Pittsburgh Public Schools solicitor seeks OK to sue Allegheny County to spur reassessment

Pittsburgh Public Schools’ top lawyer warned the school board Wednesday that the district is facing a dire financial crisis caused by plummeting property values in the city and asked for permission to sue Allegheny County in an effort to compel a countywide property reassessment.

Stoking fears of a coming disaster, Solicitor Ira Weiss introduced a resolution to start a process that would push for a reassessment of all property in the county. The last reassessment occurred in 2012.

“The ship is headed to the iceberg, and it is going to hit it,” Weiss told TribLive Thursday.

He said that he strongly encouraged the board to support the resolution.

Weiss said the district’s rainy day fund is already below the state recommended level, and it will run out within two years unless the board takes drastic action.

The district can’t raise property taxes fast enough to keep pace with the tax base erosion caused by declining property values, said Weiss, citing state law that limits how much school districts can raise tax rates.

He said that if passed, the resolution would give Allegheny County Executive Sara Innamorato the opportunity to forestall a lawsuit by voluntarily starting the reassessment process.

The district is losing millions of dollars in revenue because of the county’s declining common level ratio, a formula used to calculate real estate values for tax purposes.

In 2021, Allegheny County was using a common level ratio of 81.1% — meaning that a property seeing an appeal would have its assessment changed to about 81% of its fair market value. A house worth reassessed at $100,000, for instance, would pay taxes on only $81,100.

After a successful lawsuit brought by homeowners, a judge ruled to reduce the common level ratio from 81.1% to 63.5% in 2022, and then down to 54.5% in 2023, meaning owners of the same $100,000 house in the previous example would pay taxes on only $54,500 of its value.

The resolution states that high-value properties in Pittsburgh that have maintained or lost value since the 2012 are now “receiving artificially low assessments” because of successful appeals and application of the current common level ratio.

“The failure to reassess has resulted in higher valued property assessments not reflecting the appreciation in value over time and lower valued property assessments not reflecting the decline in value over time,” reads the resolution.

The resolution said this dynamic is resulting in an “unconstitutional lack of uniformity.”

The large drop in the common level ratio has resulted in scores of major commercial property owners, including owners of Downtown skyscrapers, successfully appealing their property values and receiving massive drops. That, in turn, lowers the amount in property taxes they must pay.

“This disaster has already cost Pittsburgh $10 million in lost revenue and will mean even more in refunds,” Weiss said.

The Innamorato administration declined comment Thursday.

Weiss said Allegheny County’s common level ratio for next year is projected to drop to about 51%, which he said will erode the school districts tax base even further.

A countywide reassessment would reset the common level ratio to 100% and would assess every property in the county to current market value.

Weiss said a reassessment would level the playing field in the county. He noted it wouldn’t lead to a huge jump in tax revenue for school districts like Pittsburgh’s because of an anti-windfall provision in state law.

“It won’t stop all the problems associated with assessment appeals, but it will provide stability into the future,” he said.

Pennsylvania is the only state in the nation that doesn’t complete regularly scheduled property reassessments, according to Weiss.

School board President Gene Walker said he supports the resolution and expects it to pass.

He said the board will likely vote on the resolution Wednesday.

“We are at a critical time,” Walker said. “We are thinking of ways to decrease costs and increase revenue without having to put an undue burden on our taxpayers.”

Walker said a countywide assessment is long past due, and he believes it will bring stability to the school district’s budget.

He said Pittsburgh Public Schools is already facing tough decisions on how to manage its budget. If tax revenue losses from commercial properties cannot be mitigated, the district will have to have serious conversations about dramatic remedies, such as combining schools or hiking taxes.

Walker said some of those measures are likely at some point no matter what, but the fiscal picture will be worse off without a countywide reassessment.

Typically, lawsuits trigger counties in Pennsylvania to conduct assessments.

A 2010 lawsuit against Allegheny County precipitated its last property reassessment in 2012, said Weiss. Beaver County recently completed a countywide reassessment after Aliquippa School District sued.

“The history is that reassessments don’t happen without a judicial directive to do it,” Weiss said.

During her campaign last year, Innamorato said she supported a countywide property reassessment to combat inequities in the system.