Should Philadelphia’s nonprofits, specifically tax-exempt universities, be obligated to compensate the city to help alleviate its massive debt? It’s a question that many in the public are considering in light of the financial crisis that has crippled the School District of Philadelphia.
On Sept. 26, the Inquirer published a front-page article raising the issue. It questioned whether or not the University of Pennsylvania, along with the rest of the city’s universities, should offer the city a Payment in Lieu of Taxes – or PILOT – to make up for its tax-exempt status.
The issue is complicated at Temple, as its status as a state-related institution blurs the distinction between being a private or public institution. The city can only request – not require – payment and Temple hasn’t contributed any significant revenue in the form of a PILOT since the program’s inception in 1994.
The city hasn’t laid out any plans to expand the PILOT program in light of the school district crisis, other than a pledge to reevaluate tax-exempt properties next year.
While we recognize that the city is not asking Temple for any payment in the form of a PILOT, we feel it is important to contribute to the discussion at a time when it seems most relevant.
In this issue, we are running a series of articles that show that the amount of revenue an expansive PILOT program in the city would generate would be insignificant in the face of the city’s budget shortfall, the city’s broken tax code poses a much greater issue than collecting donations from nonprofits and – most significantly to Temple students – a PILOT from Temple would likely cause the university to raise tuition or cut programs.
The question of whether or not universities should pay a PILOT is borne out of a number of city issues – mainly its inability to properly collect taxes. The PILOT question can’t be answered without putting the issue into proper context. We hope to provide that context.