in Pennsylvania for the South Central Assembly Feb 20 2013 David W Davare PhD Property Tax Current system Revenue and importance Limitations and special issues Tax levy methodology Assessment issues ID: 279670
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Slide1
Property Tax Reform in Pennsylvania
for the South Central Assembly
Feb. 20, 2013
David W. Davare, Ph.D.Slide2
Property Tax
Current system
Revenue and importance
Limitations and special issues
Tax levy methodology
Assessment issues
Reform and related issuesSlide3
Used by
Entity
Number
% of local revenue
% of total revenue
County
67
92%
29%
Municipal
2450+/-
49%
81%
Schools
500
78%
41%Slide4
Used by
Entity
Number
Reported
(Total)
Year of Data
Total RE Tax Revenue
County
58 (67)
2009
1,942,756,051
Municipal
2502 (2450+/-)
2010
1,576,530,198
Schools
500
2009-10
10,757,487,536Slide5
Property tax revenue
Total RE Tax $14,276,773,785
2010 Taxable Income $310,368,447,000
PIT at 4.59% + 3.07% or 7.67%
2010 Taxable Wages $245,629,659,000
EIT at 5.81%Slide6
Property tax limits
2nd Class A Counties, 30 mills
2nd, 3rd to 8th class Counties, 25 mills
3rd Class Cities 25 mills
Boroughs, 30 mills
1st class townships, 30 mills
2nd class townships, 14 mills
Home Rule Governed by their charter
School districts 25 mills excludes salaries, benefits and debtSlide7
Property tax limits
For 3rd to 8th class counties, Cities, Boroughs and Townships, an additional 5 mills may be imposed with the approval of the county court.
Codes authorize various special purpose levies for debt service, capital projects, fire hydrants, street lights, libraries, etc.Slide8
Pa Constitution
Article VIII Section 1: Uniformity of taxation
All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.Slide9
Exceptions to taxation
Tax exempt properties
Act 319 Clean & Green
LERTA/TIF/KOZ-KOEZ
Homestead/Farmstead (Act 50/72/1)Slide10
Tax reform attempts
1988-89 Casey plan
1996 – Act 50
2004 – Act 72
2006 – Act 1 Slide11
Tax reform attempts
All shift from property to income.
Both earned and personal income
Act 72 and Act 1 included homestead/farmstead exclusions
Act 72 and Act 1 opened homestead/farmstead to municipals as well as SchoolsSlide12
Property tax calculation
Assessed value
* millage
* collection rate
= RevenueSlide13
Assessment of property
No state mandates on assessment
No required reassessment
Third class cities can do own assessment (Reading)
Assessment my use either price, or replacement valueSlide14
Assessment of property
Assessment my use either
purchase price or
replacement value
Assessing county selects base year
County establishes pre-determined ratio (market to assessed)Slide15
Assessment of property
Land value taxation has limited authority in PA
May be used by 3
rd
class cities and 3
rd
class school districts that are co-terminus with 3
rd
class citiesSlide16
Assessment of property
Government entities situated in 2 or more counties must equalize using STEB estimates of market value.Slide17
Tax reform proposals have
Only address where local dollars come from.
Do not address demands and limitations
Shifting from property to income, without consideration of commercial property tax revenue
Shift the business tax burden to individuals.
Failed to consider appropriate mix of taxesSlide18
Tax reform proposals have
Increased property taxes by repealing alternative taxes available under Act 511
Encouraged increased rate on earned income.
Left personal income to local choice
Most proposals expand disparity of wealth as defined by property and income
Require a “one-size-fits-all” approach to local tax reform.Slide19
Tax reform proposals should
Include state funding as part of the debate.
Include an appropriate mix of taxes
Require counties to maintain a uniform state-wide ratio of assessed to market value
Require uniform assessment practices
Require the regular reassessment of real estate at stated intervals
Fully fund mandates on local governmentsSlide20
Tax reform proposals should
Provide state-wide support for assessment of specialty property (utility production facilities)
Supplement tax reduction/abatement programs such as Act 319 (no local choice)Slide21
Discussion time