Confluence of Issues Enlivens Pittsburgh PILOTs Debate

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June 27, 2012; Source: Pittsburgh Post-Gazette

The Pittsburgh City Council recently held a special meeting to discuss the social and economic impact of nonprofits, a code for whether tax-exempt property owners should be subjected to all but mandatory payments in lieu of taxes (PILOTs) or even regular property taxes. The latter is a possibility due to the Pennsylvania Supreme Court decision in Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals. In that case, Pennsylvania’s high court concluded that a tax-exempt property owner that failed to meet the “purely public charity” requirements of the Hospital Utilization Project v. Commonwealth decision, referred to as the “HUP test,” might not be eligible to keep its exemption.

In Pittsburgh, however, the tax-exempt target of choice is almost always the University of Pittsburgh Medical Center (UPMC), which the Post-Gazette reported could provide some $35 million to the city, county, and Pittsburgh public schools if its tax-exempt properties were taxed.

The councilwoman who called the meeting, Natalia Rudiak, said UPMC didn’t accept her invitation to speak, but others did. Labor representatives testified to the low wages that UPMC pays and its “attempt to prevent them from organizing.” UPMC is the target of an organizing campaign sponsored by the Service Employees Industrial Union (SEIU), which makes the nonprofit hospital network less sympathetic to the blue-collar voters of Pittsburgh and Allegheny County.

Rudiak said that UPMC pays “service workers” less than $12 an hour while the city’s “living wage” is $25.40. The councilwoman described UPMC hospital workers she has met who can’t afford their medical bills due to their low wages and by recent patterns of UPMC furloughs.

Brad Korinski, the chief legal counsel to the county controller, attended the standing-room-only hearing to note that it’s too easy to get nonprofit status, and that this ease results in lost revenues to governing authorities. He told the assembled participants, “Now is the time to act.”

If anyone ever thought that the issue of collecting tax payments from tax-exempt property owners was purely about tax revenues, Pittsburgh will give you reason to think again. Based on the Rudiak hearing and its focus on the behavior of a large institution whose many low wage workers aren’t shy about union organizing in a 501(c)(3) work setting, the debate on tax revenues from tax-exempt owners can contain a political dynamic comprised of a confluence of issues. –Rick Cohen