Allegheny County could soon require the status of local tax-exempt properties to be published in a public database — potentially clearing the way for more intense scrutiny of the tax breaks big nonprofits receive. The ordinance was introduced at County Council’s Tuesday meeting, which drew dozens of public commenters from local social service providers to speak out on another tax question: a proposed millage rate increase.
Tuesday was council’s last regularly scheduled meeting before the budget is due in early December. And of the more than 170 people who registered to speak at the meeting, the vast majority urged support for County Executive Sara Innamorato’s budget as proposed. The $1.2 billion spending plan calls for a 2.2 mill increase, bringing the rate to 6.93 mills – nearly a 50% increase.
“Some of you may be concerned about the cost of a 2.2 mill hike,” acknowledged Just Harvest executive director Ken Regal. “I encourage you to be concerned about the much deeper cost to our community if we fail to meet this fiscal challenge. The ability of Allegheny County to pay for an enormous range of vital services is at fundamental risk if we don’t act now.”
Innamorato has been making the case for the hike since it was first introduced in October, arguing that anything lower than the 2.2 mills would have the “catastrophic” effects on economic development and social services. A majority of council members say they oppose the hike, but council has not publicly offered a counterproposal.
Innamorato has warned that the county’s Department of Human Services, and the social service providers it funds, could be especially hard hit. County funds allotted to DHS are matched by state and federal dollars. For every $1 the county contributes, the department draws down about $4 in state and federal funds, meaning budget cuts could require the county to leave money on the table for services that many county residents rely on, like afterschool programs, rental assistance, and violence prevention.
Speakers echoed Innamorato’s concerns Tuesday, with some noting that after President-elect Donald Trump takes office, federal funding for states and counties are expected to drop.
“Please find a way to fund these critical DHS services,” said Kids Voice associate executive director Jonathan Budd. The group provides legal representation to abused and neglected children, whom Budd said would be “dramatically impacted” by anything less than a 2.2 mill increase.
“It comes down to simple math: keeping $136 million in services, 2,000 jobs and $109 million in recurring state funding year after year, or throwing away that to save $27 million … on the backs of abused and neglected kids and the variety of other groups you’re going to hear from.”
Michelle Charmello-Scanlan, executive director of out-of-school program provider Maple Unified School Academy, said many nonprofits have already limited costs and cut overhead. Additional reductions would require her program to stop serving 65 children and layoff five full-time and 20 part-time staff, she said.
“If we miss this opportunity [to raise the millage], we stand to lose far more. If the safety net for our most vulnerable collapses, it may not be able to be replaced.”
Patrick Cooper, who cofounded and is director of education for the nonprofit professional development program Community Forge, likened cutting programs that prevent bad outcomes to “stopping going to the doctors to cut costs. Yes, there's always the emergency room, but that's not the most cost effective or just way to serve our community.”
County resident Benjamin Chiszar said he opposes a tax increase.
“High taxes are killing this Commonwealth. We should be cutting the millage,” he said. “We could find $100 million in cost savings by cutting spending to core functions and bare minimum staffing to accomplish it.”
Nonprofit transparency
The nonprofit ordinance proposed Tuesday would direct county officials to compile a publicly available, searchable database identifying all properties in the county that qualify for a property tax exemption under the state’s “purely public charity” law. It requires property owners to advance a charitable purpose, operate free of private profit motive, donate a “substantial” portion of its services, benefit a group in need, and/or relieve the government of some of its burden in exchange for property tax cuts.
According to county data, more than 2,000 parcels in the county are owned by purely public charities and are exempt from property taxes.
“We have a lot of property out there that is nonprofit status that obviously isn't taxable,” said council president Pat Catena, one of the bill’s co-sponsors. “At some point, whether it's the county or the city or the school district, we're going to have to take a hard look at this and start asking some hard questions” about existing exemptions.
That’s sparked concerns about an unequal tax burden for residents at a time when they are facing a tax hike, said council member Dan Grzybek, another co-sponsor.
“Whenever we're discussing, potentially, a rather significant increase in the millage rate for your average homeowner, I think it's really important that we exhaust all possible forms of revenue,” he said.
The county’s Office of Property Assessments is supposed to review the status of nonprofit-owned, tax-exempt properties every three years, but the office has struggled to do so. In 2019, TribLive reported the county didn’t have the financial resources to complete the most recent review, launched in 2013.
The city of Pittsburgh has challenged the tax-exempt status of dozens of properties in recent years. Some of the affected properties were owned by the “big four” nonprofits in the region UPMC, Highmark/Allegheny Health Network, the University of Pittsburgh and Carnegie Mellon University. Supporters said the ordinance isn’t meant to target any specific organization, but it would likely have the greatest impact on the four nonprofits.
Catena and Grzybek said they hope the database helps spur the regular reviews required by law.
“Any time that we can give the residents and taxpayers of Allegheny County additional information that's easily accessible … that's a win-win, in my opinion,” Catena said.
Grzybek said the county needs a “truly fair taxing system. And I don't think people currently believe that that's what we have.”
It’s unclear how much revenue the reviews could generate, but Grzybek argued that the county needs to use every tool at its disposal.
“A couple million dollars is certainly not going to solve that issue,” he said. But “it can get us to a point where … we're limiting the amount of burden that we're putting on individual homeowners.”
The bill was referred to the council’s committee on assessment practices. If it is approved by the full council, county officials will have to deal with a tight turnaround time: The ordinance requires the database to be complete by the end of the year.
