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This isn't just about balance sheets. It's about the balance of power.

It's not easy to be the person who says the dumbest thing at a Pittsburgh City Council hearing. Especially if you aren't a city councilor, who typically has years of practice.

But Chatham University President Esther Barazzone is, it seems, a quick study.

"One does not negotiate with an ax hanging over your head," Barazzone primly contended Dec. 14, during a hearing on the controversial "tuition tax." 

To be fair, Barazzone's fellow educators have been saying much the same thing since Mayor Luke Ravenstahl first proposed the 1 percent levy on tuition -- an effort to replenish the city's wobbly pension fund. The schools want to help the city, they insist ... but they can't even discuss solutions unless the tax is dropped. 

This seemed to mystify several councilors, who've been negotiating with an ax over their heads for years. The city is currently under state financial oversight, governed by appointees who can take away millions in revenue unless the city does their bidding. It was a state-appointed oversight panel, in fact, that demanded Ravenstahl come up with the pension money in the first place.

Ironically, four of the panel's five members have ties to local universities -- including its current and former chair. So one set of educators is holding a knife to the city's throat -- even as another group complains about the ax over their heads.

But if it weren't for such tactics, would anyone negotiate at all? When was the last time you heard the Steelers say, "We're not talking to our free agents about contracts ... unless they first promise not to play anywhere else"?

The nonprofits themselves used to negotiate with axes over their heads all the time. During the 1990s, the city convinced them to contribute $3 million a year in Payments in Lieu of Taxes [PILOTs]. The nonprofits weren't acting entirely out of charity. Back then, state law allowed local officials to legally challenge the tax-exempt status of certain nonprofit operations. That threat was very much in the air during PILOT talks.  

But in 1997, the state changed the law -- with considerable input from hospitals. The newly minted "Purely Public Charities Act" made those challenges almost impossible to win, and the PILOTs began crashing. 

Earlier this year, when a consortium of city nonprofits offered the city some funding, they pledged less than $2 million a year. By comparison, a 2007 audit by the City Controller's office shows that UPMC alone once paid between $1.4 million and $1.7 million in yearly PILOT payments.

Think about that. Despite the spectacular recent success of UPMC, Highmark, Pitt and the rest, big nonprofits are pledging one-third less than they gave 15 years ago. 

The lesson: Power concedes nothing without a demand. Or as Councilor Darlene Harris put it Dec. 14, "The reason I can't take [the tuition tax] off the table is because I was here when it wasn't on the table." 

A tax on college students is a desperate, stupid ploy. (For one thing, it leaves UPMC and other big nonprofits untouched.) But the city is in a desperate, stupid situation. Its ability to negotiate with nonprofits directly has been hamstrung. And efforts to tax them along with everyone else have failed, most recently during Mayor Tom Murphy's administration. 

This isn't just about balance sheets. It's about the balance of power. These are among the city's largest employers. Do they share obligations with other employers ... and who decides how large those obligations should be? Should public officials just take the nonprofits' word for it? Or do our elected officials have a say, the way they do in determining how much the rest of us contribute?

Council is set to take a preliminary vote on the tax the day this issue comes out. If the tax goes through, there will be a drawn-out court battle ... one I expect the city to lose. That would leave city officials with even less leverage, which is why I think they should drop the effort. But I can't blame them for clinging to the one option that big nonprofits seem to fear.  

And by the end of the Dec. 14 meeting, the impasse seemed inescapable. 

"This is a situation of trust," William Carl III of the Pittsburgh Theological Seminary pleaded.

"I would trust you more," responded Councilor Ricky Burgess, "if there were money on the table."

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