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May 29, 2003

Mayor to plead case for taxing non-profits

Mayor Tom Murphy plans to talk at the June 3 Faculty Assembly meeting about the city’s financial woes and plead the case for taxing non-profit institutions such as Pitt.

The city will face a $60 million shortfall starting July 1 unless it implements a series of budget cuts, and Pennsylvania’s General Assembly grants additional state aid and approves new city taxes and tax hikes.

A report issued early this month by Gov. Ed Rendell’s task force on Pittsburgh finances listed a range of options for increasing city revenues.

Rendell pointed to six items for special consideration. At least four would directly affect Pitt and its employees:

• Implementing Murphy’s proposed 0.5 percent payroll tax on all city employers, including non-profit institutions such as universities and hospitals that currently are exempt from payroll taxes.

• Eliminating exemptions to the city’s business privilege tax. State regulations exclude non-profit organizations, banks, utility companies, brokerage firms, manufacturers and some lawyers, doctors and architects from the bulk of these taxes.

• Changing state law to increase payments in lieu of taxes by tax-exempt institutions for city services such as police and fire protection, street cleaning and road building. Currently, Pitt pays $85,000 annually to the city in lieu of taxes.

• Adjusting for inflation the occupation tax on city workers in effect since 1965, which would increase the tax from $10 to $58 per employee this year. According to Rendell’s task force, the occupation tax should keep going up with inflation and allow exemptions for low-income and part-time workers.

“Rendell said he will submit final Pittsburgh financial recommendations to the Republican-controlled General Assembly by its return from recess in early June,” reported the University of Pittsburgh Government Highlights newsletter.

“Pittsburgh is very important to this University,” Chancellor Mark Nordenberg said at March’s Senate Council meeting. “It is our home. We want the city to be a strong, vibrant, economically healthy place. So we do have a stake in the resolution of the issues presented by these municipal budget problems.

“But at the same time, the solution is not to strip organizations like schools, hospitals and churches of their tax-exempt status.”

Nordenberg has urged city and state officials to recognize Pitt as a major employer and “economic engine” in the region, and one that faces serious financial challenges itself: chronic underfunding from Harrisburg, rising utility costs, and a 28 percent hike in its health insurance premiums beginning July 1, among others.

The June 3 Faculty Assembly meeting, in 2P56 Posvar Hall, is scheduled to begin at 3 p.m. and is open to the public.

Murphy’s presentation is expected to be made early in the meeting, although the exact time will depend on the mayor’s schedule.

— Bruce Steele

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