Opinion

PILOT Error

By September 17, 2019 One Comment

Pittsburgh Mayor Bill Peduto. (Current photo by Jake Mysliwczyk)

By Kierran Young
Pittsburgh Current Political Columnist
info@pittsburghcurrent.com

 

UPMC, University of Pittsburgh, Carnegie Mellon University and Highmark are 4 of the largest nonprofits in Pittsburgh who are tax-exempt. Combined, the “Big 4” own billions of dollars in tax-exempt property and occupy approximately 1,000 acres of land across the city 

While the City of Pittsburgh is experiencing economic stagnation, you would think asking nonprofits to contribute payments in lieu of taxes (PILOT) to help offset the cost of providing public services to them doesn’t seem at all unreasonable. The City’s financial future is at stake, after all, as these nonprofits continue to expand and scoop up more land that will ultimately be tax-exempt.

Property taxes fund law enforcement, fire management, emergency services, garbage collection, paving city roads, infrastructure, water and sewer services, just to name a few. These nonprofits impose a cost by consuming public services. If a fire breaks out, or a burglary occurs or some other crisis arises, the City is responsible for providing emergency services to these entities.   

In 2014, upon assuming office, Mayor Bill Peduto and his staff met with officials from UPMC to discuss how to get the largest non-governmental employer in Pennsylvania (87,000 employees), and Allegheny County’s largest property owner (656 acres and 1.6 billion in land and buildings) to pay its “fair share” into the city budget. However, in 2013 former Mayor Luke Ravenstahl took UPMC to court to try and take away its tax-exempt status and collect payroll taxes. UPMC immediately fired back with a federal lawsuit alleging it was unfairly singled out in violation of its due-process rights. Against this backdrop, Peduto said it was tough negotiating with “guns pointed at each others’ heads,” and decided to take a “leap of faith” and cease legal action against UPMC. After that, UPMC dropped its federal suit.

If UPMC were to pay taxes on the land they presently own, the City would have brought in hundreds of millions of dollars in additional revenue. That would have been a huge boost to the city’s $488 million budget. Prior to Peduto becoming mayor, there was a PILOT program in place that he scrapped as a “show of good faith” to UPMC. In 2014, Peduto said future discussions will focus on “other opportunities to really become a good neighbor” that could include housing developments, job training or youth programs. 

But that was a tune completely different than the one Peduto was singing in 2007. In December of that year, then-Mayor Luke Ravenstahl reached an agreement with UPMC to pledge $100 million in matching funds over 10 years to fund the Pittsburgh Promise scholarship program. A day after the Promise was announced, Ravenstahl informed Pittsburgh City Council, of which Peduto was then a member, that in order to secure the Promise dollars, the city had to agree not to seek any additional dollars. 

Pittsburgh Current Editor Charlie Deitch wrote this at the time: “Councilor Bill Peduto [said] UPMC’s gift to the Pittsburgh Promise should have no bearing on payments to the city.

“The Pittsburgh Promise is not the city of Pittsburgh,” Peduto said. “The Pittsburgh Promise is a charity the same as the Salvation Army or the Jubilee Kitchen. If we approve this, we’re setting a dangerous precedent. It’s the same thing if Giant Eagle goes out and feeds the poor and then says, ‘We don’t have to pay our taxes.'”

Even after taking office in January 2014, Peduto wrote to Gov. Tom Wolf, “We must develop a sustainable stream of compensation for the services that our city provides to large nonprofit institutions so that we can achieve the other measures of fiscal health laid out above without raising taxes on our residents,”

But by July 2014, he had apparently changed his mind. Instead of holding UPMC accountable, Peduto gave up the fight and sold out thousands of Pittsburgh residents that have been demanding that UPMC pay its fair share in taxes, as well as pay their employees a living wage. In 2016, UPMC pledged to have service employees at “most” facilities paid $15 an hour by 2021.

But they lavish millions on their top executives while they fly around in private jets, while rank and file employees are forced to apply for second jobs, welfare or handouts. UPMC can and should do more but instead, they have spent years and countless dollars trying to keep workers from unionizing

UPMC, University of Pittsburgh, Carnegie Mellon and Highmark are a drain on the city’s budget and we really need to devise ways in which these entities will step up and pay their fair share. UPMC is worth $19 billion and the University of Pittsburgh has a $4 billion dollar endowment. Yet, the city is not compensated for any of the services they provide and the taxpayers are left to foot the bill. 

We need leadership in this city that will take bold action in order to provide more services to residents without raising taxes on personal property or income. We could use the additional funds from a Pilot program to fund affordable housing, to tackle the growing problem with homelessness, provide property tax relief to seniors and fund critical infrastructure projects. If the large nonprofits pay their fair share, we can use the new influx of revenue to make Pittsburgh more competitive nationally and turn Pittsburgh into the most livable city for everbody..

One Comment

  • Cletus Polk says:

    If you waived a magic wand and made these four pay taxes like the rest of us that would be great for a day. But what do you do when they pull up locations and move to another City where they are not taxed? What do you do with the thousands employed by these institutions. While CMU and PITT might have a harder time moving, UPMC could easily move corporate offices to Cranberry or Murrysville, and enjoy Butler or Westmoreland County’s rates. I don’t have a horse in this race, nor do I have a solution. But the answer is not as simple as we want it to be.

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