Tax exemptions cost Allegheny County governments $620M, auditor general reports
Allegheny County, its schools and municipalities may miss out on nearly $620 million in property taxes in part from nonprofits with tax-exempt status, far outpacing losses by other counties studied in a state auditor general report released Thursday.
Lawmakers in Harrisburg next year will consider a constitutional amendment that could change which charities receive tax-exempt status.
Auditor General Eugene DePasquale released the report to highlight $1.5 billion in property tax revenue potentially lost in the 10 counties examined before reform goes to a statewide vote.
“Pennsylvania is at a major crossroads in the decades-long debate over how to define and review the property tax-exempt status of nonprofit organizations,” DePasquale wrote in a statement.
Medical facilities, chiefly those of UPMC and Allegheny Health Network, accounted for 12 percent of the property taxes not paid, according to the report. UPMC did not pay $48 million. Allegheny Health Network did not pay $15.7 million.
Susan Manko, a UPMC spokeswoman, had not seen the report but said the health care giant in 2013 gave $887 million in community benefits, including charity care and care for the poor, community health programs and donations, and support for research and education. The city of Pittsburgh this year dropped a lawsuit against UPMC challenging its tax-exempt status.
Allegheny Health Network spokesman Dan Laurent said he could not comment on the report because he had not seen it.
“We are a nonprofit health care system that takes its charitable mission seriously and lives up to that commitment we make to the community we serve,” Laurent said.
The $619.7 million in taxes potentially lost to Allegheny County, municipalities and school districts is nearly triple the $230 million lost in Montgomery County, the next highest amount in the study. Beaver County’s loss is assessed at $50 million.
Other counties in the study were: Bucks, Dauphin, Erie, Lackawanna, Lehigh, Luzerne and Monroe.
The report did include government-owned buildings that do not generate tax revenue and did not take into account agreements in which charities make payments in lieu of taxes.
The Allegheny County Law Department has reviewed hundreds of tax-exempt applications in the past two years to determine whether nonprofits can keep their status, said Amie Downs, a county spokeswoman. Culling tax exemptions could net the county $800,000, officials said last year.
Pittsburgh Mayor Bill Peduto and his administration continue to have talks with major nonprofits on ways the organizations can invest in the city, said spokesman Tim McNulty. Nonprofits provided $5.2 million to the city in 2012 and 2013 as payments in lieu of taxes. Peduto would like to persuade nonprofits to contribute $20 million a year.
County and city officials are reviewing the report.
Aaron Aupperlee is a staff writer for Trib Total Media. He can be reached at 412-320-7986 or [email protected].