The Pa. Democratic Party has chosen sides in the brewing legal battle between the City of Pittsburgh and the University of Pittsburgh Medical Center.
Mayor Luke Ravenstahl announced Wednesday that the city is challenging in court UPMC’s non-profit status, saying the medical provider doesn’t fit the state’s criteria to avoid taxation.
Pa. Dems Chairman Jim Burn voiced his support for the move in a statement this afternoon.
“UPMC has been aggressive in buying hospitals and taking property off the tax rolls, paying its executives exorbitant salaries, and investing in overseas operations while taking advantage of lucrative tax exemptions that are supposed to be reserved for true charities. When UPMC doesn’t pay its fair share to support public services, every taxpayer ends up picking up the tab,” Burn said.
“The City of Pittsburgh is right to make this challenge now and has taken an important step forward in making sure UPMC is abiding by the charitable principles that allow non-profits tax benefits.”
More broadly, the challenge fits into Democrats’ broader messaging about tax “fairness.” Ravenstahl accused UPMC of spending funds on familiar items including a personal chef and private jets, etc, for executives.
Unsurprisingly, several Democratic mayoral hopefuls joined Ravenstahl’s push. Council President Darlene Harris was on hand for the event, Councilman Bill Peduto voiced support for the move, City Controller Michael Lamb was there, and County Controller Chelsa Wagner spoke in Ravenstahl’s favor (her uncle is candidate Jack Wagner).
The hospital system would pay an estimated $20 million annually to the city – taxes from which it is presently exempt.
A UPMC spokesman said the Mayor’s challenge was driven by political interests – specifically labor unions – rather than legal validity.
“The challenge to UPMC’s tax-exempt status appears to be based on the mistaken impression that a nonprofit organization must conduct its affairs in a way that pleases certain labor unions, certain favored businesses or particular political constituencies — in other words, the way that some local governments are also run,” said spokesman Paul Wood.
Labor unions have long sought to organize UPMC employees but have been thwarted in part by its charity status.
Meanwhile the state Senate passed a law Wednesday that would amend the state Constitution so as to give the legislature more clear authority to define what constitutes a non-profit.
In a 2012 decision, the Pa. Supreme Court ruled that municipalities have legal avenues to challenge non-profit status of organizations. The Court reaffirmed five criteria to be used – criteria that Ravenstahl cited Wednesday, particularly number 5:
1) Advances a charitable purpose;
2) Donates or renders gratuitously a substantial portion of its services;
3) Benefits a substantial and indefinite class of persons who are legitimate subjects of charity;
4) Relieves the government from some of its burden; and
5) Operates entirely free from private profit motive.
Full disclosure: the organization Make It Our UPMC, which was formed by the labor union SEIU, will begin advertising on PoliticsPA Thursday.