Pittsburgh Mayor Ed Gainey on Tuesday announced that Highmark, one of the largest nonprofits operating in the city, is willing to make financial contributions to the city — but only if other major nonprofits pay up, too.

In a statement, Gainey portrayed Highmark as taking a significant step forward to address the city’s years-old efforts to squeeze money out of large nonprofits that pay no taxes.

But Aaron Billger, a Highmark spokesman, said the insurer’s position has not changed in six years, which predates the Gainey administration.

“As we have said in the past, Highmark is prepared to discuss financial contributions to the city of Pittsburgh, if the large nonprofits — including UPMC — are part of the meeting,” according to a statement Gainey released that he said was provided by Highmark. “Highmark is ready to make a financial commitment as soon as all of the large nonprofits participate in a financial contribution that is proportional, within the city, to its status as a purely public charity.”

Skeptics said it didn’t seem like Gainey had made much headway in striking an agreement with the city’s nonprofits given that efforts to convince them to provide funding have stalled for years — even as the organizations’ leaders have expressed a willingness to consider such measures.

“I’m looking to finding out new information, but I don’t believe from what I’ve seen so far that this is anything new,” Councilman Bob Charland, D-South Side, said.

City Councilman Anthony Coghill, D-Beechview, said he would like to see all the city’s major nonprofits — and some smaller ones, too — coordinate with city leaders to help fund basic services as Pittsburgh faces fiscal challenges.

But he was doubtful the mayor’s announcement signaled any real progress.

“I don’t have a lot of faith right now,” he said. “It’s really nothing new.”

It was unclear what new development, if any, prompted the mayor’s announcement. Olga George, Gainey’s spokeswoman, did not answer a TribLive question asking what spurred the mayor to issue the statement.

Gainey and other city leaders for years have pushed for major nonprofits to provide payments in lieu of taxes, or PILOT, payments that could be particularly helpful with the city facing financial challenges and decreasing revenues.

Officials believe Pittsburgh’s sprawling health systems and universities — which don’t pay taxes on their charitable operations because of their nonprofit status — should provide financial support to the city, as their facilities take up large swaths of land and their workers, students and patients often rely on city services.

But so far, none of the city’s hospital systems or schools have stepped up to go first.

Highmark did not offer any estimate of how much it might pay if a deal is struck.

‘Empty promises’

Allegheny County Controller Corey O’Connor — who is running against Gainey in the upcoming Democratic primary — said Gainey’s announcement is no cause for celebration.

“The mayor is making empty promises with no funding commitments right before an election,” O’Connor said. “This administration has had over three years to reach an agreement with our nonprofits over a meaningful PILOT program and has failed to do so on multiple occasions.”

Gainey on Tuesday urged leaders from Highmark, UPMC, the University of Pittsburgh and Carnegie Mellon University to meet with him to hammer out a deal he’s been hoping to strike for years.

“In light of this major advance in our efforts to secure financial contributions from our region’s largest charities, I’m calling on the leaders of the ‘Big 4’ to meet with me before the end of the month to finalize an agreement for predictable, proportional financial support for the core services provided by city government,” he said.

Duquesne University — often considered the final piece of what city leaders call the ‘Big 5’ nonprofits in the city — was not mentioned in Gainey’s statement.

Paul Wood, a UPMC spokesman, said the health care giant remains willing to work with the administration — again, with the caveat that other nonprofits also must contribute.

Officials from Duquesne, Pitt and CMU did not immediately respond to requests for comment on Gainey’s statements.

The mayor’s office said ensuring payments are proportional has been a key element of conversations with the nonprofits. The administration said it “proposed an agreement structure to the institutions in which they would make a payment corresponding to the size of their presence within the city.”

City officials did not provide details on a payment structure or how much the nonprofits might pay. A 2022 study conducted by the city and county controllers’ offices indicated such payments could raise a “baseline” of $14.5 million a year for the region.

George, Gainey’s spokeswoman, said the administration is hoping to use the money contributed by nonprofits to buoy the city’s general fund “to support critical investments in core services.”

She said the use of the money “would be subject to the terms of an agreement,” but did not elaborate.

George also did not address questions about how long any agreements might last, when they might begin or what, if any, concrete progress has been made in ongoing negotiations with nonprofits over a funding deal.

Step in the right direction

Though details were murky, Michael Lamb, Pittsburgh’s former controller, said even having a public conversation about the prospect of nonprofits chipping in is a step in the right direction. It could spark a more serious conversation among nonprofit leaders, he said, about how the entities could move ahead with payments to the city.

“That’s actually a very big step, because I think we all had quiet conversations with different people in each of these organizations,” Lamb said. “But I never heard any of them actually saying it publicly. That puts a flag out there that someone’s willing to do something.”

The timing, he said, is critical.

Federal covid-19 relief funds expire at the end of next year and the city’s financial margins in the coming years are predicted to be tight. Pittsburgh, Lamb said, needs to secure support from nonprofits before then.

Lamb, who was not directly involved in formal negotiations for payments, said the key will be finding an equation that all the nonprofits believe is fair.

Because UPMC is the largest employer and owns the most property, a deal would likely involve UPMC paying most, Lamb said, with other nonprofits looking to pay less based on their sizes.

Gainey’s diplomacy is playing out even as his administration has launched legal challenges to the major nonprofits’ tax-exempt status. The courtroom battles may be hindering negotiations, according to Coghill.

“You can’t negotiate in good faith while you’re suing people in court,” Coghill said.

George said those challenges will continue “unless or until an agreement is reached.”

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