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Pa. panel seeks to limit municipalities from challenges to tax-exempt status

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Wednesday, Feb. 13, 2013, 11:46 p.m.

A proposed amendment to constitutionally limit the ability of Pennsylvania municipalities to challenge the tax-exempt status of charities and nonprofits got the endorsement of the state Senate Finance Committee Wednesday and is on its way to the full Senate.

The committee approved the measure on a 9-2 vote, with Democrats John Wozniak of Johnstown and Robert Teplitz of Harrisburg voting in opposition.

But amending the state Constitution is a lengthy process. The soonest it could be done is 2017.

Pennsylvania hospitals are the driving force behind the amendment, which they say would clarify the definition of a public charity. It would enable nonprofits to regain ground lost in a 2012 state Supreme Court ruling that denied public charity status to a summer camp in Pike County.

“Our goal with Senate Bill 4 is simple: To give the Legislature the sole authority to establish criteria for a tax exemption, thereby providing a clear avenue to protecting our charities which serve the interests of our communities throughout this Commonwealth,” said Sen. Mike Brubaker, a Lancaster Republican and committee chairman.

Opponents, which include the Pennsylvania Municipal League, the Pennsylvania State Association of Township Commissioners and Allegheny County Controller Chelsa Wagner, say the amendment could place unfair tax burdens on residents and businesses.

“This would be the farthest-reaching constitutional amendment in my lifetime with a negative impact on every taxpayer and local government in the Commonwealth,” Wagner said.

The issue is an important one in Allegheny County, where nonprofits, such as UPMC and the West Penn Allegheny Health System, own billions of dollars of tax-exempt property.

Allegheny County is asking thousands of nonprofit organizations to demonstrate why their properties should continue to be exempt from taxes.

In places like Monroeville, changing the tax-exempt status of Forbes Regional Hospital and UPMC are a priority of some elected officials because of the money they could generate for the community.

According to Wagner, the value of untaxed property in Allegheny County is $17 billion out of $59 billion in total assessed properties.

The measure requires passage by the General Assembly in two consecutive legislative sessions before being placed on the ballot as a referendum.

The amendment's supporters include the YMCA, the Pennsylvania Chamber of Business and Industry, the Association of Independent Universities & Colleges of Pennsylvania and the Hospital & Healthsystem Association of Pennsylvania, which helped draft it.

“We think the law as it stands could lead to costly litigation and challenges to nonprofit hospital and other nonprofits,” said Roger Baumgarten, a spokesman for the association, which represents about 225 health care providers.

Since last year's Supreme Court ruling, the tax-exempt status of Warren Hospital, Warren County YMCA, Habitat for Humanity and other non-profit organizations have been revoked.

Rick Wills is a staff writer for Trib Total Media. He can be reached at 412-320-7944 or

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