Our View: Tax-exemption plan is off base

Our View: Tax-exemption plan is off base

Bills receiving ramrod support early in legislative sessions usually can be counted on to contain more than a smidgen of benefit to lawmakers supporting them.

State Senate Bill 4 is no exception. To say Republican legislators are ramrodding it through is putting it lightly.

Those lawmakers also are eager to have the sole authority to determine which nonprofits in the state are eligible for certain tax exemptions. The Legislature clearly is not keen on having such authority in the hands of the judiciary — SB 4 seeks to “remedy” that.

The state Supreme Court in 2012 slapped lawmakers’ hands over similar 1997 legislation that barred local municipalities from levying real estate taxes on large nonprofits with healthy bank accounts as well as exemption such organizations from sales and use taxes.

The court set the 1997 law aside, easing challenges from cash-strapped municipalities.

The timeline for SB 4 is not insignificant. Supporters of the bill want the state constitution amended quickly so such determination falls totally in their bailiwick. A version of the bill passed in last year’s legislative session. It didn’t require the governor’s signature.

Passage early in this session could fast-track the issue to a vote this May on a constitutional amendment.

Large, financially secure nonprofits — including hospitals and large nongovernmental service organizations — often remain exempt from real estate taxation, prompting a flurry of local officials to oppose the Legislature’s action.

At stake often are local services when residential taxpayers already are stretched to the limit by annual hikes in school and municipal property levies. The Pennsylvania Municipal League estimates up to 40 percent of properties within the average city are owned by nonprofits.

A report released last month by Pennsylvania’s auditor general pointed to potential property tax revenue losses of $1.5 billion in 10 counties.

Tax exemptions in and of themselves are not the issue. It’s the legislative rush to enshrine the language of SB 4 in the state’s constitution, effectively immunizing any determination of tax-exemption eligibility from court scrutiny.

Naturally, the lobbying of lawmakers from major hospital groups and nonprofits has been relentless. Unfortunately, the Republican-dominated House and Senate appear all too eager to accede to the nonprofits’ demands.

There’s little doubt Pennsylvania’s Constitution, most recently revised in 1968, would benefit from more than a little modernization.

Instead, SB 4 is an unseemly end-run around municipalities’ rights of court access in tax-exemption disputes.


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