State Senate reviews nonprofit law
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State senators faced off with hospitals today in an early round of what could be a lengthy debate on how much nonprofit organizations pay to local governments.
The occasion was a senate fact-finding hearing in Pittsburgh Council Chambers on Act 55, the 1997 law defining nonprofit groups and their payments to governments.
"The act has worked very well," said Thomas Boyle, a lawyer for Buchanan Ingersoll & Rooney who represents hospitals including the University of Pittsburgh Medical Center. "If it ain't broke, don't fix it.
"To me, Act 55 has been a total disaster," countered Sen. Jim Ferlo, D-Highland Park. "The reason you're happy with the status quo is because you guys won out."
Mr. Ferlo said the state should craft a uniform standard governing how much big nonprofit institutions pay to host governments, perhaps based on how much property they own.
Sen. Patrick Browne, R-Allentown, said his Senate Finance Committee may "try to develop what may be amendments, changes, improvements" to Act 55.
Before 1997, municipalities routinely threatened to sue nonprofit organizations to challenge their charitable status if they didn???t make semi-voluntary contributions to government coffers.
"They were very public, sort of nasty disputes," said Mr. Boyle. "The effect of the act was like putting oil on water. It stilled the waters."
Mr. Ferlo said he'd rather see municipalities empowered to "go back to court and extract out of you big shots some real income" than to continue with the current system.
In Pittsburgh, Act 55 led to a gradual reduction in payments by nonprofit groups to the city, from $5.1 million a year in 1992 to $600,000 in 2003. In 2005, an umbrella group of charities agreed to pay $13.2 million over three years to help the city during a period of distress. This is the last year of that deal.
Mayor Luke Ravenstahl is trying to extend the agreement, under which some 100 organizations make payments. The organizations have sought to keep the amounts of their payments secret, but documents obtained by the Post-Gazette indicate that UPMC was the largest contributor for 2005, giving $1.5 million. UPMC recently reported a $618 million surplus from their last fiscal year.
City Finance Director Scott Kunka said the city forgoes $57.2 million a year in property, payroll and business taxes due to tax exemptions.
Big nonprofit institutions "need to come up to the plate a little bit more," said acting city Controller Tony Pokora.
First Published August 30, 2007 11:34 am