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Debate Over Property-Tax Exempt Colleges Renewed

(Philadelphia School District headquarters.  File photo by Mike DeNardo)

(Philadelphia School District headquarters. File photo by Mike DeNardo)

Mike Dunn Mike Dunn
Mike Dunn is City Hall bureau chief for KYW Newsradio 1060. He covers...
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By Mike Dunn

PHILADELPHIA (CBS)–Philadelphia’s school funding crisis has renewed a debate over whether local colleges and universities that are property-tax-exempt should help out more. Those universities responded this past week with a report laying out how much they already contribute.

The school district cash crunch has led to talk about whether universities, colleges and other non-profits should help out through what are called PILOTs — payments in lieu of taxes.

But a consortium of local schools has issued a study showing that PILOTs are mainly used in cities like Boston that rely much more heavily on property taxes than does Philadelphia.

The study’s author is Lee Huang of the consulting group eConsult.

“Philadelphia’s tax structure is such that if you are tax-exempt in terms of not paying property tax, you are still contributing a significant amount of tax base to the city.”

That contribution comes mainly through wage taxes. The report says Philadelphia’s higher educational institutions alone create jobs that contribute $211 million a year in wage taxes.

“So this notion that the universities don’t pay taxes but do consume services and therefore should be paying PILOTs is incorrect, because they pay lots of other taxes,” said Huang.

Moreover, Huang’s study says the local universities help the school district through other, collaborative means and that cooperative relationship could shift if PILOTs were imposed.

“The introduction of a PILOT makes it more of a transactional relationship (in which) the city says, ‘we want your money, we’ll take your money and we’ll go solve the problem.’ And I think the collaborative approach is a much better way to deal situations like the schools here in Philadelphia.”

The report also disputes the notion that the city’s tax-exempt institutions own buildings that total $30 billion in property value.

Huang says more than half of those properties are actually owned by government or quasi-governmental institutions and cannot be taxed by law.