If colleges and universities don't want to be taxed on tuition, perhaps they'd rather contribute based on the property they own and the students they serve, Pittsburgh Councilman Ricky Burgess suggested yesterday.
In the wake of Mayor Luke Ravenstahl's Monday proposal of a 1 percent tuition tax, Mr. Burgess said that next week he'll introduce related legislation. He would have the city appraise higher education properties, estimate the costs of serving their students and press them for consistent, voluntary donations.
"They have to support our city and to participate in funding the services that are given to all of our constituents, including their students," said Mr. Burgess. If they don't want their students to directly bear the burden through a tuition tax, a voluntary payment "provides a vehicle for the universities to spread the pain" to other parts of their operations, he said.
The University of Pittsburgh, for one, "rejects any attempt on the part of the city to receive payments based on the value of the university's real property," said Pitt spokesman Robert Hill. "There's a reason we're tax-exempt, because of the public services we provide, educational services, a myriad of other services of value to city and its residents."
Asked for comment on Mr. Burgess' proposal, Mr. Ravenstahl issued a written statement saying, "I love the idea, in fact, would prefer it." But state law gives the city no leverage to pry payments from universities, he said, and the schools have "expressed little interest in voluntarily participating."
The mayor argues that the city needs $15 million annually to shore up its pension fund, plus $1 million for the Carnegie Library of Pittsburgh. He's turning to the schools because they own lots of tax-exempt property, and their students consume services while some pay no taxes.
A 2007 city controller's office study found that the University of Pittsburgh owned property assessed at nearly $1.4 billion, which would result in a $15 million city tax bill if the property were taxable. It also concluded that Allegheny County assessments on tax-exempt land aren't reliable.
Mr. Burgess would remedy that by contracting with property appraisers. He'd also work out what it costs the city to provide services to each of its residents, and extrapolate that to students. The two numbers would form the basis for negotiations on payments in lieu of taxes by the schools, which he hopes would lead to a prompt payment of more than $15 million, followed by a multi-year payment pact.
Long-term, the schools and city could jointly go to Harrisburg and lobby for legislation to reimburse municipalities for hosting big, tax-exempt institutions, he said.
Universities participated in the Pittsburgh Public Service Fund, in which tax-exempt institutions made $14 million in donations to the city from 2005 through 2007. For 2005, Pitt pledged $800,000, Carnegie Mellon University $250,000, and Point Park University $30,000, according to a list obtained by the Post-Gazette and never verified nor disputed by those schools.
The fund offered $5.5 million for the years 2008 through 2010, but the city has not accepted that.
An agreement by the schools to pay the city anything close to $16 million a year would be unprecedented. Harvard University is paying Boston and Cambridge, Mass., $1.9 million and $2.2 million, respectively, this year. The four higher-education schools of Providence, R.I., pay that city $2.5 million a year.
Rich Lord can be reached at firstname.lastname@example.org or 412-263-1542.