Getting relief from the tax man

From the BCCT

Getting relief from the tax man
Bucks County will likely lose a few million dollars because of lower assessments.
By JENNA PORTNOY

Because they appealed their assessments this year, 1,600 of your neighbors will pay lower property taxes.

In fact, 90 percent of Bucks County home and business owners who requested relief got it.

That’s good news for residents - who likes paying taxes? - but not so good for governments facing budget deficits.

All told, the assessment reductions amount to $86 million in taxable value that school districts, municipalities and the county can no longer rely on to generate revenue.

“The township managers meet each week,” said Gail Weniger of Warwick. “The topic is, ‘What are you doing with your budget?’ because that’s what everyone’s worried about right now.”

The reduction in assessments - the figures used to set taxes - is one factor that prompted Warwick to consider its first meaningful tax increase in years. Owners of homes assessed at the township average of $40,000 are expected to pay $80 more next year.

“We certainly have cut the nonessentials,” Weniger said. “We’re down to the bone at this point.”

On top of limiting capital spending, the township slashed budgets for seminars, non-emergency overtime, part timers and office equipment, hoping small-ticket items will add up.

“In another year, you would say, ‘Why would you cut that?’ “ she said. “But this year it all has to go.”

Thanks to new construction, however, the overall assessed value of property countywide was practically flat compared with the end of last year. Countywide assessments total about $8 billion and increased just threetenths of 1 percent. That slight bump is not enough to offset the rising cost of running government, including increases in fuel costs and union workers’ salaries, and the decreased revenue, such as real estate transfer taxes.

Warwick’s total assessed value ticked up a bit, too, by about onetenth of 1 percent. New Britain saw the biggest increase - about 4 percent - while Ivyland took the biggest hit with a decrease of 1 percent.

But even a net increase in total assessment value does not translate to smooth sailing for business administrators.

Bucks County will likely lose a few million dollars due to the reduced property assessments, said Brian Hessenthaler, director of finance and administration. He also expects more people will be unable to pay their taxes, so instead of a typical 98 percent collection rate, he’s projecting a delinquency rate of about 4 percent.

Preliminary budget numbers will not be released until Nov. 26, but he hopes to make up the shortfall. As always, departments should look for ways to be more efficient without sacrificing service and Hessenthaler might have to tap the county’s rainy day fund.

Not since 2000 have as many property owners requested relief. This year, 1,775 property owners filed appeals, which is more than three times as many as last year.

Reductions were also awarded at a higher rate than usual. The percentage of successful appeals topped 90 percent - the highest rate since 2002, the earliest year for which figures were readily available from the county.

The ratio was similar in Montgomery County, where 80 to 90 percent of residential appeals and 60 to 70 percent of commercial appeals resulted in reductions, said Assessment Appeals Board Chairman Dennis Sharkey.

It’s up to the counties’ Assessment Appeals Boards, whose three members are appointed by county commissioners, to rule on property owners’ requests for assessment changes. While residents generally want their assessments to go down, school districts also petition the board to increase assessments on commercial properties they feel should be paying higher taxes.

Every fall, county appraisers research cases and make recommendations to the board, which recently issued its rulings.

The down housing market and recessionary economy likely prompted this year’s rush of appeals in Bucks.

“We know what’s happening out in the marketplace,” said Jim Roberts, a Quakertown councilman and Assessment Appeals Board member in Bucks. “We understand that. They don’t have to feel on edge or nervous about asking.”

Few property owners think about their assessment until the tax bill arrives, Roberts noted. That’s when the assessed value of a property really matters and if it no longer reflects current market value residents could be paying too much.

Some residents in newer homes have argued their taxes subsidize the owners of older homes, whose property taxes are based on values set during the last countywide reassessment - in 1972.

Only new construction and significantly renovated homes get new assessments. State lawmakers have called for rolling reassessments - to be done at the time of sale - but the method is prohibited in Pennsylvania. Also illegal are spot assessments, which would let the county reassess all the homes in a development based on just a few successful appeals.

Appealing an assessment is relatively easy. Property owners present evidence of recently sold comparable homes - same style and same neighborhood - that prove an assessment is based on a disproportionately high market value. (An appeal form can be downloaded at www.buckscounty.org. The county will accept 2010 annual appeals from Jan. 1 through Aug. 1.)

The process worked for 100 homeowners in age-restricted developments.

Appraiser James Dougherty of Lower Makefield filed appeals on behalf of 33 residents of the Realen-built Flowers Mill community in Middletown. All will save at least $1,000 on their tax bills, he said.

In Northampton, Jean and Bill Brenner filed appeals for 67 of their neighbors at Toll Brothers’ Regency at Northampton. Again, all assessments went down, with the biggest reduction amounting to 24 percent, she said.

For example, the Brenners’ assessment was reduced by nearly $10,000 to $45,890; the corresponding market value is $504,286, which is lower than the previous $590,213, but not as low as the $480,000 the Brenners believe their home is worth.

If 2009 school, county and municipal tax rates stay the same, the Brenners will save about $1,300 on a tax bill of $7,568.