Suggests if incapable, should be privatized or absorbed into Revenue Department
Auditor General Jack Wagner announced Thursday his office found so many errors in the State Tax Equalization Board’s (STEB) revised property values for 2008 it brings subsequent reports and the impact on government aid and property taxes into question.
“While the system was never perfect it was stable and fairly reliable, as evidenced by the fact that there were few public complaints about STEB’s annual property market value reports,” said Mr. Wagner. “That changed with STEB’s 2008 report which contained sudden and inexplicable increases in many property market values when compared to the 2007 report.”
The STEB was created in 1947 by the General Assembly to equalize property value assessments across the state in order to calculate for more than $9 billion annually in school subsidies.
As the STEB’s calculations also impact taxpayer aid from the state government to local governments and school districts, miscalculations by the STEB can pressure municipalities and school districts into increasing property values incorrectly.
But Mr. Wagner said the errors’ impact to local school property taxes, which represent 60 to 70 percent of a Pennsylvanian’s tax load, would be impossible to calculate.
“What STEB influences is the school subsidy by state government to local school districts,” said Mr. Wagner. “The simple fact remains it should be right, it should be accurate, and we have no sense of confidence it is today.”
The Office of the Auditor General began its investigation into the STEB last July at the request of the General Assembly and by sampling 70 municipalities found “systematic” errors which Mr. Wagner attributed to human error, not political finagling to reduce state aid to local government entities.
“The State Tax Equalization Board… is a 1947 Hudson with a misfiring engine and a driver that may be asleep at the wheel. The road worthiness is in serious question in terms of this data and this information,” said Mr. Wagner.
Among the errors were: 21 municipalities were credited with sales of properties that did not exist, inaccurate property sales ratios used in the market value calculations for 15 municipalities and simple worksheet errors in 19 municipalities that led to incorrect market values.
Overvaluations for property values from 2007 to 2008 included a rise from $44 million to $98 million in Montour County’s Cooper Township and from $70 million to $103 million in Liberty Township. In Snyder County’s Penn Township, the aggregate market value increased from $189 million in 2007 to more than $228 million in 2008.
Twenty-eight out of Pennsylvania’s 67 counties have not reassessed market values since the 1980s, creating a large swing for the STEB to correct in its annual reports. Mr. Wagner said unless the STEB, which has an annual operating budget of $1 million and a three-member board, corrects the information in the 2008 and 2009 reports, Gov. Tom Corbett should consider abolishing it and either contracting the market value assessment out to a private firm or integrating the agency into the state Department of Revenue.
Dan Guydish, spokesperson for the STEB, said the agency is already taking steps to correct what it knows to be inaccurate data.
“We are in the process of purchasing and putting into effect a new computer system which will deal with the computer problems we have faced in the past two years,” said Mr. Guydish. “That program, according to reports, should be fully functional by June of this year.”
That is also when the next report is due to the school districts. Mr. Wagner argued the next three to four months called for urgent action on the part of the STEB, Mr. Corbett and the General Assembly.
“We are calling for the urgency for the governor, for the General Assembly to pay more attention to STEB and to bring some pressure on them to get it right…prior to impacting the 2010 market values that will be reported by STEB,” said Mr. Wagner. “They are gathering the information from last year already.”
Also in question is why the STEB released the 2009 property value assessment last fall when the auditor general had warned them they should review all of the data and when the chairman of the STEB board, James Zurick, said in an interview with the Sunbury Times on Nov. 24 “there isn’t a glitch in the system, it’s a total failure.”
“It was either stop everything and everyone is held up,” said Mr. Guydish, “or release the figures and if someone had a problem we would immediately attend to it and correct it. That is by no means what we feel is the ideal situation but what we had to work with the computer program we have it was the best option we had at our disposal.”
Mr. Corbett received Mr. Wagner’s letter and report Thursday morning.
“If STEB can do it, do it now,” said Mr. Wagner. “If not it’s time to take a whole new look at the paradigm by which we do this.”
