By Mike Dunn
PHILADELPHIA (CBS) — Amid the latest Philadelphia school funding crisis, a city councilman today revived the idea of prodding the city’s major not-for-profit entities to voluntarily contribute more, since they’re exempt from property taxes.
Councilman Wilson Goode calls them “mega-nonprofits” — the city’s universities and health care institutions, which are now exempt from property taxes.
He has introduced a nonbinding resolution urging the mayor to push them to make what are called “PILOT” contributions (Payment In Lieu Of Taxes) to the city’s coffers — voluntary payments in lieu of taxes.
“As we begin discussion of a proposed property tax increase by the Nutter administration,” Goode said today, “we’re asking them to consider the issue of voluntary contributions from nonprofits that own a ton of tax-exempt land. And so, it’s an appropriate policy issue to bring up as we discuss a proposed property tax increase. I don’t think all the burden should be on homeowners.”
Goode fully admits that PILOT contributions would be voluntary; there’s no way the city could force the nonprofits to chip in. But he says groups that support the idea of PILOTS would consider legal action — challenging the tax-exempt status of certain properties — if the mega-nonprofits don’t pony up.
“Their tax-exempt status could be challenged in court,” Goode notes, “and to the extent that it could be challenged in court for certain property they own, this (PILOT method) is a way of addressing it legally, as a remedy. So we hope the universities will realize that perhaps they should be contributing more.”
When asked if that was an implied threat, Goode said his stance is simply a reiterating of the concept of PILOTS begun during the administration of Ed Rendell. (For several years, about 50 institutions contributed around $9 million a year, but that program has since expired.)
The mayor has proposed a nine-percent property tax hike to raise $105 million extra for the schools above the city’s current contribution.
This puts councilmembers in the difficult position of having to choose between more school funding and going easy on homeowners, and prompts them to look for alternate fundraising means, such as PILOTS.
More than half of the city’s property tax revenues go to the school district.
Goode estimates that ten percent of all privately held land in Philadelphia is now exempt from property taxes.