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A $500,000 allocation to cover assessment appeal refunds in Luzerne County’s proposed 2019 budget is frustrating county officials.
“When is this long nightmare going to be over?” Councilman Harry Haas said during last week’s budget/finance division presentation, in reference to big-ticket commercial refunds.
County Manager C. David Pedri told Haas he shares the sentiment.
The administration ran a report showing the county should receive approximately $700,000 more in real estate tax payments in 2020, when tax breaks expire on 20 or so properties. However, Pedri said he expects some of these commercial entities will appeal their assessments and obtain reductions that will lower the expected windfall.
“So it looks like good news and bad news,” Pedri said.
County officials have been pushing for the closeout of multiple-year assessment challenges in recent years, particularly involving larger commercial sites, to minimize the hit to government finances.
Budget/Finance Division Head Brian Swetz said the $500,000 budget request is a reduction of 9 percent, or $50,000, from this year’s allocation.
The county paid $331,000 in refunds through Oct. 5, but Swetz said he said he is confident the expense will end up totaling at least $450,000.
Refunds cost the county $416,000 in 2017. Swetz noted the county spent more than $700,000 on refunds in 2014.
On average, 1,500 new appeals are filed annually, including both residential and larger commercial properties, county Assessment Director Anthony Alu told council.
“We feel $500,000 is realistic,” Swetz said. “We still have some outstanding commercial cases in addition to new property appeals,” Swetz said.
Pedri said the county must ensure funding is available to comply with larger court-ordered reductions, which often are reached through settlement negotiations between both sides involving appraisals.
Haas said legislators should explore the legality of barring tax break recipients from appealing their assessments after their breaks expire, describing post-break challenges as “doubly sinister.”
Alu said commercial and industrial properties often fail to pay attention to assessments until their breaks are nearing expiration, and they then point to years of structural wear-and-tear to bolster their argument that value reductions are warranted.
Commercial appeals also take more time to process, compounding refunds that date back to the date a challenge is filed, Alu said.
“I don’t think it will ever go away,” Swetz said of refunds totaling hundreds of thousands. “I think it kind of fell some and is going to stabilize.”
It should be noted that some properties coming off tax breaks do not receive reductions.
An example is the Cargill Cocoa and Chocolate manufacturing plant in the Humboldt Industrial Park in Hazle Township, which will return to the tax rolls next year, records show.
Representing the Hazleton Area School District, Attorney Raymond Wendolowski had filed a reverse appeal arguing the old assessment was too low. Through settlement negotiations, the property’s assessment ended up increasing from $17.2 million before the reverse appeal to a new $23 million.
Overall, the budget for Swetz’s division is set to increase from $3.1 million to $3.2 million. The division includes expenses for tax collection, property assessment and the treasurer’s office.
The only personnel change in the division this year was the addition of an assessor field investigator at a starting salary of $22,750 plus benefits.
Alu told council he is confident the position cost will be covered by revenue from additional properties added to the tax rolls through the efforts of the new employee.
The International Association of Assessing Officers recommends one field investigator per 10,000 properties. With 168,000 properties and seven investigators, the county has one for each 24,000 in properties, he said.
“It’s important we have the resources to go out there,” Alu said.