The Pittsburgh Tribune-Review recently published an op-ed by La Follette School student Charles Pratt about payments in lieu of taxes (PILOTs). Pratt, an officer with the City of Madison Police Department, wrote the op-ed for the State and Local Government Finance (PA 891) course.
In the op-ed, Pratt recalled his time as a paramedic in Pittsburgh, PA, where he also received his bachelor’s degree. Pratt and his colleagues were frustrated that the already strained Emergency Medical Services (EMS) system was being overwhelmed by University of Pittsburgh students – non-taxpaying, non-city residents.
According to City Finance Director Paul Leger, about 40 percent of Pittsburgh’s assessed property value is untaxed, including the University of Pittsburgh and two hospitals in the Oakland neighborhood, where Pratt worked. Local governments, though, rely on property tax revenue to fund their EMS system and other public services, Pratt wrote.
“As the industries of many American cities, especially in the Rust Belt, change from manufacturing to health care and education, local governments need to find a way to receive revenue from these institutions that own a significant amount of valuable property and put a significant strain on city services,” Pratt’s op-ed said.
Some cities – such as Boston – use payments in lieu of taxes (PILOTs), which are negotiated by the locality and nonprofit institution. PILOTs vary widely, are often unequal and unreliable, and are unlikely to adequately satisfy the revenue lost by tax-exempt property. One option, he said, is more fee-based funding of services.
“As city economies transition to a greater reliance on nonprofit organizations, local government needs to find a way to recoup revenue lost from the increasing proportion of tax-exempt property. However, unlike the factories of the past, universities and hospitals are much less mobile and more reliant on the municipality for their image,” Pratt wrote.
“It is therefore in their interest to be located in a successful, well-reputed city. This gives hope to the residents of Pittsburgh that health care and academics could become more fiscally sustainable than steel and coal,” he said.
Pratt received his bachelor’s degree in emergency medicine from the University of Pittsburgh as well as an associate’s degree in nursing from a community college. He worked as a paramedic in Pittsburgh for five years before relocating to Madison in September 2017. His sister, Eleanor, also attends the La Follette School.