HARRISBURG - A House committee advanced a bill Tuesday affirming the Legislature's authority to define what a public charity is for tax-exempt purposes.
The Finance Committee approved the proposed state constitutional amendment on a mainly party-line vote. The measure, which won Senate approval in March, now goes to the House floor.
The legislation is a response to last year's state Supreme Court ruling denying tax-exempt status to a religious camp in Pike County. The Mesivtah Eitz Chaim of Bobov Inc. did not meet a standard set in a 1985 court case, the ruling stated. In the wake of the ruling, officials in Pittsburgh and other municipalities have challenged the tax-exempt status of some nonprofit institutions to reverse the shrinkage of their tax bases. The bill's sponsors said the constitutional amendment is needed to address a separation of powers issue created by the court ruling since it gave precedence to the 1985 case over a 1997 state law governing charities.
Rep. Mike Peifer, R-139, Honesdale, a panel member, voted against the bill. Mr. Peifer said he's uncertain how the bill would impact existing local agreements involving the charitable status of non-profit summer camps which own significant amounts of property in Pike and Wayne counties. Another panel member, Rep. Sid Michaels Kavulich, D-114, Taylor, voted against the bill. Mr. Kavulich said the measure is drawing opposition from local government associations.
The Pennsylvania State Association of Township Supervisors said the bill would restore a legal status quo that made it nearly impossible for a local government to prevail in a challenge of a non-profit that claims charitable status. Reps. Madeleine Dean, D-153, Abington, and Rick Mirabito, D-83, Williamsport, called for a committee hearing on issues involving tax-exempt charitable status and its impact on local government tax revenue. However, Rep. Eli Evankovich, R-54, Export, said the constitutional amendment which will also require approval from statewide voters is the necessary first step.
"If we don't amend the Constitution, we (Legislature) have no standing on the issue," he said.
The underlying problem is that non-profit institutions have replaced manufacturers as property owners in cities, said Mr. Mirabito. The fight between the Legislature and courts is just a symptom of the problem.
Contact the writer: rswift@timesshamrock.com