UPMC Presbyterian (Photo by Ryan Loew/PublicSource)
Pleas by Pittsburgh and Allegheny County officials for help from large nonprofit institutions have been hamstrung by a lack of leverage, but PublicSource’s series The Exempt Dilemma revealed a range of potential paths forward.
by Emma Folts, PublicSource
Pittsburgh’s “eds and meds” are economic drivers, but how does their tax-exempt status impact the city’s bottom line?
PublicSource has spent the summer seeking to answer that question, one rooted in years of debate that city and county officials have once again renewed. Here’s what we’ve learned.
The major nonprofits have billions of dollars worth of tax-exempt property.
Property taxes are Pittsburgh’s largest revenue source, but only 61% of the city’s property is taxable. Overall, the city’s five largest “eds and meds” – the University of Pittsburgh, UPMC, Carnegie Mellon University, Highmark/AHN and Duquesne University – paid taxes on about 7% of the assessed value of their property in the city, and 11% countywide, in 2021. If their remaining $4.3 billion in exempt city property was taxable, Pittsburgh would have collected an extra $34.5 million last year.
City Controller Michael Lamb and former Acting County Controller Tracy Royston have argued that greater financial contributions from the major nonprofits would lessen the burden that residential taxpayers bear for funding city services, such as police, fire and EMS. Property taxes are critical for funding these services, which the major nonprofits rely on just like residents do.
The major nonprofits have made investments in Pittsburgh. Four of the institutions have collectively committed $115 million over five years to fund city priorities through the OnePGH Fund, an independent nonprofit created in spring 2021 under former Mayor Bill Peduto. The organizations are also some of the region’s largest employers and provide charitable community benefits to Pittsburgh.
But the OnePGH contributions don’t flow directly to the city’s budget, and the pledged amount for five years nearly equals one year of what the nonprofits’ exempt property would otherwise provide the county, its municipalities and its school districts. As the city reckons with a future without the federal pandemic relief funding that has kept its budget balanced, the city and county controllers want to see these institutions make direct – and larger – payments.
“Huge non-profits that bring in millions or even billions in revenue and occupy some of the most valuable real estate in our region must pay their fair share,” County Controller Corey O’Connor said in a statement in response to questions from PublicSource.
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