HARRISBURG, NOV. 23, 2009 — State Sen. Wayne D. Fontana and Rep. Timothy J. Solobay began circulating a co-sponsorship memo today to colleagues urging their support of legislation that would amend the Institutions of Purely Public Charity Act to allow political subdivisions to enact an essential services fee on tax-exempt organizations that own property within the municipality.
While acknowledging that the bill will require considerable amendment before passage, the members intend the bill as a starting point for a dialogue at the state level about the impact of tax-exempt real property on the fiscal health of Pennsylvania municipalities, “There is a delicate balance between addressing the financial concerns of these municipalities with large amounts of tax-exempt properties and not harming those institutions that are often central to our cities’ revitalization,” said Fontana. “The City of Pittsburgh and Allegheny County, which I represent, continue to struggle with the issue as do many other municipalities in this Commonwealth. The bill isn’t perfect, but can allow us to debate and discuss this issue with the input of all stakeholders at the state level where it should be happening.”
The bill would allow municipalities the option to continue with existing voluntary agreements, to impose a fee based on total square footage of properties, and do establish a limited real estate tax for properties owned by institutions of purely public charity moving forward. The legislation was introduced as Senate Bill 1328 last year and was referred to the Senate Finance Committee where it remained until the expiration of the legislative session.
“It isn’t just big cities affected by tax exempt real estate properties,” said Solobay, D-Washington. “We have similar issues in the City of Washington and Washington County which I represent as the number of tax exempt properties grows and the burden of paying for services falls on the shoulders of property owners who do pay taxes. The intent of this bill is to help combat this problem by having non-profit/tax exempt entities pay a partial tax.”
Both the City of Pittsburgh and the County of Allegheny recently proposed legislation that would have an impact on non-profits in their community. Pittsburgh’s Mayor Luke Ravenstahl has proposed a 1% levy on post-secondary school tuition. It has been met with great resistance from colleges and universities in the City as well as throughout the Commonwealth. Allegheny County’s Chief Executive Dan Onorato recently vetoed a County Council proposal that would have created a “tax-exempt certification and essential services fee” for certain properties on which nonprofit organizations currently pay no taxes.
Senator Fontana and Representative Solobay are urging their members to co-sponsor the legislation as a way to show their interest in beginning a discussion on this issue. The bills are expected to be submitted to the respective Secretaries for introduction on Monday, December 7th.