On April 29, 2009, the Pennsylvania Supreme Court unanimously held, in a Majority Opinion written by Chief Justice Castille in Clifton, et al. v. Allegheny County, Nos. 20 & 21 WAP 2007 (PDF, 53 pages), that "the base year method of property valuation, as applied in Allegheny County [PA], violates the Uniformity Clause. We therefore agree that a countywide reassessment is required."
A Concurring Opinion was filed by Justice Baer.
The Majority Opinion framed the issue on its first page:
The present appeals call for us to consider the constitutionality of Pennsylvania’s property assessment laws.1The Pennsylvania Supreme Court agreed with the trial court as to the unconstitutionality of an indefinitely-applied base year concept as proven in Allegheny County, but did not require, as did the trial judge, annual market reassessments of real estate for taxation purposes, instead leaving the crafting of a constitutionally-acceptable, countywide real estate tax assessment mechanism to the legislature.
Presently, the assessment laws of the Commonwealth neither require nor do they prohibit periodic property reassessments, and thus they permit real estate taxes to be levied on property values that are based upon a stagnant “base year market value” for an indefinite period of time. Allegheny County has adopted such a base year system.
In a thorough opinion and order, the Court of Common Pleas of Allegheny County, per the Honorable R. Stanton Wettick, Jr., found that, because a base year assessment method that does not require periodic reassessments inherently causes significant disparities in the ratio of assessed value to fair market value, the Commonwealth’s property assessment laws were facially unconstitutional as they violate the Uniformity Clause of the Pennsylvania Constitution, A.CONST. art. VIII, § 1, which requires equality of taxation. * * *
[Footnote 1: When referring generally to “assessment laws,” we are referring to the General County Assessment Law, 72 P.S. §§ 5020-1 to -602, the First Class County Assessment Law, 72 P.S. §§ 5341.1-5341.21, the Second Class County Assessment Law, 72 P.S. §§ 5452.1-5452.20, the Second Class A and Third Class County Assessment Law, 72 P.S. §§ 5342-5350k, and the Fourth to Eighth Class County Assessment Law, 72 P.S. §§ 5453.101-5453.107]
[T]he Allegheny County scheme, which permits a single base-year assessment to be used indefinitely, has resulted in significant disparities in the ratio of assessed value to current actual value in Allegheny County.In beginning its examination of Pennsylvania's real estate tax assessment system, the Court reached all the way back to "ancient Egypt, Babylon, and Persia", through medieval England, and up to colonial America.
The disparity is most often to the disadvantage of owners of properties in lower-value neighborhoods where property values often appreciate at a lower rate than in higher-value neighborhoods, if they appreciate at all. * * *
The Court examined the post-1982 real estate assessment system in Pennsylvania, when "the assessment laws governing the different counties were amended so as to allow counties to utilize either a current market value method or to adopt a base year market value method in arriving at the assessed value of each property in the county."
The ruling was reported on April 30, 2009, in an article entitled "Court orders county reassessment -- Justices say taxation system is 'broken'" by Karamagi Rujumba, published by the Pittsburgh Post-Gazette.
The court cited examples of what has happened to property taxes in the Woodland Hills School District since the county implemented its base-year system. Between 2002 and 2005, for example, the court showed that property values in Braddock declined by 16 percent while they went up by 35 percent in Edgewood.
Justice Max Bear wrote a concurring opinion as the court returned the case back to Common Pleas Court where it asked "the trial court to determine Allegheny County's progress in executing a county wide reassessment and to set a realistic time frame for its completion."
As a result, the justices wrote, "Allegheny County is currently left with a broken system of property taxation." * * *
"We find no ineluctable constitutional deficiency with the use of a base year system: it is only through the passage of time that a base year assessment will become stale, and thus unconstitutional," said the court.
The article noted that, "[s]o far, this ruling has no effect on any other county that has a base-year assessment system.
The Supreme Court nudged the Commonwealth's General Assembly for real estate tax reassessment reform:
It is not our charge to determine what may be the best system of assessment. Nor is this Court capable of fixing a point in time at which a base year automatically becomes unconstitutionally non-uniform.The Court then issued its ruling:
As the trial court noted, the General Assembly is the appropriate place in the first instance to fashion a more comprehensive and soundly constitutional scheme. To that end, the trial court has provided a useful survey of the property assessment methods of our sister states, which shows that twenty-two of our sister states require annual reassessments, while twenty-six permit reassessments to be conducted at intervals over one year, though they still require periodic reassessment.
Pennsylvania is the only state where legislation allows the use of a base year indefinitely. * * *
Ultimately, our task is decisional, and Allegheny County is currently left with a broken system of property taxation.This case should nudge the Legislature to amend the assessment laws for reasonable, periodic countywide reassessments of property values used for real estate taxation.
In its effort to fashion a remedy, the trial court directed the Chief Assessment Officer of Allegheny County to conduct a reassessment no later than March 31, 2009, for use in the 2010 tax year, even if this Court had not yet issued a final order.
We agree that reassessment is required. However, recognizing that the passage of time may require adjustment by the trial court, we will remand this matter to the trial court to determine Allegheny County’s progress in executing a countywide reassessment and to set a realistic timeframe for its completion.