When universities grow but cities don’t, taxpayers lose, officials said yesterday at a state Senate Democratic Policy Committee hearing on new legislation to tax big nonprofit institutions.
“When all of these schools were established,” said state Sen. John Wozniak, D-Johnstown, holding two fingers an inch apart, “these schools were that small.
“They’re now this big, all around,” he said, spreading his arms wide. The fact that they still don’t pay taxes hurts cities, he said.
“We do pay taxes and fees, in many different forms,” said Carnegie Mellon University President Jared Cohon. Pittsburgh’s institutions of higher learning pay $23 million a year to the city in taxes and fees, he said, and shoulder $11 million in policing costs. Taxing campus structures would force tuition hikes, financial aid reductions, or lab cuts that could, he said, “strike right at the heart of the ability of our institutions to do what we’re expected to do: education and research.”
Legislation submitted by Sen. Wayne Fontana, D-Brookline, and Rep. Tim Solobay, D-Canonsburg, would allow cities to charge tax-exempt institutions $100 for each 1,000 square feet of buildings they own, except the first 5,000 square feet. When a nonprofit institution buys a previously taxable property, the city would be allowed to charge 10 percent of the normal tax bill during the first year under new ownership, ramping up to 50 percent in the fifth year.
Mr. Fontana said the bill has “an outside chance” of passing this year, perhaps with changes.
“Every time a local government has budget issues, the topic of taxing nonprofits comes up,” he said.
In November, Pittsburgh Mayor Luke Ravenstahl sought a 1 percent tuition tax to generate $15 million a year to bolster the city’s pension fund. He shelved the proposal, and is instead working with university and corporate officials on a fiscal fix for the city.
He told five senators and Mr. Solobay at the hearing that he was not committed to any single approach to tapping tax-exempt organizations, adding that the city will need state legislation to address its pension problem.
“If we do not identify $15 million in revenue at some point this year, we will face some very, very serious and difficult decisions,” he said.
City Controller Michael Lamb said that Mr. Fontana’s approach depends on data on buildings that the city doesn’t now have. He said a better way would be to extend the 0.55 percent tax on the payrolls of city businesses to tax-exempt employers, and to lower the rate to 0.44 percent, boosting the city’s tax take by $10 million to $15 million.
Read more from the Post-Gazette here
Tags: Luke Ravenstahl, tuition tax
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