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Property-tax case goes to Pa. justices today

In a case that could have dramatic consequences for school districts and towns across Pennsylvania, the state Supreme Court will hear arguments today on the constitutionality of the commonwealth's property-tax system, which raises more than $14 billion annually for education and local government.

In a case that could have dramatic consequences for school districts and towns across Pennsylvania, the state Supreme Court will hear arguments today on the constitutionality of the commonwealth's property-tax system, which raises more than $14 billion annually for education and local government.

The court's decision could fundamentally change the way counties assess real estate for tax purposes, forcing them to conduct frequent mass reappraisals of homes and businesses.

Some counties, including Bucks, have not done large-scale reassessments in 35 years.

In June 2007, an Allegheny County Court judge decreed that such a system guarantees unfairness and, among other injustices, punishes owners of lower-priced properties, a phenomenon documented in an Inquirer series in June.

Allegheny County Solicitor Michael H. Wojcik is asking the Supreme Court to reverse the ruling by Judge R. Stanton Wettick Jr.

In his 119-page opinion, Wettick noted a basic flaw in Pennsylvania's system: Assessments, on which tax millages are applied, are fixed in time, but property values are not.

As properties appreciate, assessments decrease as a percentage of a home's market value, creating a tax break for owners of pricier properties in higher-end neighborhoods.

"That actually happens the day after your assessment starts," said William Moon, the Delaware County assessment manager, who, along with other assessors, acknowledged that the system was problem-plagued and needed fixing.

All Pennsylvania counties operate under a "base year" program that experts say may be unique. In place in some form for a century, it became law in 1982. Counties must assess all properties at once, and those values are then frozen.

Montgomery County, for example, last revalued all its real estate in 1996. This has been a boon for appreciating neighborhoods and a burden in those where values have stagnated or dropped.

For instance: Effective tax rates - annual tax bills expressed as percentages of market values - are 25 percent higher, on average, in Norristown than in more affluent West Norriton, although both towns are in the same school district.

The $1,280 tax bill on the house Al Williams bought at the end of last year in the 800 block of Cherry Street in Norristown is double what it should be because the property has not appreciated.

Radically different rates of appreciation are also an issue in Philadelphia, though the city purportedly reassesses every year. Some property owners in West Philadelphia are being socked with effective tax rates that are triple those being paid by Center City residents, based on an Inquirer analysis.

Tax experts say continual freshening is the best antidote to inequity. But they also caution not to expect quick change from the Supreme Court. The consensus is that the justices will take their time in ruling and likely kick the problem to the General Assembly.

The case has prosaic roots, beginning with a group of appeals filed to the Allegheny County assessment board. Lorrie Cranor, a Carnegie Mellon University professor who was among the appellants, said she never envisioned her complaint growing into a landmark case.

Cranor and her husband bought a home in the Squirrel Hill section of Pittsburgh in December 2003 for $730,000. A few months later, her assessment was increased from $466,000 to $730,000 after the school district, contending the tax was too low, filed an appeal on the property. The Cranors argued they were paying way too much.

After their appeal was denied, they joined the class-action suit that led to Wettick's decision.

Assessors say that while the system needs reform, annual mass appraisals would be costly if not impractical.

"I'm a proponent of frequent reassessment," said Steve Howe, the Dauphin County assessor, who is treasurer of the state assessors association. He pointed out, however, that a typical countywide reappraisal costs from $50 to $70 a property. Unless the state put up the money, he said, the counties would balk.

Howe said he favored a system that required revaluations when statistical analyses indicated that assessments were significantly out of whack.

Delaware County's Moon said state officials needed to take some action to keep assessments fresher, regardless of what the Supreme Court did.