One of the most important sources of income for public schools and local governments in Pennsylvania is property taxes. As homeowners across the Commonwealth know, property tax bills have a major impact on the budgets of many households, from middle-class families to single parents to older adults on a steady income.
Despite the huge impact of property taxes, many counties in the Commonwealth lack a current tax assessment. About half of Pennsylvania counties use pre-2000 estimates; more than a dozen have not been reevaluated since before 1980.
Lackawanna County is one such county, having completed its last reassessment in 1968. Much has changed since then: Housing construction in suburban communities has increased, while the city of Scranton has lost about a quarter of its population since the 1970 census. Jobs and people have moved and shifted as the world has changed. The institute’s analysis of data from Zillow found that home prices in some Lackawanna County ZIP codes increased by 23% to 48% from 2017 to 2021. Over a longer period of time, these discrepancies could be even larger.
When real estate values rise at different rates in different parts of the city, this leads to inequalities. Taxpayers who have seen relatively little appreciation in their property since the last revaluation pay more in taxes relative to the actual value of their home than those whose property has appreciated more rapidly; For this latter group of homeowners, there is a larger gap between the appraised value used to calculate their tax bill and the actual value of their home. In other words, taxpayers whose real estate values have risen at above-average rates are being undertaxed compared to taxpayers whose real estate values have either risen more slowly or fallen in value. Accordingly, some Commonwealth judges have ruled that the use of outdated valuation values violates the Pennsylvania Constitution’s requirement that taxes be collected uniformly.
Earlier this year, Lackawanna County relocated to begin the reevaluation process. But dozens of other counties across the state still base their property tax calculations on decades-old data. As the government’s primary source of revenue and a significant part of most homeowners’ budgets, property taxes must be collected fairly. While many homeowners worry that reassessment will result in higher tax bills, state law requires reassessments to be income neutral – meaning the overall tax burden will move but not increase. Some homeowners will see their tax bills increase, others will decrease, and others will see little change. Ultimately, however, these changes are important to ensure that the taxes imposed on Pennsylvanians are consistent and fair.
Andrew Chew is Director of Research at The Institute, a community-based research organization in northeastern Pennsylvania.