As UPMC has expanded its real estate empire, it has taken large amounts of taxable property off the tax rolls. That means even tighter budgets for the city, the county and our schools.
So while we’re taking teachers out of classrooms and cutting transit service to the bone, can we really afford to subsidize UPMC’s seven-figure executive paychecks and land buying binges?
As recently as the 1990s, local governments in Pennsylvania used to receive so-called “payments in lieu of taxes” from large non-profits like UPMC, but that changed when the legislature passed Act 55 in 1997, which made it more difficult to challenge the tax exemptions of non-profits. Now there are very few non-profits left paying PILOTs in Pittsburgh, including UPMC.
UPMC defends its decreasing contributions, claiming that any taxation of UPMC would result in a loss of community benefits.
But as Eric Heyl in the Pittsburgh Tribune-Review points out, the suggestion that UPMC spends all of its “not-for-profits” to benefit our region is something only “dummies” would believe. UPMC’s hundreds of millions in profits is invested in many places besides Pittsburgh – including Qatar, etc. UPMC’s annual contribution to the Pittsburgh Promise, while welcome, is less than the amount it overpaid to acquire the land for UPMC East.
Luckily, a state Supreme Court case from earlier this year has since made it potentially easier for local governments to challenge non-profit tax breaks again.
According to the Pennsylvania Constitution, nonprofit corporations must act as purely public charities, substantially benefitting the communities they serve and responsibly handling the charitable assets with which they are entrusted.
UPMC’s behavior has many people asking whether it really meets the test.
Nicholas Carfardi, a charity law expert believes UPMC lacks appropriate oversight. “If they were a business corporation, the shareholders would be filing dividend lawsuits saying you’re wasting the assets of the corporation. But the charity boards tend to identify with the senior executives and they don’t exercise proper oversight.”
That’s why many elected leaders, community organizations, and taxpayers believe it’s time to change our relationship to UPMC, from one where decisions about how resources are used are made by a tiny number of executives and loyal board members to one where all stakeholders have a say.
Let’s make it Our UPMC.