Although the City of Pittsburgh's agreement with the Pittsburgh Public Service Fund, a coalition of some forty tax-exempt organizations that have agreed to contribute to city coffers, ends in December, Mayor-elect Bill Peduto is hoping to forge a new agreement that results in a more stable and harmonious relationship between nonprofits and the city, the Pittsburgh Post-Gazette reports.
The city received about $2.6 million in voluntary payments in lieu of taxes (PILOTs) in 2013 from the coalition. But an effort earlier this year to renegotiate the agreement was abandoned after the city sued to strip the University of Pittsburgh Medical Center, the state's largest employer, of its tax-exempt status. The suit, which is working its way through Allegheny County Common Pleas Court, chilled an already uncomfortable relationship between city government and local nonprofits.
Peduto told the Post-Gazette that he wants to move from short-term agreements between the city and the fund to a more structured, long-term agreement that would generate enough income for the city to start shifting tax revenue back to the Pittsburgh public school district, which faces a deficit that threatens to consume its reserves by 2016. Many nonprofits in the city are resisting, however. According to Kenneth Service, a spokesman for the University of Pittsburgh, the service fund was created to assist the city during a devastating financial crisis, but since the city has created a succession of balanced budgets, voluntary contributions to the fund from the city's nonprofits are no longer needed.
"The nonprofits have a sense that all the things they do for the city are not well-known and appreciated," said Don Smith, president of the Regional Industrial Development Corp. and chair of a now-defunct task force that was supposed to negotiate a new agreement between the city and local nonprofits. "When you talk about putting money in the general fund, [nonprofits] feel like they're being taxed."
For his part, Peduto argued that the voluntary payments are a critical part of the city's goal to get to 2018 without adding to its debt. According to the Post-Gazette, that's the year the city is slated to have paid off most of its debt, enabling it to begin allocating additional funds to its seriously underfunded employee pension fund. "We know what the amount would be to get to 2018 without having to borrow that much," said Peduto. "We also know that if we do look to help the schools...that that will leave a hole in our budget. And we know [we can deal with] all of these things...with a fair payment in lieu of taxes."