(Photo illustration by Natasha Vicens/PublicSource)
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Without property tax exemptions and abatements, the five largest nonprofits in Allegheny County would contribute about $127.5 million more each year to local municipalities, the county and their public schools, according to a new report from the city and county controllers. Now, the two officials are teaming up to recommend a path forward for elected leaders to pursue greater contributions.
In a joint report released Tuesday, the controllers propose that Pittsburgh and the county seek long-term, voluntary payment-in-lieu-of-tax agreements from some nonprofits. Through these payments, known as PILOTs, nonprofits can help fund the public services that they use alongside residents, according to the report.
“When it comes to the city’s financial bottom line, they have to play a role,” City Controller Michael Lamb said in an exclusive interview prior to the public release of the report.
Though property taxes are Pittsburgh’s largest source of revenue used to pay for many municipal services, just 61% of property in the city is taxable. Exempt and abated property that is not government-owned accounts for 20.7% of city property, with an assessed value of about $6.7 billion.
As the city’s number of taxpayers has shrunk over the decades, its nonprofit, mostly tax-exempt hospital and university presence has grown, making it harder for the city to balance its budget.
Pittsburgh’s fire and EMS bureaus are grappling with aging equipment fleets. The city faces a large backlog of needed infrastructure improvements. Pittsburgh Public Schools had a budget deficit this past year and raised its property tax rate. Given that elected leaders want to avoid raising taxes, the controllers are asserting that revenue from major nonprofits will be critical in funding vital services.
“I think that we really need to begin to talk about our region as a whole and how everybody’s contributing and what everyone’s responsibility is,” said acting County Controller Tracy Royston.
In responses to PublicSource questions about their willingness to pay more, large nonprofits indicated that they already contribute to the community, but did not rule out doing more.
The federal American Rescue Plan Act has helped stabilize the city’s finances, but Lamb said he’s unsure if other revenue sources will grow to replace the funding in the next two years. He said the city now has a fresh opportunity to receive greater financial contributions from nonprofits due to changed public perception, a new mayor who is focused on the issue and new leadership atop UPMC.
Mayor Ed Gainey has had meetings with leaders of UPMC and Highmark/Allegheny Health Network, his press secretary Maria Montaño confirmed. But she offered no other information about the talks other than that they are ongoing and that Gainey aims to “ensure that everybody pays their fair share.”
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