Clifton v. Allegheny County

Decision Date29 April 2009
Docket NumberNo. 20 WAP 2007.,No. 21 WAP 2007.,20 WAP 2007.,21 WAP 2007.
Citation969 A.2d 1197
PartiesJames C. CLIFTON, Charles and Lorrie Cranor, Husband and Wife, and Roy Simmons and Mary Lisa Meier, Husband and Wife, Appellees v. ALLEGHENY COUNTY, Appellant Kenneth Pierce and Stephanie Beechaum, Appellees v. Allegheny County, Pennsylvania, Daniel Onorato, Its Chief Executive, and Deborah Bunn, Its Chief Assessment Officer, Appellants.
CourtPennsylvania Supreme Court

Anthony T. McBeth, Esq., Robert L. Knupp, Esq., Knupp Law Offices, LLC, Harrisburg, for amicus curiae The County Commissioners Association of Pennsylvania (20 WAP 2007, 21 WAP 2007).

M. Janet Burkardt, Esq., Ira Weiss, Esq., Robert Maxwell Junker, Esq., Law Offices of Ira Weiss, Pittsburgh, for James C. Clifton, et al. (20 WAP 2007).

Raymond L. Billotte, for Court Administrator of Allegheny County (20 WAP 2007).

Michael Henry Wojcik, Esq., John Anthony Mulroy, Esq., Robert James Reith, Esq., George M. Janocsko, Esq., Allegheny County Law Department, for Allegheny County, et al. (21 WAP 2007).

Donald F. Driscoll, Esq., Kevin Lewis Quisenberry, Esq., Community Justice Project, Pittsburgh, for Kenneth Pierce and Stephanie Beechaum (21 WAP 2007)



Chief Justice CASTILLE.

"Controversies growing out of the assessment and collection of taxes are as old as civilization. To question the assessment, to doubt the levy, and to delay the collector may be classed among those inalienable rights of mankind not guaranteed by any Constitution, but very generally asserted under the law of human nature." Delaware, L. & W.R. Co.'s Tax Assessment, 224 Pa. 240, 73 A. 429, 430 (1909). The present appeals call for us to consider the constitutionality of Pennsylvania's property assessment laws.1 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, PA. CONST. art. VIII, § 1, which requires equality of taxation. In Judge Wettick's view, the only option for the County was an annual reassessment. For the reasons that follow, we disagree with the trial court's holding that the statutes are unconstitutional on their face. Nevertheless, for many of the same reasons cited by the trial court, we hold that the base year method of property valuation, as applied in Allegheny County, violates the Uniformity Clause. We therefore agree that a countywide reassessment is required and we remand this matter to the trial court for implementation of that mandate consistent with this Opinion.

I. Background

Initially measured by a tract of land's agricultural productivity, property taxes were regularly administered in ancient Egypt, Babylon, and Persia. Richard Henry Carlson, A Brief History of Property Tax, FAIR & EQUITABLE, Feb. 2005, at 3-4.2 In medieval England, each parcel of land was measured and had its value estimated, with the resulting property assessment and tax liability entered into the town's Domesday Book. In the Seventeenth Century, a hearth tax was administered in England and some of its colonies, which estimated a building's value according to the number and size of its hearths. In colonial America, revenue was raised by many colonies through a general property tax, which assessed the value of land, buildings, animals, and personal property; and while the tax rate was generally higher than it is today, properties were routinely under-assessed. Id. at 5-6. In the early United States, national property taxes such as the "window tax," which, in addition to a land tax, assessed real estate according to the number and size of a building's windows and doors, caused unrest and, at times, rebellion.3 With the development of a mercantile economy, and later an industrial economy, the property tax was supplanted, first by the excise tax, and later by the income tax. Id. at 5-8.4 Nevertheless, through the Nineteenth Century, property tax was the primary form of taxation at the state and local level. John Joseph Wallis, A History of the Property Tax in America, in PROPERTY TAXATION AND LOCAL GOVERNMENT FINANCE 127 (Wallace E. Oates ed.2001); see also John A. Miller, Rationalizing Injustice: The Supreme Court and the Property Tax, 22 HOFSTRA L.REV. 79, 83 n. 8 (1993) (describing origin of property tax in United States). While its primacy has faded with the implementation of local income taxes and sales taxes, the property tax has remained a primary provider of local tax revenues for, among other things, public schools, police and fire departments, and sanitation services. Wallis, supra, at 127-28; Miller, supra, at 83 n. 8; Stewart E. Sterk & Mitchell L. Engler, Property Tax Reassessment: Who Needs It?, 81 NOTRE DAME L.REV. 1037, 1037 (2006). For example, when the first comprehensive census of governments was completed in 1902, property taxes comprised 73% of all revenue collected by local governments. In 1992, the percentage was 40. Wallis, supra, at 123.

