Pittsburgh city government has been trying to wrest money from local nonprofit organizations since the 1980s. One third of the land in the city is exempt from property taxes. Half of that is government-owned and the remaining half belongs to nonprofit, tax-exempt organizations. If it were taxed, the nonprofits’ property would generate more than $30 million per year for the city treasury. Yet the nonprofits receive all of the same city services as other businesses and individuals. 
Mayor Luke Ravenstahl and his four predecessors have always complained that it’s not enough. However, under the Internal Revenue Code, nonprofit corporations do not pay taxes. In exchange for that exemption, they follow thousands of regulations on their activities. City officials can complain all they want. They can not tax nonprofit organizations.
Granted, the hospital-university complex makes hundreds of millions of dollars in “profits” every year. It also draws thousands of visitors and millions of dollars to the city and its treasury. And those organizations have already paid about $15 million to the city voluntarily.
But there is a huge difference between Pitt-UPMC and your neighborhood community agency. A small social service agency operating on a shoestring budget simply cannot afford to contribute to the city. Most of them struggle to exist at all. Yet those agencies provide indispensable services to Pittsburgh’s poorest and most vulnerable residents.
Now, Ravenstahl is threatening to impose surcharges and fees on the nonprofits. Those fees might include a payroll tax on each employee and additional fees on water use, hospital patients, and university students.
While they might be technically legal, the idea of the fees is bad policy. The large nonprofits would not pay the fees. They would pass them on to the consumers – the students, hospital patients, and clients. The smaller agencies can’t pass them along and may have to close their doors. That’s a bad idea even in a good economy.
Instead of looking for ways to raise money by violating the law, Ravenstahl should enforce the laws that already exist. Pittsburgh should concentrate on its existing activities that generate money. Now I know that Oakland and some parts of South Side are parking nightmares. But we all know that we never have to worry about feeding parking meters on most city streets because no one ever checks them.
Look around. Other parking violations are everywhere. Sidewalks are broken. Most city neighborhoods are dirty, sloppy, and hazardous because the Bureau of Building Inspection doesn’t enforce regulations. Citizens have to beg the Department of Public Works to enforce snow and ice removal from sidewalks.
We enforce these laws through fines on the violators. Pittsburgh must enforce the laws, impose, and collect those fines. That would place responsibility on the people and businesses – and some nonprofits – who deserve it, rather than on those who don’t deserve it and can’t afford it. And it will improve Pittsburgh’s appearance, safety, and convenience for everyone.
I’d love to see some numbers on how much money the city could raise simply by enforcing its own laws. I’m sure it would put a dent in the debt. Pittsburgh needs to handle its own responsibilities first, before it begs for help from others. Then we can talk about how much more money they really need.
Comments
Very good points, Pat. This past week, the Greater Pittsburgh Nonprofit Partnership,which represents the smaller nonprofit and largely social service sector, voted to stand with the larger non-profits. The reality that these nonprofit organizations are given this status to supplant public services is a critical point. While they may have service costs they also provide significantly more in terms of the services they provide that would otherwise have to be met by government. That is why city efforts to tax nonprofits must go through the state that grants this special status.
Even the large nonprofits generate a huge economic impact - Oakland is the third busiest commercial hub in Pennsylvania behind downtown Philadelphia and Pittsburgh - by the patients, students, visitors, and staff to local business. What if Pitt stopped handling public safety in Oakland - it is the 3rd largest police force in Allegheny County, or paying for half of the city building inspector's salary. Jeesh!
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