Nonprofits get a free ride, controller says
Firms claiming nonprofit status should pay their fair share of taxes to cover transit, emergency, road and other basic services that Pittsburgh and Allegheny County governments are struggling to provide, County Controller Chelsa Wagner said in what she called a “taxpayer alert” released on Monday.
Wagner is the latest in a decades-long string of local elected officials to challenge the tax-exempt status that many of the region's largest employers and top universities have persuaded state legislators to protect.
“Residents are seeing their taxes go up and their services go down,” Wagner said. “We're saying the free riders need to be held accountable.”
Wagner wants the county's Office of Property Assessments to require nonprofits to apply every year for tax-exempt status by explaining why they deserve the tax break under the state's charities law.
County Executive Rich Fitzgerald said he's skeptical that any changes can be made without the state Legislature's approval, and he questioned why Wagner didn't introduce a bill to tax nonprofits when she was a state representative from 2007 to 2012.
“That's when she had the ability to do something about it,” Fitzgerald said.
State Sen. Wayne Fontana, D-Brookline, said he received virtually no support for a bill he introduced that would authorize local governments to tax nonprofits on the value of their land but not their buildings. It exempts the first $200,000 in assessed value to avoid burdening small nonprofits.
Wagner's report singles out the top five non-government organizations that are tax-exempt in Allegheny County: UPMC, University of Pittsburgh, Carnegie Mellon University, West Penn Allegheny Health System and Duquesne University. CMU, West Penn and Duquesne officials are reviewing the report but declined to comment.
Susan Manko, a UPMC spokeswoman, said the recovery of Western Pennsylvania's economy has been driven by nonprofit “meds and eds.” UPMC contributed $565 million in charity and uncompensated care last year, paid $176 million in federal and state employment taxes, employed more than 55,000 people who paid $118 million in state and local income taxes and pledged up to $100 million to the Pittsburgh Promise scholarship program, she said.
Wagner's office estimated that the county could take in $95 million from taxing about 26,500 tax-exempt parcels — enough to lower tax bills by $173 per property.
Pitt spokesman Robert Hill noted that assessed values on those properties are unreliable because nonprofits wouldn't appeal unfair assessments. He said the university does pay some real estate and other taxes and contributes to the Pittsburgh Service Fund.
That fund, a committee representing dozens of nonprofits, plans to contribute $2.6 million to the city in lieu of taxes this year and next.
Jeremy Boren is a staff writer for Trib Total Media. He can be reached at 412-320-7935 or [email protected].