Who’s Really to Blame for the Trash Tax?

Point the finger at Penn and the rest of the city's non-profits, who continually come up small when it comes to supporting the city's coffers

Mayor Nutter has resorted to picking through the city’s trash to find a way to balance next year’s budget with its $150 million shortfall.

Last week Nutter recommended to City Council a $300 annual trash fee for residents that would go a long way to help close the budget gap. Needless to say, many Philadelphians think the trash fee stinks.

What stinks even more is how little the city’s major non-profits organizations, most notably our so-called Meds and Eds, are doing to help fill the city’s empty coffers with needed cash.[SIGNUP]

I wrote about this subject for Philadelphia magazine last June in an article entitled “Centsibility,” arguing why Philly’s giants should start paying taxes like the rest of us. I was critical of how little money our major non-profit institutions contributed in lieu of paying taxes. Facts have now come to light, thanks to the Daily News, that make me realize those institutions are much stingier than I had imagined eight months ago.

To be fair, non-profits are under no legal obligation to pay taxes since they are tax-exempt. This legal exemption costs Philadelphia and many other jurisdictions a boatload of money since non-profits own so much real estate that is tax-free (unless it is a revenue-producing property like a bookstore).

Despite their tax-exempt status, it has been a practice for non-profits to voluntarily make contributions in a program called PILOTS, which stands for payment in lieu of taxes. When I wrote my article, the most recent records revealed that the city collected $1.3 million in PILOTS. I noted how woefully inadequate that was compared to what non-profits contributed in other cities.

For example, Boston University by itself contributed $4.9 million to Boston, almost four times more than all of Philadelphia’s institutions combined.

Now, Anthony Campisi of the Daily News reports that the latest numbers reveal the city brought in a tad less than $700,000 in PILOT contributions last year, a mere pimple on the city’s $3.7 billion budget hide.

Which institution was the highest contributor?

University of Pennsylvania? Nope.

Temple University? No way.

Jefferson Health System? Sorry, wrong again.

You could keep on guessing, and I doubt you will get the correct answer. Have you ever heard of Cathedral Village? It’s a retirement home in Roxborough. It gave $275,000, which puts it at the top of the heap.

As for the big guy on the block, the University of Pennsylvania, it gave zilch.

You don’t even have to look to Boston or go out of state to see how chintzy our non-profits are. The city of Lancaster, with a population of 56,000, one-fifth the size of West Philadelphia, receives $1.6 million in PILOTS. Erie, with its 104,000 citizens, received $1 million.

Despite the city’s need to find every dollar it can, I haven’t heard the word PILOT come out of the mouth of Mayor Nutter or other city officials. Compare that to the actions of Boston Mayor Thomas Menino, who put together a task force to coax his institutions to do more even though they already contribute over $32 million. Or Pittsburgh Mayor Luke Lavenstahl, who threatened his major institutions with a tuition tax if they didn’t renew an agreement they had with the city to make PILOTS.

With the exception of Philadelphia, that seems to be the trend throughout the nation. Local officials and legislators are talking tougher to encourage non-profits to pony up more. Granted, times are tough for non-profits just as they are for the jurisdictions in which they reside. And granted, non-profits contribute in their own ways. After all, Penn is the city’s largest employer.

Nevertheless, compared to their counterparts elsewhere, the track record of Philadelphia’s major institutions should be downright embarrassing to them.

Frankly, they run the risk of soiling their rosy reputations with a stench as bad as the garbage the mayor is trying to tax.

PHIL GOLDSMITH has held high-level positions in the private sector and in city government.