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Sen. Ferlo to propose plan to tax Pittsburgh nonprofits

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By Bobby Kerlik
Monday, Jan. 14, 2013, 6:20 p.m.

Large Pittsburgh nonprofits would have to pay a tax on their payroll under a plan floated by Sen. Jim Ferlo.

Ferlo, D-Highland Park, said on Monday he would introduce a bill that imposes a 0.4 percent payroll preparation tax on nonprofits with more than 250 employees. The bill would lower for-profit businesses' rate from 0.55 to 0.5 percent.

Ferlo estimates the changes would net the city $5 million to $10 million. He said he is finalizing the bill and plans to solicit co-sponsors.

“The notion of payments in lieu of taxes is nice in theory, but it's not enough and it's not equitable,” Ferlo said.

City officials have complained for years that tax-exempt institutions, which include government entities, occupy about 40 percent of city real estate but contribute little monetarily for services.

Charities make voluntary contributions known as payments in lieu of taxes through an umbrella group, the Pittsburgh Public Service Fund. The group is expected to contribute $5.2 million total in 2012 and 2013. The city‘s budget this year is about $470 million.

A spokesman for UPMC, the region's largest nonprofit, declined to comment, but the health care giant has said only 51 percent of the property it owns is tax-exempt. Spokesmen for the West Penn Allegheny Health System and Carnegie Mellon University also declined to comment. A spokesman for the University of Pittsburgh did not return a call.

City Council President Darlene Harris said she supports Ferlo's plan.

“I'm for whatever he can get because right now we're not getting anything,” Harris said. “What's different if you work at a hospital or a school as opposed to PNC or a construction company?”

Joanna Doven, Mayor Luke Ravenstahl's spokeswoman, said the mayor “looked forward to reviewing the proposal” but did not answer questions.

Ferlo's move was made as Allegheny County officials are scrutinizing nonprofits' property tax exemptions. Executive Rich Fitzgerald has said he directed the county's Office of Property Assessments to review the qualifications of each tax-exempt property to ensure they meet the criteria for an exemption.

Ravenstahl on Monday said, in a separate move, the city would review the tax-exempt status of the city's largest nonprofits.

Bobby Kerlik is a staff writer for Trib Total Media. He can be reached at 412-320-7886 or

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