Non-Profits and the Budget

Four candidates for governor of Pennsylvania are split on whether or not the state should refund nonprofits who took out loans during last year’s 101-day budget impasse.
The gubernatorial hopefuls made their comments at a forum sponsored by the United Way.
When state funding to nonprofits and counties dried up last summer, many organizations took out large loans to pay their bills.
Democrats Dan Onorato and Joe Hoeffel say the state should fund those groups’ interest payments, but Auditor General Jack Wagner is more hesitant.

"Should we recoup those counties? Sure. If we could, yes. I’m not sure the state presently is in a fiscal condition to do that. Based on the serious financial challenges facing us, now, in the next budget."

Hoeffel says he’d stop all payments, if the state entered the new fiscal year without a spending plan.

"I won’t sign a temporary budget. I’ve seen this wreck the budget process in Harrisburg and in Washington. They don’t pass budgets on time in Washington. They sign—pass continuing resolutions, temporary budgets here. There have been seven straight late budgets. So no budget July 1, nobody gets paid."

Onorato criticized Governor Rendell for withholding funding from nonprofits during the 101-day budget impasse.

"And that’s what happened here. Because a lot of the other programs were funded. There was temporary budgets. There were payments being made to employees in other departments. And yet you have this department of human service bearing the political burden of this debate."

Republican Sam Rohrer says Pennsylvania government is running out of money, and may soon find itself in the same dire financial straits as California and other distressed states. Rohrer said the federal stimulus package did more harm than good.

"Because there’s two and a half billion dollars in this budget that will run out this year, that has to be made up. That’s the rub of where it goes from here. What should have done last year – spending reductions of about ten percent should have taken effect, and we’d be sitting here with a balanced budget."

All four candidates vowed to pass budgets by the July 1 deadline, if elected.
Republican Tom Corbett and Democrat Anthony Williams were both invited to the forum, but didn’t attend.

Fontana Wants Fee For Nonprofits

Lawmakers in Harrisburg are being asked to consider legislation that would strip away some of the tax benefits of being a nonprofit organization in Pennsylvania. The measure sponsored by State Sen. Wayne D. Fontana of Brookline and State Rep. Timothy J. Solobay of Washington would leave the first 50,000-square feet of floor space owned by a nonprofit organization tax free and then a $100 per 1,000 square foot fee would be assessed on any remaining space. The idea is to hit the large nonprofit organizations while leaving small churches and charities out of the tax. Fontana says when he first talked about the amendment to the Institutions of Purely Public Charity Act there was not much support but now that Pittsburgh Mayor Luke Ravenstahl has brought up the issue of schools paying their “fair share” through a tuition tax he thinks he will have more support. Fontana says this may not be the best plan but it is a starting point for debate. Fontana says, “It’s my opinion that they have a financial obligation to the city or municipality for the services they get and the services they receive. Many of them have accumulated vast amounts of real estate and those things are hurting our tax base.” The bill would allow nonprofits and municipalities the option to continue with existing voluntary agreements, to impose a fee based on total square footage of properties, and to establish a limited real estate tax for properties owned by institutions. Rep. Solobay says, “It isn’t just big cities affected by tax exempt real estate properties. We have similar issues in the City of Washington and Washington County which I represent as the number of tax exempt properties grows and the burden of paying for services falls on the shoulders of property owners who do pay taxes. The intent of this bill is to help combat this problem by having non-profit/tax exempt entities pay a partial tax.”