Still a bad idea, the state Senate will at least hold a hearing *before* it votes on tax-exemptions for non-profits: John L. Micek

State Budget Senate GOP

(Carolyn Kaster, The Associated Press, file)

(*This post has been updated to include new comment from Pennsylvania Auditor General Eugene DePasquale)

It's still a terrible idea, but at least the Senate Finance Committee is now going to hold a hearing on a proposed constitutional amendment that some municipal leaders fear will make it harder for them to challenge the tax-exempt status of non-profits.

The panel chaired by Sen. John Eichelberger, R-Blair, will hold a hearing sometime next week, Senate Republican spokeswoman Jennifer Kocher said Wednesday morning.

A final Senate vote is expected the week of Feb. 16, Kocher said in an email.

As I noted last week, at issue here is a push, with the Hospital and Healthsystem Association of Pennsylvania out front, to give the Legislature the final say over which non-profits are "purely public charities" in the eyes of the law.

For the last 15 years or so, that power of final determination has resided with the courts.

The amendment received legislative approval in last year's session. Under the law, it has to get approval from the House and Senate in this year's session to get onto the statewide ballot, where voters would have the final say.

The proposal sponsored by Sen. Ryan Aument, R-Lancaster, was vigorously debated during a Senate Appropriations Committee meeting on Tuesday.

The panel's Democrats, led by ranking member Vince Hughes of Philadelphia, reiterated arguments that the bill was being needlessly fast-tracked so it could get onto the spring primary ballot.

He echoed complaints of the bill's opponents, who charged during a news conference last week that the amendment was being sent to voters with little or no public vetting.

In a conversation last week, Eichelberger told me he planned to hold a series of hearings -- but only after the full Senate voted on the amendment, which smacked of "barn-door closing."

Opponents of the bill raised the same argument yesterday on Twitter:

On Tuesday, the committee's chairman, Sen. Pat Browne, R-Lehigh, countered that the committee could still send the bill to the floor and hold a public hearing on it. And that's what happened.

Browne added that any debate on the bill's consequences -- unintended or otherwise -- was separate from the debate over the amendment.

As I noted last week, between 20 percent and 40 percent of all properties in the average city are owned by non-profits, according to thePennsylvania Municipal League, a lobbying group for city governments.

And that means these non-profits, often mega-huge hospitals and universities, mostly get a pass on paying local property taxes, while the locals are asked to make up the difference.

In their defense, some of these large non-profits make what are known as payments in lieu of taxes, or PILOTs, to mitigate their impact on the tax rolls. But not all of them do that. And there's no requirement that they do so.

Further, some properties owned by larger non-profits, like those hospitals and universities, also include parking garages and other profit-making entities. And they're tax-exempt.

Taken together, that's a big chunk of change that municipalities are missing out on --about $1.5 billion's worth of tax liability in 10 counties -- according to a report released late last year by state Auditor General Eugene DePasquale.

*In a statement released Wednesday DePasquale called for "full transparency" in the debate over the amendment.

"Changes that improve government operations are great, so long as the public is fully aware of the impact of those changes," DePasquale said. "I want to ensure that every Pennsylvania voter fully understands the impact of a constitutional amendment before it is thrust on the election ballot for a decision."

And Gov. Tom Wolf isn't a fan either. The Guv has "serious concerns about amending the constitution for this purpose," administration spokesman Jeffrey Sheridan said.

Senate Democrats, including Sen Rob Teplitz, D-Dauphin, hammered home those points during Tuesday's Appropriations Committee meeting.

But Teplitz's description of some of these entities as "Mega-Million" nonprofits (which some of them undoubtedly are, got a him scolding from Senate President Pro Tempore Joe Scarnati,R-Warren.

Scarnati told the panel that Warren County Commissioners are considering whether to tax the Warren County hospital and the local YMCA -- which are hardly mega-bucks operations, he said.

And he questioned whether that decision to tax would prompt the hospital to "put off buying a new MRI machine," or force the local Y to cut programs so they could make their tax bills.

And Scarnati does have a point -- some nonprofits are genuinely small operations that deserve their tax breaks.

But there is an order of magnitude's difference between small nonprofits and behemoths such as UPMC and Pinnacle Health that are behind the push for this amendment.

These mega-operations are much closer to Fortune 500 corporations than the nonprofits envisioned by the original law.

If this debate is about restoring the balance of power to the Legislature -- where, let's face it, lawmakers are more likely to heed deep-pocketed corporations than small non-profits -- that's one thing.

But if this is about rigging the system to ensure that huge nonprofits don't have to pay their fair share of taxes, pushing it down onto local property owners, then that's another matter entirely.