Require tax-exempts to pay municipal fee in lieu of taxes
Pennsylvania lawmakers have the power to help financially beleaguered cities in the commonwealth — including Butler — effect a turnaround in their worsening financial circumstances.
Trouble is, they have so far not had the collective spine to do so, and there's no evidence that that will change.
Meanwhile, on the municipal front, the issue retains its "hot potato" status as well.
The issue in question is some formula of required contributions by currently tax-exempt properties to their home municipalities in lieu of real estate taxes. That would include churches, schools, hospitals and nonprofit agencies or groups.
In Butler, tax-exempt properties account for 35 percent of Butler's 2.7 square miles. It's reasonable to believe that a required, reasonable contribution from the entities that own those properties could help Butler get off its current road toward bankruptcy.
Such a fee, coupled with hard decisions by the city council involving the cutting of annual costs — meaning not just salary, but also pension and health care costs — of fire, police and other departments, could help the city avoid bankruptcy or filing for distressed status under the state Municipalities Financial Recovery Act, called Act 47, which is not a panacea.
Considering the city's worsening money plight, it would seem that community-minded tax-exempts would, without any official requirement to do so, recognize a responsibility to help their community maintain at least a solid, if not prosperous, existence.
However, tax-exempts here as well as in other places across the state are content to enjoy their tax-free status while their communities struggle to maintain basic services, many of which benefit them.
It's true that some of Butler's problems are rooted in past and current city leaders' failure to make tough decisions — such as, even through attrition, moving toward a combination-type fire department, with a core of paid professionals supported by well-trained volunteers. Volunteers could be paid a predetermined amount for the time they are mobilized to fight fires or to perform other functions that the paid members of the department are unable to carry out.
Other cities function with such a hybrid system; Butler also should consider it.
Likewise, this city and other communities must come to grips with the issue of employee contributions toward their health care. The total estimated 2010 contribution for health insurance by all Butler city employees combined is $17,956; the 2010 cost to provide health insurance to one city employee with a family is $19,145.
Most of this city's tax-exempt entities don't have piles of excess money. In fact, consistent with the overall economy, many are struggling to maintain the services they traditionally have provided.
And, some leaders of those entities might question why they should provide a special financial contribution to the city when the city has failed to exercise all of the options it has available to cut costs.
That's a logical point.
But the bigger point is that all of the tax-exempts, whether they pay anything or not, have access to all vital city services. They are protected by the police and fire departments. There is year-round street maintenance to enable people to get to them, even during the harshest winter conditions. There are other public works functions aimed at having a city that is attractive and hospitable.
If those facilities and organizations have a conscience, they should acknowledge their responsibility to provide something toward the city's financial well-being.
If lawmakers in Harrisburg had the courage, they would pass a law to mandate that most tax-exempt entities make a contribution to their municipality based on the size of their operation and their annual budget — a formula that would be stipulated in the law.
Any such law also should stipulate that tax-exempts' property holdings not specifically involved in the performance of their basic functions — such as hospitals' parking garages and churches' community centers — be subject to regular real estate taxation.
It's not a viewpoint tax-exempts like to hear, but they should acknowledge the tattered picture that their community's bankruptcy or distressed status paints, not only for the government but for themselves.
Most entities like to boast that they are an important component of a vibrant community. The financial crisis evolving in this city — and others — will stifle such bragging rights. Some predictions suggest Butler could face bankruptcy in a few years
Instead of remaining mired in partisan politics, state lawmakers on both sides of the legislative isle should commit themselves to take a hard look at the tax-exempts' current lack of financial support toward their communities.
Granted, it's not a discussion they relish, but it's a discussion long overdue.
Tax-exempts, especially the biggest ones, have gotten a free ride long enough.
