Tuesday, December 18, 2007

Present Council Displays Moxie

Unless council and the school district approve the tax exemption, UPMC's deal to support The Pittsburgh Promise is off, said UPMC spokesman Frank Raczkiewicz. (Trib, Jeremy Boren)

Why not just announce the full terms of the deal all at once?

[Ravenstahl press secretary] Sirk said she didn't know why UPMC's tax-credit condition wasn't disclosed when the donation was announced with much fanfare on Dec. 5.

Ah. Of course, there's also this from UPMC's Raczkiewicz:

"We are willing to donate $100 million, but we don't want to pay $100 million and also have new taxes of $100 million," Raczkiewicz said.

Still sounding reasonable, we hate to admit.

Some state lawmakers have discussed amending state Act 55, which defines what constitutes a nonprofit and governs what taxes they pay, to let cities impose payments in lieu of taxes.

See, if it helps to engineer this happy outcome -- if it dampens UPMC opposition to such an amendment, while spurring the City to pursue it with vigor -- then we're all for it.

It is "inappropriate" for Ravenstahl to introduce the legislation so close to the end of the year, [Doug Shields] said. City Council will get three new members in early January.

Agreed. Now, apropos of nothing:

In a last-minute move, council approved an amendment creating a $10,000 trust fund for the city's Ethics Hearing Board. The board can draw on the money for legal assistance and other expenses. (P-G, Team Effort)

Woohoo! Trojan horse! Trojan horse!


  1. Bram: Despite news stories that claim that this has to do with theoretical future taxes if Act 55 is reformed, I've seen no clear statement that UPMC won't be getting credits on its current taxes, since a lot of UPMC's properties are already taxable.

    Even if it does only apply to theoretical future taxes, it is rotten: UPMC is still trying to insinuate the idea that it's somehow unjust for it to pay taxes. UPMC gets to choose where its "charitable donations" go, rather than paying taxes into the general fund like everyone else. (In that respect it's sort of like a TIF.) UPMC should live with the possibility that it may have to actually pay taxes or at least PILOTs if the legislature changes the law, and leave it at that, rather than getting to hedge its bets this far ahead of the game.

    Further, while it is true that it would take UPMC out of the game as a lobbying force on Act 55, the fact is that non-profits in general are still a powerful force at the state level. Pitt is probably a bigger tax-exempt landowner than UPMC, for instance. And you would still have the whole Hospital Association apart from UPMC.

  2. Bram: I may need to write a full-length post about this when I get the chance, but there are two more things of interest in today's PG article:

    (1) In the last sentence, Ira Weiss says that the agreement does not apply to UPMC's currently-taxable properties, so that question is answered. (Good.)

    (2) In the paragraph before the last, however, Weiss is paraphrased as saying that UPMC meets the definition of a public charity under current law, so that it is "unlikely anyone could challenge its tax-exempt status." Weiss is not quoted directly, but if these are pretty much the words he used, then this is Grade-A lawyerly dissembling. Of course no one is going to challenge UPMC's tax-exempt status under the IRS: that is a very high standard to meet, and I am unaware of any hospital or health system anywhere in the country that has been so challenged. But challenging an organization's tax-exempt status is a different matter altogether from challenging its tax exemptions. It is states who set the standard for tax exemption at the state level and govern the way municipalities set their own tax exemptions. So you can have a non-profit enterprise that pays no Federal taxes, but is still obliged to pay some local or state property taxes, and that is legal. It's just hard to do in PA because of Act 55, which also took the teeth out of cities' and school districts' efforts to extract PILOTs from big non-profits. But Weiss is not telling the whole truth if he's implying that we have to go whole-hog and challenge UPMC's entire tax-exempt status with the IRS if we want to tax them. We don't; we just need to change state law. Granted, that's a heavy political lift, but it is a political question and therefore subject to the democratic process, rather than a legal question where we'd have to challenge UPMC's status under a Federal law that clearly favors them.

  3. Say what you will about Shields, he's one council member who seems to be willing and able to take on the powers that be head on and call them on hair brain schemes that line someone eles's pockets at the expense of the people of pittsburgh. He did again this past week right on the heels of getting the domestic violence/police ordinance passed. No easy trick in either case.