Kick-starting a $50 million conversation
With a bill introduced last Tuesday to levy a new infrastructure tax on patients and students at Pittsburgh’s hospitals and universities, Councilman Ricky Burgess said he aims to begin a conversation.
“Kick-start” was the Post-Gazette story’s verb of choice.
Well, mission accomplished. And kick-start is definitely more apt because the city’s college students and ailing citizens have greeted the proposed tax like a kick in the teeth.
Understandably so. Customers of our city’s vaunted “eds and meds” already face eye-popping bills. Is asking them to shoulder even bigger costs for the sake of Pittsburgh’s decaying roads really the best way to go?
This is a conversation worth having — although it’s been strangely muted in recent years.
Most of us are familiar with huge, unintelligible hospital bills, but not everyone puts a kid through college. This year an out-of-state freshman at the University of Pittsburgh’s School of Business Administration will pay well over $50,000 per year in tuition, fees, and room and board. What’s another 500 bucks, right?
Attending Carnegie Mellon costs even more — almost $77,000 — but at least schools post these numbers on their own websites.
You don’t get that kind of clarity from hospitals, not even after your visit, but they do release public financial statements. Last month UPMC reported having paid “more than $900 million in federal, state and local taxes” in the most recent fiscal year.
Local taxes? Maybe they ran out of waiting-room tissue boxes and had to restock at a nearby minimart?
It’s fun to snipe at a “nonprofit” that had operating revenue of $843 million last year and operating income of $24 billion.
My family is way more nonprofit than UPMC, but we’ll be writing checks to the city for the next few months, using the friendly installment plan.
As everyone knows, what irks us mere citizens is that we pay taxes on our real estate, while nonprofits do not, even when they enjoy massive revenues and billions in assets.
Approximately 40% of Pittsburgh real estate is owned by nonprofits. As real estate values and construction costs skyrocket, the taxpayers’ subsidy grows more onerous and those tax dollars cover less. How is this fair?
When this civic debate was last at a boil, about 15 years ago, the city’s fiscal picture was considerably worse, but the nonprofit and foundation world focused elsewhere. Its leaders were busy launching the Pittsburgh Promise, a scholarship program to encourage students to pursue education beyond high school.
UPMC garnered much praise for promising the Promise $100 million over 10 years. Its gift was understood to be in lieu of taxes. Others followed suit, and the debate died down — to the relief of all nonprofits. But that arrangement ended years ago.
Under Mayor Bill Peduto, nonprofit contributions dwindled to a pittance, but last April, the mayor announced a big win: the city’s four largest nonprofits — UPMC, Highmark, Pitt and CMU — would contribute $115 million, over five years, to his administration’s “ONEPgh” public-private collaboration.
Three weeks later he lost the Democratic primary to Ed Gainey. Eleven months have passed without an update to the ONEPgh website.
Into this lull leapt Mr. Burgess with his $50 million-a-year plan. Mayor Gainey’s office said it learned of the tax proposal when the rest of us did.
OK.
Perhaps the strategy here is to get us little guys all riled up so that public outrage will pressure these massive, cash-flush enterprises to step up.
Fine, $50 million sounds about right; we can and should be bold. The sheer size of the nonprofits’ (untaxed) capital investments tethers them to our city. They may keep expanding, but it shouldn’t be at the expense of their crumbling hometown.
And yes, they’ll try to pass this cost on to their consumers. That’s where the “use tax” will get hashed out. As a patient, I can argue with my hospital. As a taxpayer I cannot.
To pave roads and rebuild bridges, taxpayers must stick together and make the big guys pay their freight. And for kick-starting this conversation, however bracingly, Mr. Burgess deservesour thanks.