That sound you heard on Mon., Dec. 17, was the other shoe dropping. It was a golfing shoe, of course: one of the pair that Mayor Luke Ravenstahl wore this summer, when he was out at a charity golf event with UPMC representatives who paid for his ticket.
On Dec. 17, Ravenstahl asked city council to give UPMC $100 million in tax credits, in exchange for the health-care giant’s pledge to contribute to the “Pittsburgh Promise.” The Promise is a college-scholarship program for Pittsburgh Public Schools graduates; UPMC has pledged to fund it with $1 for every $1.50 contributed by others, up to $100 million.
The pledge itself was announced at Dec. 5 press conference held at the Downtown CAPA High School. Officials from UPMC, the city and the school district all talked about what UPMC does for the city. But no one mentioned what UPMC wanted the city to do for it. The PR glow was undimmed by talk of tax credits or quid pro quo.
It must have slipped their minds in all the excitement.
In fairness, this deal may cost us nothing. UPMC is a nonprofit, and doesn’t pay city taxes now. The “tax credit” would apply only if state law, which prevents taxing such entities, were changed. That seems unlikely: Pittsburgh has complained for years about tax-exempts not sharing the burden, and Harrisburg has done nothing.
Given that, Ravenstahl is just doing what others have proposed already.
During this fall’s mayoral campaign, Republican challenger Mark DeSantis pledged that, instead of trying to tax or arm-twist nonprofits, he’d get them to help cover the city’s depleted pension fund. Nonprofits, he said, would put more money in a “lockbox” than into a sieve, which the city’s leaky operating budget can be. Ravenstahl’s deal isn’t much different — except that UPMC is helping the next generation of workers, rather than the last one.
The problem is, there’s still this generation to think about. Many parents save up for their children’s college education … but usually, they make sure they can pay the gas bill first. Ravenstahl has reversed those priorities, at a time when the city’s day-to-day finances are shaky.
And how much harder will it be for Ravenstahl to plead for taxing power over nonprofits now, when he’s giving up revenue we don’t even have? “UPMC, the largest private-sector employer in the region, doesn’t pay a dollar in taxes!” city officials always say. Well, now it probably never will, no matter what Harrisburg does.
Also, what’s to stop others from making the same demand when they contribute to the Promise? UPMC’s gift is a matching donation; it will contribute when others do. So what’s to prevent, say, the insurance giant Highmark (itself a nonprofit) from demanding tax credits before it contributes? I mean, why should they contribute so that UPMC — which offers a competing insurance plan — can get tax immunity? Do we expect Highmark to help students and competitors, but not itself? If nonprofits were that generous, they’d be paying city taxes already.
This whole circus, meanwhile, just reaffirms the reason UPMC pisses everyone off. Their irritatingly meaningless ads always tell us about the wonderful things they do for us, yet you can’t escape the impression they’re doing pretty well for themselves. UPMC announced profits of $618 million in its most recent fiscal year: I don’t necessarily begrudge them all that money — but I resent the implication that I’m supposed to thank them for earning it. And now, I don’t feel like thanking them for the “Promise” either. I mean, lots of us contribute to good causes: Can we get a dollar-for-dollar break on our tax bills too? Or does that only work when your contributions support mayoral golf outings?
The sad part is Ravenstahl’s attempt to force the deal through before council had time to study these implications. (On Dec. 18, councill voted to hold the matter over for a public hearing.) Why? We went nearly a full year before the Promise had any funding to speak of; we could certainly take a couple of weeks to study the strings being attached to the funding now. If we don't, council could be setting the stage for disaster.
So let me put this in the terms that seem to govern city politics these days:
(Editor's note: The third-to-last paragraph was altered from the print edition to reflect council's vote for a hearing, which took place after this story went to press.)