UPMC-Highmark Impasse Prompts Bill Requiring Non- Profits to Pay Taxes on Land

Tuesday, I announced my intent to introduce legislation that will require non-profits to begin paying taxes on the land value of real property owned by the 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 nonprofits 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. 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 nonprofit’s bottom line?

The legislation that I am proposing would require all nonprofits to pay taxes 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 nonprofit. 

I have been working on legislation to address ongoing issues and concerns with the lack of voluntary payment agreements between nonprofits and their host municipalities since 2008. The law that governs nonprofits—the Institutions of Purely Public Charity Law—allows nonprofits to enter into voluntary agreements to defray some of the costs of local government services.

Since the law’s passage, however, there have been fewer and fewer voluntary agreements—and the ones that do exist have declined in the amounts over the years. This is another reason that we should be looking at this issue. 

Like most Pennsylvanians, the nonprofit sector has been affected by the recession, but by stopping or decreasing these payments, the nonprofit sector ends up putting an even greater burden on taxpayers. The system lacks uniformity—which is what the current law was supposed to fix.

Do not misunderstand me. Tax exemptions aren’t frivolous. Many nonprofits 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. My legislation attempts to address the imbalance created by organizations where profit is clearly their driving factor. Each day we see nonprofits in the community buying up real estate, expanding, getting bigger and bigger while making decisions that actually harm our communities. 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 previous legislation raised several issues to be addressed in the legislation, and resulted in my re-working the bill. Although not perfect, I believe that re-introducing the bill now 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. I expect to file the bill for introduction before the end of September and am hopeful that the committee to which it is referred will take a serious look at this issue and my legislation.