Rep. Mike Hanna nails it. The local property tax exemption for charitable organizations is already way too loose, and should become tighter.
Property-tax exemptions should be distributed about as easily as manhole covers are tossed about. If not, more of the tax burden falls on homeowners, who already are shouldering an unfair load of an unfair tax.
In some communities, nonprofits consume two-thirds of properties, and their tax-exempt status makes it impossible for local governments to levy fair taxes to pay for police and fire protection, schools and infrastructure.
Any proposal to tinker with our constitution should be viewed warily. However, the public-charities amendment is advancing without even a single public hearing.
Both the process and the policy are suspect. The amendment, I believe, would uphold an unfair system where large health-care organizations with multimillions of dollars in revenue are judged by the same standards as the local boys’ and girls’ club.
Thinking about the rationale for the exemption, the idea is that charitable services deserve exemption from taxes because they are providing public services at least equal to, or possibly better than what the government would otherwise spend that money on (police, public education, etc.)
We do want to encourage people to spend more on these services and their programmatic activities with the tax exemption. What we don’t want to do is create a perverse incentive for charitable organizations to gobble up a bunch of land. That does not make any sense.
Non-profits really should have to keep paying the portion of the property tax levied on land, and receive an exemption for operations. But we should also be tightening up the code so that giant hospital corporations like UPMC that are only technically organized as charities don’t get the tax-exempt classification.