Pittsburgh Mayor Luke Ravenstahl's administration today endorsed legislation that would steer $240 million a year in state money to municipalities with large concentrations of tax-exempt property, including $24 million to Pittsburgh.

The endorsement came just before a morning hearing of the state House Local Government Committee in Council Chamber at which Rep. Bob Freeman, D-Northampton, outlined legislation to shift revenue from the Johnstown Flood Tax, an 18 percent levy on state liquor store sales enacted after the 1936 deluge.

"We think it's an innovative approach to a well-known, long-standing problem," said city Finance Director Scott Kunka.

Mr. Freeman said he wants to move the bill out of committee within months, after tweaking the formula for awarding the aid.

Municipalities "are failing, by and large, because they don't have a tax base anymore, and the biggest contributor to that is [growth of] tax-exempt nonprofits," he said in a meeting with the Post-Gazette editorial board prior to the hearing. "Since the inception of the [flood] tax was to help the victims of a natural disaster, it would be helpful to earmark it to victims of a municipal financial disaster."

Such a move would reduce the state surplus, he acknowledged. But he argued that it would keep more municipalities from slipping into Act 47 distressed status, as Pittsburgh has done, and thereby help the state in the long term.

He said Pittsburgh and Philadelphia each would get 10 percent of the flood tax revenue, which is the maximum share allowable under the proposed formula. Harrisburg would get $11.5 million, Mahoning Township $3.1 million, Easton $970,000, Gettysburg $702,000, and Clarion Borough $574,000, to name a few.

"This is a logical source of funding," said state Rep. Don Walko, D-North Side, a co-sponsor who has worked on the issue of tax-exempt land for years. "Theoretically, it could pass this year." But he acknowledged it prove to take much longer to resolve the decades-old problem.

Mr. Kunka said the city would continue along a parallel track of negotiating with tax-exempt institutions for voluntary contributions that totalled $13.98 million over the last three years. The Pittsburgh Public Service Fund, a consortium of some 100 tax-exempt institutions, has agreed to negotiate a new three-year deal.

A city controller's office audit last year found that eight institutions of higher learning and 14 health-care concerns owned $3 billion in untaxed property, on which they would otherwise have to pay $32 million in property taxes.