Tuesday, December 9, 2008

Balancing State and Local Budgets on the Backs of Charities

In Pennsylvania, as in many states, balancing state and local budgets is of paramount importance.  Governor Ed Rendell of Pennsylvania has proposed, as one solution to the budget conundrum, redefining the term "charity" so that health care organizations ans similar profitable charitable nonprofits are not defined as "charitable" under state law.  Here is an excerpt from the December 9, 2008, issue of the Times-Tribune of Scranton Pennsylvania:

Scranton could benefit if lawmakers seriously consider legislation by state Rep. Robert Freeman, D-136, to reap revenue from tax-exempt properties, which account for 25 percent of properties in Scranton.

As a potential remedy for municipal fiscal woes, both the League of Cities and Mr. Rendell want to tackle the issue of tax-exempt properties in cities and boroughs.

But they would go about it different ways.

Generally speaking, anywhere from 25 percent to one-third of the market value of properties in these long-established communities is exempt from taxes, depending upon the mix of colleges and universities, churches, health care facilities and courthouse complexes.

The league is pushing for legislation to dedicate state liquor tax revenues to compensate municipalities that have high levels — 15 percent or more — of tax-exempt property.

. . . .

[Gov. Ed Rendell] has urged passage of legislation to redefine what a charitable institution is, so municipalities could obtain some revenue from properties considered tax-exempt.

The governor points out churches are truly charities, but he questioned whether nonprofit health care organizations with financial surpluses fit that definition.

“That (change) would allow cities to get payments in lieu of taxes at a reasonable rate,” Mr. Rendell said.

For the entire story, see "Recession Spurs Revenue-Raising Creativity" in the December 9, 2008, issue of the Times-Tribune.

DAB

http://lawprofessors.typepad.com/nonprofit/2008/12/balancing-state.html

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Comments

And don't forget that intermediate sanctions (Sect. 4958) was originally passed as a "revenue raiser," projected to bring in $66 million/year.

Posted by: Barnaby Zall | Dec 9, 2008 6:36:51 AM

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