Is Non-Profit Payment Non-Attainable?

The idea was probably germinating for a long-time, but in September of 2009 the County Executive announced that he would be seeking $4 million from non-profit agencies in the County to help with the budget in 2011 (the Executive stated "it is not in my budget until 2011" and that requests would start with hospitals "because they’re the largest [nonprofits] in the region. It doesn’t mean we’ll stop there").

The line-item for the contribution did indeed make it into the 2011 County budget: in the section titled "Revenue by Object Code with Character Sub-Totals" under Local Unit Revenues there isa line item of $4 million from "non-profits", right below money from the Regional Asset District, the City of Pittsburgh, and the Airport Authority.

Last year as the 2011 budget was being assembled printed reports detailed the scant and secretive details. To the best of anyone’s knowledge that money is not available. In September it was reported that "No deal has been reached to provide those funds, but [the Executive] pledged that an agreement would be signed by year’s end and the money would be available for 2011. He declined to identify any of the nonprofits with whom his administration is talking". In November it was reported the Chief Executive "has been closed-mouth about the status of any negotiations with nonprofits, [but that Council’s finance chair] said he expected the money eventually would be there."

Now state-level changes (the state funds a healthy portion of law enforcement and health and welfare functions in all counties) mean a $15 million gap in the 2011 budget and the status of the $4 million from unidentified non-profits makes that shortfall even more pronounced.

Two Cities Steering their Pilot Programs: But to Where?

Like Pittsburgh (population 310k, 55 square miles), Boston, Mass. (population 609k, 49 square miles) is trying to get more money from its tax exempt properties, especially those properties owned by the health care and university community.

Here’s how some of the comparative data stacks up: Both cities have collected voluntary donations under PILOT (payment in lieu of taxes) payments for years. Recent data shows that Boston received about $13.3 million in PILOTs; Pittsburgh, during the recent years of Act 47 and the establishment of the Pittsburgh Public Service Fund, received contributions in the area of $14 million over the three year period of 2005-2007.

Keep this in mind that according to published reports and the Boston City Assessor’s office that the value attributed to that City’s health care and higher education institutions alone is $12.7 billion: by comparison Pittsburgh’s total exempt value (non-profits, government, etc.) was $7.7 billion in 2008. Pittsburgh’s taxable property value ($13.2 billion) is slightly higher valued than Boston’s exempt property.

Boston wants to have a gradual movement toward having the non-profit community pay up to 25% of their assessed value in a PILOT to the city. Pittsburgh’s recent approach was to propose a raft of fees, such as charging for water use and possibly hospital stays, before settling on the now dead tuition tax.

Both cities likely are quick to acknowledge that the non-profits deliver wonderful benefits but pay no taxes. It is also fair to say that it is likely that neither has conducted a study measuring all of the related costs and all of the related benefits from the non-profits to determine whether or not, on net, the city derives a loss or a benefit. Until that happens, the PILOT talk fails to achieve liftoff.

Tuition Tax—R.I.P.

The tuition tax, also known as the "Post-Secondary Education Privilege Tax", also known as the "Fair Share Tax" has been put to rest after weeks of almost coming up for a vote before City Council only to be temporarily shelved time and again. All along proponents had the necessary five votes and an opinion from an attorney that the tax would stand up to a court challenge.

So what comes next? Obviously the City is determined to obtain $15 million to put toward pension costs. According to early news reports on the tax being tabled, there is a collation of universities and colleges, along with some of the City’s corporate interests, that will work toward getting "significant legislation in Harrisburg". What could it be? Certainly an increase in the $52 Local Services Tax-levied on everyone who works in the City-would not help many of the same college students targeted by the tuition tax since many have jobs. And a boost in that tax would certainly be enabled for all municipalities (except for Philadelphia) since that’s what happened just five years ago when the last pieces of "significant legislation" were crafted for Pittsburgh.

All of this smacks of the "don’t tax me, tax the fellow behind the tree" mentality on the part of the college community-they won’t see a tuition tax, but would be perfectly fine with enabling a new or higher tax instead of holding the City accountable for its continued growth in expenditures in recent and coming years.

And what makes this coalition think that legislators would be agreeable to help? Just a few short months ago the City was a big part of the collapse of the initial plan for municipal pension reform (the City wanted exempted so as to pursue the parking garage lease plan). Now the "heavy hitters" want to return to the Capitol to pursue a new a pension solution? Good luck with that. What other revenue sources can there be? The City has obtained the RAD sales tax, payroll tax, casino money, etc. They need to take a much more hard line approach to their costs.