Given how a left-wing think tank out of Harrisburg has released a “report” yet again shilling for Pittsburgh and it “big five” nonprofits to enter into PILOT (payments in lieu of taxes) programs, we thought it quite appropriate to return to a Jan. 29, 2025, “At Large” that soundly refuted the PILOT mentality once and for all.
Unfortunately, some have chosen to ignore the facts of the matter originally set forth below:
Those of a certain generation or two might think The Beatles have been resurrected, for all the “yeah, yeah, yeahs” of those pushing yet again for a Pittsburgh “PILOT” program.
“PILOT” stands for “payment in lieu of taxes,” considered by more than a few – from government, to the private sector, to academia – to be “the way” to replace at least part of the taxes not paid by tax-exempt properties.
Think hospitals, colleges, universities and other nonprofit organizations.
PILOT programs are only “fair” to make such entities pay for the public services they consume, proponents contend. But as Jake Haulk, president-emeritus of the Allegheny Institute for Public Policy, has been cautioning for decades, there continues to be a key point that is overlooked:
“Pittsburgh has a revenue problem because it spends far more per capita (42 percent ) than comparable benchmark cities and raises far more in revenue per capita (37 percent) than those benchmark cities,” the Ph.D. economist reminds.
Moreover, Haulk notes that Pittsburgh Public Schools spend $30,000 per student per year, far above the state average of $19,144 (and with consistently poor, if not putrid, results).
Then there’s the mass transit system, Pittsburgh Regional Transit, with costs per rider far higher than other cities, some far larger. And, lest we forget, Pittsburgh International Airport, which is more costly per passenger than airports in similar markets.
“Pittsburgh’s problem is not lack of revenue,” the think tank scholar reiterates. “It is drowning in legacy costs,” pension and other employment benefits, and other post-employment benefits (OPEBs) other than pension distributions, such as paid health and life insurance, and deferred compensation.
Then there’s overstaffing.
“Long-term population declines have not been matched by employee reductions,” Haulk adds.
“The fundamental problem is the domination of Pittsburgh and Allegheny County by liberal politicians with their extreme fealty to unions and, more importantly, to the powerful government worker unions,” he says.
So, are PILOTs always and automatically nonstarters? Not necessarily, Haulk says.
“The only reason to discuss the possibility of implementing PILOTs is in the context of dollar-for-dollar reductions in other taxes and fees affecting the prospective PILOT payers.”
And Haulk says that [former] Pittsburgh Mayor Ed Gainey’s efforts to push unionization on private entities [was] “antithetical” to any effort to make the city more attractive to the business community.
“Given the decades-long decline in population and the resulting huge overhang of legacy costs per capita, the city needs to be looking for ways to cut spending rather than complaining about needing more revenue,” he concludes.
Thus, PILOTs certainly are no panacea. And, in reality, they stand to only exacerbate spending by enabling and emboldening government spendthrifts to keep plying their odoriferous ways.
While seriously undermining the important missions of nonprofits — Pittsburgh’s “big five” and others — by reducing the amount money they have available to do so, we remind.
And as Frank Gamrat, executive director of the Allegheny Institute, notes in a critical point of order: “These five provide a significant number of jobs and economic opportunity for the residents of the city and county.
“No one ever mentions that if the city were better stewards of the public money they currently get, they wouldn’t be in this mess in the first place,” the Ph.D. economist stresses.
“This is nothing more than cherry picking a topic to divert attention from the real problem—gross mismanagement of the city and county for years,” Gamrat concludes.
And that’s why there must be a ground-stop for this PILOT.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
