No Humor for Nonprofits in Scranton Expected to Ante Up Payments in Lieu of Taxes

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November 26, 2011; Source: Times-Tribune | There is a lot of humor in “The Office,” the TV sitcom based on a paper firm in Scranton, Pennsylvania, but nonprofits won’t find many laughs in the Scranton municipal government’s plan to get nonprofits to make payments in lieu of taxes (PILOTs) to help the city cover a projected 50 percent cut in the municipal parks and recreation budget. The Times Tribune quotes the city’s recovery act coordinator, Gerald Cross, saying that it’s time for “nonprofits to step up to help the city to pay for parks.” Cross believes that “the nonprofit community [will be] . . . very receptive to targeted appeals” like this dedication of their PILOTs to parks and rec compared to asking them to contribute to the city’s general fund. The specific linking of nonprofit PILOTs to parks, Cross says, has worked in other cities. Mayor Chris Doherty thinks the PILOT-for-parks strategy will work because nonprofits “don’t want to pay for salaries,” suggesting perhaps that nonprofits are willing only to pay for capital expenses, or that they don’t get the need that they all know better than anyone for administrative costs such as salary and overhead.

Think of Scranton’s strategy this way. To pay for parks and recreation services (services that are probably in many cases carried out by nonprofits), the City is going to charge tax-exempt entities. It’s just about the equivalent of asking nonprofits to pay for nonprofits. The city assumes that dedicating the PILOTs to a nonprofit-like function like parks and rec will go down better than exacting contributions from nonprofits for the city’s unfunded pension obligations or other budget items (the City faces an overall $6.1 million budget deficit this year). The logic of the city’s position somehow eludes us, but it has convinced Cross (from the Pennsylvania Economy League) and Mayor Doherty. It would, on the other hand, make sense if it were part of the Dunder-Mifflin marketing strategy. —Rick Cohen