Democracy Has Prevailed.

February 26, 2007

Rich Lord on a Budget Problem

In today's P-G, Rich Lord has an article on one of the issues facing the city budget: the city's "Paynent in Lieu of Taxes" policy.

Figuring out how to pay for basic services while tax-exempt organizations control large blocks of land is a problem for cities nationwide.

Pittsburgh's solution has been to go hat-in-hand, asking nonprofit institutions to give the city whatever they can.

He then goes on to compare and contrast our city's policy with some other well known cities (New Haven, Cleveland, Philadelphia). The verdict?
That's a "unique" approach to a national problem, said Evelyn Brody, a professor of law at Chicago-Kent College of Law and author of the book "Property-Tax Exemption for Charities: Mapping the Battlefield." Pittsburgh is "relying on something voluntary," she said, when most cities "are looking for something more certain."
There was a deal in place between the city and a consortium called the Pittsburgh Public Service Fund. According to Lord, the group is made up of a little more than one hundred non-profits and had promised to make $13.25 million in donations to the city over three years.

Ending in 2007. And that's a problem.

But it's not the first time we've seen it.

Back in November, 2005 we saw a preliminary discussion of the city budget played out in the papers. And the gap between what the city could expect from the consortium was spelled out:
A consortium of nonprofit groups has said it doesn't plan to give the city money after 2007, but the city's plan counts on $5.7 million a year from such organizations through 2011.
Again, Rich Lord on the city budget beat.

To be clear, Lord's article isn't necessarily about the budget (and as proof, he doesn't reuse Councilman Peduto's oft-used phrase "phantom revenue"). It's more about how other cities have other solutions to the same problem. He does get some info from Peduto:

City Councilman William Peduto, a Democratic mayoral challenger, said the Connecticut model would be ideal, with the state paying a portion of the revenue cities lose to tax exemptions.

Barring state action, Mr. Peduto would like to see "a 20- to 40-year plan that focuses only on hospitals, universities and insurers." He would have them make payments based on the size of their payroll, just as for-profit businesses do.

Whatever the solution, it needs to be done right.


Richmond K. Turner said...

It might be worth mentioning that an earlier Lord article on this same topic was discussed last week over at The Comet. Bram did a really good job with it. He especially brought out the fact that Peduto has (once again) a coherent plan to deal with this issue while (F)Luke has (once again) notihng in mind apart from the status quo.

Mark Rauterkus said...

The way to deal with the nonprofit problem is to call it what it is -- a nonprofit opportunity.

The nonprofits are wonderful.

The nonprofits are a success. Pittsburgh is a success. We all win.

Now that the obvious is out of the way -- (tip FYI, they can't tax nonprofits) -- we need to get the nonprofits to agree to curtail all future expansion into a bigger footprint.

I would strike a deal with the nonprofit weenie group to insist that a detailed inventory of space be conducted. I want to know how many inches of land these nonprofit folks control / own.

Then I'd insist upon yearly progress -- and a plan -- to shrink that space.

Nonprofit consolidation needs to occur. We don't need them sitting on idle land.

And when one nonprofit wants to grow its footprint, growth should occur only if another nonprofit makes an equal or greater contraction. Or else, growth of nonprofits could always occur upward. Hint: Build taller buildings.

Nonprofits should be leveraged so as to improve upon Pittsburgh's density.

Last week's example of the Cathedral of Learning by acting controller Tony P was insane. Those were foolish remarks by Tony P.

Finally, the nonprofit universities should do property inspections on behalf of their students / customers. Not the city.