Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Pennsylvania Cities Take Fight to Tax-Exempt Institutions

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Pennsylvania Cities Take Fight to Tax-Exempt Institutions

Article excerpt


The interests of nonprofit institutions and Pennsylvania's financially struggling cities in which they often reside clashed Wednesday on the state Senate's floor, as Democrats decried tax- exempt protections as having spun out of control.

The debate coincided with Pittsburgh Mayor Luke Ravenstahl's announcement of two actions designed to force regional health system giant UPMC to pay tens of millions of dollars annually in local property taxes and city payroll taxes.

The Senate's debate and vote on a resolution to amend the state constitution were, in a sense, about two different things.

The resolution, which passed on a 30-20 vote, is designed to amend the constitution to let lawmakers decide what kinds of institutions qualify as "purely public charities" that are immune from local taxes -- a category that already includes hospitals, social service agencies, universities and houses of worship.

It was spurred by a state Supreme Court ruling last year that limited lawmakers' power to broaden the definition of a tax-exempt charity. Instead, the justices said the courts hold the constitutional responsibility to identify those boundaries and that a court-devised test for a tax-exempt charity remains in force.

Mr. Ravenstahl cited the court's ruling as his motivation, and said UPMC has failed the court's test, in part, by donating less than 2 percent of more than $5.7 billion in revenue to patients eligible for financial assistance.

"The reality of the situation is the taxpayers ... are currently subsidizing UPMC's nonprofit status," Mr. Ravenstahl told a news conference, the Pittsburgh Post-Gazette reported, and he noted that UPMC has closed facilities in struggling communities while opening them in affluent areas and foreign countries.

In a statement, UPMC contended that it is part of the health care safety net for the poor and uninsured and without it the responsibility could fall to the government and taxpayers.

The Republican sponsors of the Senate bill cautioned that, since the Supreme Court's ruling, the tax-exempt statuses for Warren Hospital, the Warren County YMCA, Habitat for Humanity and other nonprofits have already been revoked.

All 27 Republicans voted "yes," while three Democrats broke party ranks to vote with them. …

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