Tag Archives: hospitals

A Collegial Relationship

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A few years ago, 2009 to be exact, the County’s tangled web of relations between itself and UPMC, the County’s role as the body that assesses property value and certifies that parcels exempt from real estate taxation really should be, the County’s role as promoter of economic development and leaning heavily on "eds and meds", and the County’s role as viewing itself as needing to intervene in matters such as UPMC’s decision to shutter the hospital in Braddock all intersected at one Council meeting, one that we wrote about then. That’s because on the same night that County Council decided it wanted to explore what UPMC owned and whether everything was deserving to be exempt (presumably as a tactic to scare UPMC into changing its mind) it had to decide whether the County-acting through its related Hospital Development Authority-would issue $1 billion in bonds on behalf of UPMC.

The issue of the Authority acting as a debt issuing vehicle rose again in 2011 when the UPMC-Highmark battle was at its apex. Again, we wrote about that debate and the $330 million borrowing request that, in case the County wanted to exert influence by not issuing the debt, another state level authority stood ready. The County did not issue the bonds.

So why bring these instances up? Because at the end of 2012 County Council held a hearing on UPMC which it promised would be the first of many on finding out if property owners classified as charitable and exempt really deserved all their exemptions. As an article today pointed out, the classification system the County has on exempt property is a mess, but tomorrow night the Council will take up business deciding whether its Higher Education Building Authority should issue over $80 million in debt for two private universities in the City of Pittsburgh and, after that, whether the Authority needs a new lease on "municipal" life, which amounts to fifty years additional. The County does not pledge its revenues or the state’s by issuing the bonds but it has the opportunity to make plenty in fees and payments. That’s the decision point it has to deal with when deciding if it wants its instrumentalities to help the institutions it is trying to get to act a certain way.

Poor City, Poor County

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Now, both the City of Pittsburgh and Allegheny County are pushing ahead with plans to pry money out of the non-profit community, which, by and large, means the institutions in the City.

Both governments are facing difficulties balancing their out-year budgets so they are flailing around looking for any source of potential revenue they believe they might be able to intimidate or shame into coughing up money. The irony could not be more complete.

Hospitals and universities are endlessly hyped in marketing and self-promotion literature as the great drivers of the local economies. And they are. A large share of net new job growth is traceable to health care and education.

After imposing tax, regulatory and labor climates that are inimical to private sector expansion, the two governments (assisted by costly school districts) find themselves in position where raising taxes is likely to be counterproductive. Quite a conclusion for big government advocates. So what’s left to do? Go after non-profits that might have some extra money lying around. The question: where will they go when they milk all they can out of those institutions and it also turns out to be self-defeating and counterproductive and when they find still do not have enough cash coming in to fund government?

Cutting spending comes to mind. But why not do the cutting now before more revenue chasing does more harm to the area’s economy?