Pittsburgh, like every other Pennsylvania city, is powerless to muscle any payments in lieu of taxes from tax-exempt organizations -- even those with grand offices, rich executive compensation and enormous surpluses.
It's all due to a 1997 state law that protects nonprofits and punishes municipalities. Until the Legislature addresses this costly imbalance, Pittsburgh and its peers will be forced to rely on the kindness of tax-exempts.
More than 100 tax-exempt universities, hospitals, health insurers, foundations, arts groups and religious organizations were kind enough, through the Pittsburgh Public Service Fund, to contribute $13.98 million in the last three years. Since it was $411,000 more than pledged, it was all the better for a financially distressed city with too much property that cannot be taxed to support public services.
Still, other cities in other states do better by their tax-exempt groups, and Pittsburgh, which is not out of the dark financial woods, deserves stronger support.
The consortium that runs the Pittsburgh fund is reconstituting its board and will resume negotiations with the city on a new voluntary support agreement. That's good news, as far as it goes.
Missing from most of the forthcoming renewal, however, will be one of the city's premier tax-exempt institutions, the University of Pittsburgh Medical Center. After contributing in the initial term of the fund, UPMC said it would provide one more year's aid but then focus on fulfilling its pledge of $10 million a year to the Pittsburgh Promise scholarship program. The plan is a worthy initiative and a city-supportive strategy to boost graduation from Pittsburgh Public Schools and with it, perhaps, even city residency.
UPMC's shift means other tax-exempts will have to step up and either become new participants in the fund or offer more support than they did as prior contributors. In a city known for neighbors helping neighbors, that should not be an onerous task, particularly given the financial largess of some tax-exempt organizations.
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.