Property Taxes and PILOTS

Articles 
PANO Updates

Articles 
 

• The Pittsburgh Promise's first lesson, Pittsburgh Post-Gazette, By Brian O'Neill, 12/30/07, Page 2.
• UPMC announces $618 million profit, fends off critics, Pittsburgh Tribune-Review, Rick Stouffer, Aug 24, 2007,
• $618M is a pretty tidy 'non'profit for UPMC, Pittsburgh Tribune-Review, Eric Heyl, Aug 24, 2007, 
• IRS Releases Hospitals and Community Benefit - Interim Report
• "No relief: Shifting state money only bails out rich nonprofits”, Pittsburgh Post-Gazette, editorial, 11/19/07 .
• “Allegheny County may ask nonprofits to fill gap”, Pittsburgh Tribune-Review, 11/20/2007, by Mike Wereschagin
• ”Ferlo calls for end to one of city's state overseers”, Pittsburgh Post-Gazette 11/08/2007, by Rich Lord
• “Pennswood Village granted tax exemption”, Bucks County Courier Times, 11/14/07 by Rachel Canelli. (But will pay nearly $500,000 in PILOTS until 2020.)

PANO Updates

3/7/08 Public Hearing: The PA House Local Government Committee will hold a public hearing on Friday, March 7, 2008, 10:00 am in Pittsburgh to discuss House Bill 2018 to create the Tax-exempt Property Municipal Assistance Fund (the State-paid PILOTs bill) that would create an annual revenue sharing program for distressed municipalities with high levels of tax-exempt property.  The hearing will be held at the City-Council Building, 5th Floor, City Council Chambers, 414 Grant Street, Pittsburgh, PA.  Testimony will be heard from Scott Kunka, of the City of Pittsburgh, Curtis Davis of the City of Johnstown, Rich Herman and Nancy Freenock of Clarion Borough, Robert Lucas of City of Sharon, James Nowalk  of the Pennsylvania State Mayors' Association; and from the Committee,  Rep. Robert  Freeman (Chair) and Rep. Don Walko. 

3/7/08 The Pittsburgh Public Service Fund is a group of over a hundred Pittsburgh nonprofits who for the past three years, have been paying $13.57 million in voluntary contributions in-lieu-of property taxes to assist the City of Pittsburgh with its fiscal crisis. Last month’s final payment of that three year agreement exceeded the Fund’s promise by $411,000, bringing the total paid to $13.98 million in PILOTs (payment in-lieu-of taxes). See Tax-exempt groups exceed 3-year pledge to city, offer more, Pittsburgh Post Gazette, March 1, 2008, by Rich Lord. http://www.post-gazette.com/pg/08061/861722-53.stm. 

Currently, the Public Service Fund is reconstituting its board and will resume negotiations on a new voluntary PILOTs agreement with the City. With UPMC contributing $10 million annually to the Pittsburgh Promise scholarship program, some are concerned that smaller charities will be asked to make-up the difference. According to the Pittsburgh Post-Gazette, “The alternative is state legislation that sets a formula for real payments in lieu of taxes. While Pennsylvania cities bogged down by the inability to tax wealthy "nonprofits" would love to go there, we suspect the nonprofits would not.” Measure of help: The city deserves more support from tax-exempts, Pittsburgh Post-Gazette online Opinion, March 6, 2008. http://www.post-gazette.com/pg/08066/862815-192.stm. 

2/20/08 PANO testifies at State Legislative Hearing in support of State-Paid PILOTs bill. This bill would enable to State to compensate hundreds of distressed municipalities that have greater than 17% tax exempt property within their borders. David Ross, PANO Public Policy Officer, testified that this bill would encourage cooperation between charities and their local communities by relieving tensions over PILOT (payments in-lieu-of taxes) agreements.

2/19/08 House Committee to Hold Public Hearings on State–Paid PILOTS Bill. On February 19 and 20, the House Local Government Committee will hold hearings on legislation to establish the Tax Exempt Property Municipal Assistance Fund. Representative Freeman’s bill (HB2018) would provide for an annual revenue sharing program for municipalities that have high percentages of tax–exempt property.

11/14/07 Freeman Bill Introduced; State Would Cover Costs for Tax-Exempt Property. On November 14, 2007, Rep. Freeman introduced HB2018 to compensate municipalities with high concentrations of tax exempt properties. The Freeman bill would tap into the State’s $240 million annual revenue stream from the 1936 Johnstown flood liquor tax. This money would compensate municipalities with at least 17% of the land not on the tax rolls for as much as $36 million a year. For the bill history go to http://www.legis.state.pa.us/WU01/LI/BI/BH/2007/0/HB2018.HTM. 

11/14/07 Rep. Freeman (D-136) bill offers a remedy to Act 47 municipalities. HB2018 (PN2846) provides $240 million from old State liquor tax to compensate any municipality with 17 percent or more of its total assessed property value exempt from property taxes. Bill text posted at http://www.legis.state.pa.us/WU01/LI/BI/BH/2007/0/HB2018.HTM. 

11/13/07 Press release & analysis of HB2018

11/12/07
Rep. Freeman- (D-Northampton, Easton)- plans to unveil legislation he will be introducing next week (Nov 13, 2007) that would provide funding to municipalities with high levels of tax-exempt property. http://www.pahouse.com/PR/136110907.asp. 

