Pittsburgh's approach to tax-exempt nonprofits could be model for others in state
Pittsburgh could serve as a model for the rest of the state in determining how much money tax-exempt nonprofits should pay for city services each year, one of the city's financial overseers said Monday.
In a meeting with Tribune-Review editors and reporters, Intergovernmental Cooperation Authority Chairman Dana Yealy said the mayor holds the key to the success of a task force that will consider the question. Mayor Luke Ravenstahl must appoint a chairman who can “look the nonprofits in the eye and say, ‘It's time for us to think about this differently,' ” Yealy said.
The ICA, appointed by the state Legislature eight years ago to help Pittsburgh resolve its chronic financial problems, last week asked the city to create the task force in approving the mayor's 2013 budget.
“It's not all about getting money,” Yealy said. “It gives (nonprofits) a forum to tell their story as well. It's about getting buy-in from all of the stakeholders.”
Ravenstahl spokeswoman Joanna Doven said the mayor intends to comply with the ICA's request.
City officials say nonprofits, including government entities, own about 40 percent of Pittsburgh real estate and benefit greatly from services such as road maintenance and police and fire protection, but pay little to offset that cost, which amounts to millions.
The Pittsburgh Public Service Fund, an advisory group for the nonprofit community, has paid the city about $19 million in lieu of taxes since its formation in 2005. It expects to give the city about $2.6 million this year and next. Pittsburgh's annual operating budget is about $470 million.
Reynolds Clark, who represents the fund's members, declined comment.
Yealy also promised that the ICA would lobby the state for pension reform to help Pittsburgh cope with ballooning obligations that total about $1 billion. That will likely make the legislative agenda next year, said state Sen. Jay Costa, D-Forest Hills.
“I think there will be a conversation about pension reform in the next legislative session,” he said. “Whether it will include municipal pension reform remains to be seen.”
Yealy and Act 47 coordinators Dean Kaplan and James Roberts reiterated that the city has made great strides in addressing its financial problems. The Act 47 team, the city's other financial overseer, recommended two weeks ago the state Department of Community and Economic Development release the city from its oversight. But they want the ICA to remain and continue monitoring the city's compliance with initiatives created for its fiscal recovery.
A significant problem that remains is that its revenue remains flat with no new sources to tap, the overseers said.
They said collecting the city's 0.55 percent payroll privilege tax from nonprofits, currently paid only by private employers, is an option. Doing so would generate more than $27 million annually, said Bill Urbanic, City Council's budget director.
“We'd be able to pay down our pension funds and also make more capital improvements, fixing roads and other infrastructure,” he said.
Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or email@example.com.