How Much Revenue is Lost Due to Charitable Property?
If you read a recent opinion piece, and one not long before that, you might think it is $1.5 billion. That comes from the December 2014 report by the state Auditor General’s office in which the office collected data on ten counties in the state, including Allegheny County and Beaver County in southwestern PA.
The most recent opinion piece stated that “[the Auditor General’s report]…made it clear this past December when he reported that PA taxpayers lose $1.5 billion each year in property taxes because of tax exemptions to a few large non-profits in just ten counties”. Before that a column noted that the analysis “… $1.5 billion in property taxes was not paid in these counties by organizations with charitable status”.
The only problem is that the report never said that the tax revenue “lost” due to tax-exempt charitable organizations or non-profits was $1.5 billion. In table 2 of the report, titled “Tax Exempt Properties, 2014″ it notes ” Table 2 looks at…government owned properties, K-12 schools, churches, charitable organizations, hospitals, and higher education institutions.” That means when the millage rates from the counties, municipalities, and school districts in the ten counties sampled by the report is applied to the total value of exempt property a dollar value is obtained, and that is called “total potential property tax liability” in the table, and, when totaled for the ten counties, a figure of $1.5 billion is obtained.
In fact, the only specific category of exempt property the report shows is in Table 3 “Medical Facilities with Purely Public Charity Status, 2014” that the “total property tax liability” in the ten counties was $177 million–if indeed the medical facilities were all deemed to become taxable. Not a small amount, but only a fraction of the $1.5 billion in the piece. That means the remaining $1.3 billion has to be accounted for by other classes of property. Without the other categories separated out we cannot compare the liability to state owned universities, community colleges, authority-owned property, etc.
In Allegheny County–one of the counties in the sample–total tax exempt property was valued at $24 billion in 2014, while medical facilities with public charity status totaled $3.1 billion. When the County’s real estate millage of 4.69 is applied to these assessments, the County would reap either $116 million or $15 million. If the County had its choice between the two it would probably choose the former, but that would require alot of other types of exempt property to become taxable.