One may think it's to their advantage to have their house assessed at a lower value because they will pay less in taxes, but it doesn't necessarily work that way -- it also doesn't necessarily translate to a good thing when you do go to sell your property. A reassessment is merely a redistribution of who pays what share of the total real estate tax for a county, school district and local government. If someone's tax bill is going down, someone else's has to go up to help make up the difference. Even if every property was assessed lower there would be people that pay more in taxes. The process determines what share you pay in comparison to your fellow property owners.
And, here in lies another problem in affixing new values now. It is critical that these values are right and can stand the test of time. The school district, the county and the local government is guaranteed the same total amount of tax revenue. Assessments are a cold, calculated numbers game. Data is fed into a model for 125,538 properties in Lehigh County. That data can only be as good as the current real estate market allows. Under the current model, 55 percent of property owners in Lehigh County will see a decrease in taxes, while 45 percent will see an increase. That sounds good on the surface. And, if this were an election, those are good numbers, but, remember, the total revenues to the taxing bodies remains the same, so if 10 percent of owners pay less tax, a significant amount more needs to be generated from the others to make up the difference. Let me give you some specifics from the current model.
• There are property owners -- homeowners, business owners and farmers -- who are slated to see a 50 to 100 percent increase in total real estate taxes (school district, county and municipality) in 2013. Same property; same services; new year. For some, this will mean $3,000 or more in new taxes for the same property. This may only be 1,000 property owners but, in my mind, if it's one property owner, it is too many. It's hard to believe that it's legal for an increase of that level to be put in place without a mechanism that allows for it to be implemented over a multi-year period of time.
• The current model also says another 11 to 12,000 property owners will pay taxes ranging from 15 to 45 percent higher. Ironically, we just spent more than a year -- and an entire election -- where the central issue was a 16 percent tax increase, which averaged $99 on just county taxes. This reassessment will increases all real estate taxes for those 12,000 owners from 16 percent to 100 percent. On average, county taxes are only about 18 to 20 percent of a property owners total real estate tax bill.
• Understandably, there has been a lot of focus and reporting on residential properties and the tax affect of this reassessment. About 57 percent of residential property owners will see a reduction in county taxes, about 43 percent an increase. Those numbers change when we look at the results of the model on farmland and commercial and industrial property.
• About 53 percent of those with vacant land, which is often farmland, will see an increase in taxes.
• 70 percent of those that own commercial and industrial property will see an increase in taxes. That includes most businesses, along with most apartment building owners.
These realities should give us pause as we put forward fairness as our justification for proceeding. In these economic times, a significantly higher property tax on business owners could hinder some hiring; an increase on apartment building owners is likely to be passed on to renters; and, higher costs for farmland could result in farmers deciding to sell off property instead of keeping it for open space or to farm. And, of course, a dramatic increase for a homeowner on a fixed income could lead to selling.