Today in Pennsylvania, property taxation is primarily used to raise revenue for the maintenance of the counties' public school systems, and is administered through a number of statutory provisions. See Pennsylvanians Against Gambling Expansion Fund, Inc. v. Commonwealth, 583 Pa. 275, 877 A.2d 383, 413 (2005) (citing Mikell v. Phila. Sch. Dist., 359 Pa. 113, 58 A.2d 339 (1948)). Relevant to the present appeal, Pennsylvania's property assessment laws are governed by both the General County Assessment Law, 72 P.S. §§ 5020-1 to-602, which contains provisions applying to all sixty-seven counties, and by statutes applicable to specific categories of counties, e.g., first-class counties, second-class counties, etc. Under this statutory regime, as with those preceding it, a county conducts property assessments in order to value a property and arrive at a basis for property taxation. Although based on a property's "actual value,"5 the value established by the tax assessors is referred to as a property's "assessed value." See BLACK'S LAW DICTIONARY 1586 (8th ed.2004) (defining assessed valuation as "[t]he value that a taxing authority gives to property and to which the tax rate is applied").6 Under the Uniformity Clause, countywide assessments must be uniform so that all property in each county is uniformly assessed. See PA. CONST. art. VIII, § 1. Such uniformity is more easily achievable in counties where all real property is assessed at 100 percent of market value, resulting in assessed values that are the same as actual values. Disparities in uniformity often occur where a property is assessed at a higher percentage of fair market value than other properties in the taxing district, causing assessed values and actual, fair market values to differ, often dramatically.

Prior to 1982, Pennsylvania's assessment laws required that each county assess real property every year based on its current fair market value — no doubt in order to avoid the disparity described above. Allegheny County was the only county then permitted to conduct triennial assessments. In practice, however, most counties did not comply with the annual assessment requirement. In 1982, 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. 72 P.S. § 5020-402. A "base year" is defined as:

[t]he year upon which real property market values are based for the most recent countywide revision of assessment of real property or other prior year upon which the market value of all real property of the county is based. Real property market values shall be equalized within the county and any changes by the board of assessment appeals shall be expressed in terms of such base year values.

72 P.S. §§ 5020-102, 5342.1.

Under a base year system of valuation, a county performs a countywide reassessment of all real property in the base year, and then uses each property's base year assessment as that property's basis for taxation in the base year, as well as its basis (i.e., assessed value) in subsequent years. Downingtown Area Sch. Dist. v. Chester County Bd. of Assessment Appeals, 590 Pa. 459, 913 A.2d 194, 202-03 (2006). In the base year, a property's assessed value may be 100% of its actual value, and thus, assessments of all real estate in the county are based on actual, fair market value for the base year. Each year thereafter, however, a given property's market value may change, but its assessment ordinarily remains static, fixed at its base year level until the next countywide reassessment. Id. at 203-04. This is so because a county utilizing a base year method of valuation typically does not consider market fluctuations subsequent to the base year when assessing "current value," or factor in variables such as improvements to a property that may increase its assessed value. If a building is constructed on a lot that was vacant during the base year, the property's assessed value is determined by...

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