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Pittsburgh to Adjust Property Tax Rate to Account for Reassessment

Although the total value of all property in the city of Pittsburgh will rise from 2012 to 2013 thanks to Allegheny County's property reassessment, the city is legally required to collect the same amount of property taxes from last year to this year. That means the city must lower its property tax rate, and Pittsburgh City Council started that process Wednesday.

Pittsburgh City Council unanimously gave its first approval to the package of four tax-related bills introduced by Mayor Luke Ravenstahl. The measures, which lower the property tax rate by 30% and expand tax relief programs, are up for a final vote on Tuesday.

Pittsburgh Finance Director Scott Kunka told Council that the total value of property in the city jumped from $13.6 billion to $20.6 billion as a result of the countywide property reassessment. Because of the reassessment, Pittsburgh was required to collect the same amount in property taxes this year as it did last year -- that is, $126.7 million. Kunka said to get there, the mayor chose to not only reduce the millage rate for property taxes, but he also moved to increase the city's tax exemptions for homeowners and seniors.

"It's actually calculated to bring in a little less than $126.7 million," said Kunka. "So, I'm erring on the side of less revenue, given the state of the city's fund balance and the state of other revenues of the city, that should we fall a little bit short, we'll be fine. But it also protects the taxpayers to the maximum extent."

Specifically, the Ravenstahl plan would increase the Homestead Exemption. This tax relief program currently grants tax-exempt status to the first $10,000 of an eligible homeowner's total property value, so a house assessed at $100,000 would be taxed for $90,000. One of the bills in City Council would increase the Homestead Exemption from $10,000 to $15,000.

The package of bills would also increase the tax discount for Pittsburgh's senior citizens. The senior discount currently exempts 30% of the value of a senior's home, so a house assessed at $100,000 would be taxed for $70,000. The legislation would increase the discount from 30% to 40%.

The board of the Pittsburgh Public School District have take a similar vote to lower its millage rate by 30 percent.

Pittsburgh Law Department attorney Ron Pferdehirt said the Ravenstahl administration expanded the tax discount programs for homeowners as much as it could without attracting a lawsuit from non-residential property owners.

"Although technically the city is lowering the millage rate, the argument could be made that if the Homestead [Exemption] were increased dramatically, that the millage rate would not be reduced to the same extent that it otherwise might be reduced," said Pferdehirt.

The changes to the city's tax rates are especially beneficial for homeowners whose property value did not increase in the property reassessment. For example, a senior whose house was valued at $100,000 before the reassessment paid roughly $756 in city property taxes with the senior discount. If the reassessed value did not change, then the senior would now pay $453.60 in city property taxes under the proposed system.

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