HARRISBURG, September 6, 2011 – State Sen. Wayne D. Fontana announced today his intent to introduce legislation that would require non-profits to begin paying real estate taxes on the value of the land owned by their organization.

“It has become very clear – particularly in light of the ongoing dispute between the University of Pittsburgh Medical Center and Highmark – that there are non-profits out there with no concern at all about contributing to the common good or lessening the burden on government and taxpayers – instead it’s about their bottom line,” said Fontana. “In fact, UPMC’s president was recently quoted as saying the decision to no longer negotiate was based on the ‘realities of competition.’ If that is indeed the case, why should taxpayers pay more to boost any non-profit’s bottom line?”

The legislation would require all non-profits to pay on the assessed value of their land only (no buildings), but would exempt the first $200,000 of total land value. The exemption would not be on a per parcel basis, but would instead apply to all properties owned by the entity.

Fontana first started working on legislation to address ongoing issues and concerns with the lack of voluntary payment agreements between non-profits and their host municipalities in 2008. Since that time, there has been a steep decline in the amount of agreements, yet Fontana has stood by his belief that non-profits should pay their fair share. “Like most Pennsylvanians, the non-profit sector has been affected by the recession, but by stopping or decreasing these payments, the non-profit sector ends up putting an even greater burden on taxpayers. The system lacks uniformity – which is what the current law was supposed to fix.”

Fontana acknowledged that tax exemptions aren’t frivolous and that many non-profits provide services that the government would otherwise have to perform. In fact, many of these institutions are central to the revitalization of the communities in which they are located. Fontana’s legislation seeks to address the imbalance created by organizations where profit is clearly their driving factor. “We see non-profits in the community buying up real estate, expanding, getting bigger and bigger while making decisions that actually harm our communities,” explained Fontana. “Asking them to pay taxes on only their land value starts to address that inconsistency.”

A Senate Democratic Policy Committee hearing held last year on prior legislation raised several issues to be addressed in the legislation, and resulted in Fontana re-working the bill. Although not perfect, Fontana believes that the introduction of the legislation allows the General Assembly the opportunity to debate and discuss this issue with the input of all stakeholders and to make improvements that can resolve this issue once and for all.

The co-sponsorship memo for the legislation is currently being circulated in the Senate. Senator Fontana expects to file the bill for introduction before the end of September.

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