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Reassessment -- it's a process that is often misunderstood, cloaked in the vernacular of the tax system with formulas and ratios, but behind it is the need to be realistic and fair about what properties are actually worth by today's standards.
The last time Lycoming County did a reassessment was in 2004. That was the year that George W. Bush was re-elected president; President Ronald Reagan died; Vladimir Putin was re-elected president of Russia -- no surprise there; the last episode of Friends aired; and Martha Stewart went to jail for insider trading.
In the interim 19 years, things have changed. Housing costs and values have gone up, but the basis for determining the assessed value has not. That is determined by the common level ratio and Lycoming County's is still stuck in 2004.
The common level ratio measures how a county's base year assessments compare with current real estate market valuations, said Brooke Wright, the county's chief assessor/tax claim director, at a recent county commissioners' meeting.
"Before 2004, before the reassessment, the assessment was 75% of the market value.Then, when the 2004 reassessment came around, they changed that ratio to 100%. So market and assessed (values) were the same," Wright said.
The current common level ratio now is 51.3%, which is why reassessment is needed.
Every year, validated real estate sales in the county are reported to the State Tax Equalization Board (STEB), which then uses that information to calculate the ratio of the assessed value to current market value.
Because 2004 is used as the base year, that common level ratio is used during appeals and that brings the value of a property back to that year's values.
In her presentation to the commissioners, Wright broke it down into basic terms.
"Reassessment is needed when the property values used to make up the tax base are inconsistent, unfair and/or too old to reflect current market trends and changes in the value of real estate...It is simply a tool to equalize assessments and ensure, once again, that all taxpayers are paying their fair share," she said.
One of the arguments expressed by those at the commissioners' meeting was that the county just wants to increase taxes and that's the reasoning behind doing a reassessment. But, state law prohibits taxing bodies from using it just to get more revenue.
"Reassessment is not a windfall for local government and school districts. State law requires local governments and school districts to lower their taxes in the same proportion as tax base increases. For example, if the tax base doubles, they will be required to reduce their tax rates by half," Wright said in her presentation.
"The county and townships/boroughs must reduce their millage rate so that it does not exceed the total amount of taxes that was collected in the previous year. But the county and townships/boroughs can then still adjust the millage rate to collect no more than 10% of the total amount that was levied in the previous year. The school districts are held by the Act 1 legislation which is tied to the index in that act," Wright said.
This is why during a reassessment, it is estimated that taxes for some property owners will go up a third, while a third will decrease and a third will stay the same because some neighborhoods are growing in value and some are in decline.
Wright cited some real estate sales from the last few years, which illustrated this point.
As an example she noted that a property in McIntyre Township, which had an assessed value of $88,130 with county taxes of $572.85, sold last year for $340,000. If the market value had been applied to the assessed value, taxes would have been $1,105.
A residential property in Clinton Township, on the other hand, which had been assessed at $35,990 sold last year for $24,500. Taxes before the sale were $233.94 and, if the market value had been applied to the assessed value, those would have decreased to $79.63.
A commercial property in Williamsport, assessed at $1.3 million paid taxes totaling $8,541.33. It sold in 2022 for $3.87 million. Estimated taxes would have been $12,593.75.
Lycoming County has 54,085 parcels. Of that, 2,091 are tax exempt, which means that they could be schools, hospitals, churches, veterans exemptions, FEMA buyouts or township buildings and fire halls.
For example, in 2015, the county had 51,904 taxable parcels and 1,896 tax exempt parcels. So, in the period between then and 2023, the county grew by 285 parcels, but the number of those not paying taxes also grew by 195, which many property owners who pay taxes think is unfair.
But, just think of the size and cost of homes that have been built since 2004. Isn't it just as unfair for those properties to be assessed at 2004 values?
The county also loses tax dollars when big box companies file commercial appeals.
"They're coming in, these big box companies, and filing commercial appeals because they know they're going to get this common level ratio. Their assessment is basically what today's value is, is basically being cut in half," she explained.
In the past five years, the county has lost $550,000 in revenue through commercial appeals. The companies do it because they can, which increases the lack of uniformity in taxing -- that equity in the system that the commissioners cited when voting to approve the reassessment.
There are misconceptions about how reassessments are actually conducted. No, people don't enter your home and measure everything. Measurements are taken, but of the outside of your home and of your property.
"Reassess is when they visit every property. They're taking a picture and they're messuring from the outside. They do not go into the home," Wright stressed.
"When they value a home, the square footage is taken into consideration. The condition of the home and the area sales are all considered in making cost tables for us because the cost tables we are (currently) using are based on the 2004 reassessment," she said.
A reassessment usually take from 24 to 30 months to complete and at a cost that is yet unknown, but could be around $4 million.
In voting against reassessment, County Commissioner Scott Metzger stated that his no vote was against the timing. He said that he felt now was not the right time to do this because of the current economic climate.
"I agree there is never a good time for reassessment," Wright said.
"If they put it off for another three years, something else could happen," she added.
She noted that the county had planned to do a reassessment in 2012, but canceled it due to legislative changes regarding flood insurance.
"Maybe we should have just continued with it, because 19 years is quite a long time," Wright said.