Pittsburgh Mayor Luke Ravenstahl's administration yesterday 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 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 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.

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," Mr. Freeman said in a meeting with the Post-Gazette editorial board. "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 said 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 revenue, which is the maximum share allowed under the proposed formula.

Johnstown no longer gets the money from the Flood Tax. Nearly half of its land is tax exempt, qualifying it for funding under Mr. Freeman's proposal.

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

"Theoretically, it could pass this year," said state Rep. Don Walko, D-North Side, a co-sponsor who has worked on the issue of tax-exempt land for years. But he acknowledged it could take much longer.

Mr. Kunka said the city would continue negotiating with tax-exempt institutions for more of the 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 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 annually.