiate action in the Court of Common Pleas, according to Weiss.
Lajja Mistry is the K-12 education reporter at PublicSource. She can be reached at lajja@publicsource.org.
