Allegheny County Council on Tuesday joined the chorus of voices calling on the state Legislature to stop bills that would amend the state constitution and give lawmakers the right to decide what qualifies an organization for tax-exempt, public charity status.
Democratic Councilman Michael Finnerty was the primary sponsor of the motion urging the Pennsylvania General Assembly to oppose Senate Bill 4 and House Bill 173.
“I believe that they’re going to attempt to make it easier for these charities to get this tax exemption,” Finnerty said.
The proposed constitutional amendment would not actually define what constitutes a purely public charity, but rather would open the door for the Legislature to create such a definition in the future.
Currently, courts rely on parameters specified by the state Supreme Court in the 1985 Hospital Utilization Project v. Commonwealth case. The so-called “HUP test” states that a nonprofit charitable organization must do the following in order to qualify for tax-exempt status:
- Advance a charitable purpose
- Donate or render gratuitously a substantial portion of its services
- Benefit a substantial and indefinite class of persons who are legitimate subjects of charity
- Relieve the government of some of its burden
- Operate entirely free from private profit motive
The issue has proved to be uniquely non-partisan in Harrisburg, but has rather pitted local governments against state legislatures.
Republican Councilman Edward Kress said he is concerned about centralization of decision-making power.
“If you’re consolidating all the power in Harrisburg, are we losing our right to examine how local nonprofits are operating?” Kress asked. “That’s the reason I’m for the Finnerty motion and opposed to what they’re trying to do in Harrisburg.”
But fellow Republican Councilwoman Heather Heidelbaugh disagreed, saying she saw the question as whether the courts or the Legislature should ultimately decide which organizations qualify as purely public charities.
“I would never be in support of what you’re saying, Mr. Finnerty, because what you’re saying is that the court should decide these issues,” Heidelbaugh said. “We elect the Legislature, the Legislature puts out the legislation and the test, and the courts are to take that and to interpret it and they are not to act as a super-legislature.”
Finnerty countered that Heidelbaugh misunderstood his motivation.
“I want it to remain the way it is, which gives every county in Pennsylvania a right to say ‘You meet these five things,’” Finnerty said. “And if you don’t meet them, then maybe we have to go to court, so you have to prove that you meet them.”
The state legislation in question already received approval from both houses in 2013. In order to amend the constitution, a bill must be passed by two consecutive legislatures and must receive majority approval in a voter referendum.
County Council voted 9 to 1 in favor of Finnerty’s motion. Heidelbaugh voted against it, while Councilwoman Sue Means and Councilman Tom Baker abstained. Baker said his day job at the nonprofit Big Brothers Big Sisters of Greater Pittsburgh created a conflict of interest, and that he didn’t believe it was appropriate for County Council to weigh in on such matters. Means said she did not have enough information to make a determination.
