Philly leaders love to rave about how rich the city is in higher educational and medical institutions. But the picture isn’t so rosy when you look at how little money they contribute to the city.
“Meds and Eds” are tax-exempt organizations, viewed by the law as charities — a definition stemming from before our universities and hospitals became big businesses with major real estate holdings, rocketing compensation packages and multimillion-dollar marketing campaigns.
They can still be asked by the city to make voluntary payments, known as PILOTS. But when it comes to PILOTS, Philly’s richest Meds and Eds — Penn and its health-care system, Jefferson Health System, even behemoth health insurer Independence Blue Cross — act more like Sisters of Charity. Today, of the city’s nearly $4 billion budget, only $1.4 million comes from PILOTS — rather miserly compared to Pittsburgh’s $4 million deal with its nonprofits. Boston gleans more than $32 million in PILOTS, of which $14 million comes from hospitals and schools — though that hasn’t stopped Beantown mayor Thomas Menino from trying to raise even more money.
Here, as the city tries to cope with shrinking revenues and increasing costs, its generous tax exemptions mean the middle class will pay — with increased taxes or fewer city services, or both. Sure, our Meds and Eds are invaluable — but so are many tax-paying businesses. And when the city revenue department proposed new regulations to clarify the rules on nonprofits, cries from lawyers and lobbyists forced the department back to the drawing board … with no timeline in sight. One lawyer who appeared at the hearing as a proponent of tax-free nonprofits just happened to belong to a firm whose partners are also exempt from city taxes, because their Cira Centre offices fall in the city’s Keystone Opportunity Zone — Philly’s version of an offshore tax haven. It appears this isn’t a case of the blind leading the blind, but of the privileged leading the privileged.
And Philly’s poorer for it.