Rep. Curry-(H.R.459) - Resolution directing the Legislative Budget and Finance Committee to study the fiscal impact of tax-exempt properties on the finances of municipalities and school districts; to review the policies of other states in addressing the burden of limited tax bases as a result of tax-exempt properties; and to make recommendations on ways to assist tax authorities with a high concentration of tax-exempt properties. Introduced in the House on October 18, 2007 and referred to House FINANCE Committee. 

11/7/07 Senate to Hold Act 47 Hearing in Pittsburgh Nov 8 On Fiscal health of Distressed Cities in PA. On Thursday, November 8, 2007 at 9:00 am, the Pennsylvania Senate Urban Affairs & Housing Committee will hold a public hearing to examine Pennsylvania Act 47 of 1987 and the fiscal health of distressed cities in Pennsylvania. Hearing will begin at 9am in the City Council Chambers of the City-County Bldg, Pittsburgh, PA.

State Senator John Pippy (R-37 Allegheny and Washington Counties), chairman of the Senate Urban Affairs and Housing Committee is hosting a series of public hearings on the fiscal health of Pennsylvania's cities and Act 47 of 1987, the Municipalities Financial Recovery Act and the fiscal health of distressed cities in Pennsylvania. Act 47 is the 20-year-old state law designed to help stabilize the finances of Pennsylvania’s distressed cities. These hearings are designed to identify causes, and offer solutions. While the Committee has not targeted charities tax exemptions, the Committee will address the role of nonprofit tax exemptions a it related to a diminished urban property tax base.

The Brookings Institution, the Pennsylvania Economy League and Penn State University recently issued a joint report citing the shortcomings of Act 47 and the need to examine challenges faced by Pennsylvania's cities. The Committee’s first public hearing was held in Harrisburg on May 23, 2007. For the Senate Urban Affairs & Housing Committee go to http://www.senatorpippy.com/urbanaffairs.htm.  For transcripts of the September. 20, 2007 Allentown hearing go to http://www.senatorpippy.com/UACnews/9-20-2007-Allentown.htm. 

8/30/07 PANO Testifies at State Senate Hearing on Act 55, Charities Contribution. On August 30, 2007, Pittsburgh attorney and former PANO Board Member, Jack Owen, testified on behalf of PANO before the Pennsylvania Senate Finance Committee public hearing on Act 55 of 1997, Pennsylvania's Institutions of Purely Public Charity Act. The Pittsburgh hearing is part of a statewide fact-finding tour to review the impact and adequacy of Act 55 after 10 years of the law being in effect relatively unchanged. Jack Owen testified that Act 55 helped to build Pennsylvania’s dynamic community of 61,000 charities employing over 650,000 full-time workers (1 of every 9 in Pennsylvania’s workforce). The Act was designed to reduce costly litigation and provide uniform and clear rules by which charities could receive property and sales tax exemptions. It is PANO’s position that Act 55 works, continues to help charities promote the quality of life in our communities. For a copy of the August 30, 2007 Pittsburgh hearing Agenda and the testimony, go to http://www.senatorbrowne.com/finance/083007/083007-agenda.htm.   For the March 14, 2007, Harrisburg public hearing Agenda and testimony, go to  http://www.senatorbrowne.com/finance/031407/031407-agenda.htm.

6/21/06 House Passes Property Tax Reform Bill; Senate Approved; goes to Governor for Signature. June 14- House adopts [Special Session HB 39] Conference Committee Report reducing property taxes for low-income senior citizen homeowners. The Senate signed the Report on June 19. The bill moves to the Governor for signature. The Governor has stated publicly that he intends to sign it. Pennsylvanian’s can expect sharper reductions in their property tax through a shift to local earned income and personal income tax increases.

While proponents argue that the bill is a significant step toward real property tax reform in PA, opponents argue that the bill is misses a significant opportunity to achieve real tax reform. For a copy of the bill go to http://www.legis.state.pa.us/WU01/LI/BI/BT/2005/1/HB0039P0093.HTM.

3/24/06 Local Governments seeking PILOTS from Charities. Last week, Erie City Council Approved a proposed 3% Amusement tax on Admission fees on all events including Nonprofit Arts events.  Museums and symphonies will face decreased revenues, increased operating costs, and decreased attendance. 

Scranton city Council President Gatelli pushes for nonprofits to make payments in leis of taxes. In 2005, Scranton collected $166,200 from non-profits, but most of it came from the University of Scranton.  While, nonprofits are property tax exempt in PA, some municipalities have looked to nonprofits for voluntary payments to the communities where they are based.  Unfortunately, this can adversely effect charities' ability to provide programming.  Scranton Council president Gatelli said that she intends to ask every nonprofit in the city to make some voluntary payments. 

The City of Pittsburgh has been requiring payments in lieu of taxes from nonprofits because they have received distressed city status.  The City of Pittsburgh is finally in the black again, but is still requiring PILOTS.

PANO will continue to monitor these issues and offer updates.  If your community is considering PILOTS, please contact David Ross at PANO at david@pano.org.