Pennsylvania Demands “Voluntary” Payments from Pittsburgh Nonprofits

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January 14, 2012; Source: Pittsburgh Tribune-Review | Here we go again! For the past few years, Pittsburgh has been one of the nation’s epicenters (along with Boston) for municipal government attempts to extract payments in lieu of taxes (PILOTs) from otherwise tax-exempt nonprofit property owners (see NPQ coverage of Pittsburgh’s PILOT controversies here, here, here, and here).

Now, Pittsburgh’s city government is in such a financial mess that the municipal budget has to be reviewed and approved by the state’s Intergovernmental Cooperation Authority (ICA). For its 2012 budget, the City Council wrote in an anticipated $3.2 million in “voluntary” PILOT payments from nonprofits, but there is no agreement in place with the 46 nonprofits that make payments through a coalition called the Pittsburgh Public Service Fund. In 2010, the Fund paid the city $2.6 million and pledged to pay about the same for 2011, though it is still more than $500,000 short of fulfilling that pledge.

As a result of the City Council’s amending its budget after the ICA’s approval, the ICA responded by rescinding its approval of the budget, citing the lack of discussions between the city and the nonprofits as one reason. The interesting dynamic now is whether the state will hold the city’s budget hostage to the nonprofits’ agreeing to pay $3.2 million, adding an extra layer of pressure on tax-exempt property owners agreeing to make all-but-compulsory “voluntary” tax payments.—Rick Cohen