The need to go after voluntary payments from tax-exempt colleges, medical facilities and organizations came up at three Luzerne County government gatherings last week.
“It’s a difficult decision that this council has to make, but one that has to be made,” acting county Manager C. David Pedri said at the council’s work session.
Pedri made the same pitch at the council’s strategic initiatives meeting and in a speech before Hazleton area business and community leaders last week.
Harrisburg-based Public Financial Management, the county’s outside financial consultant, has recommended the push for such payments in lieu of taxes, known as “PILOTs,” in its proposed recovery plans for more than a decade, including one released in October.
Past county officials have acknowledged the merits of the proposal over the years, but a structured program never materialized.
Public Financial estimates the county could increase revenue $500,000 over five years by phasing in payments equal to 10 percent of current tax rates from the top tax-exempt colleges and medical-related facilities.
As of January, there were 8,446 tax-exempt parcels with a total assessed value of $2.7 billion in the county, the recovery plan said.
The county receives about $146,000 in voluntary payments from tax-exempt entities annually, the plan said.
The council last week agreed to Pedri’s proposal to hold a special work session, possibly in June, to discuss the matter with impacted tax-exempt entities.
The county would present information about the cost and value of services provided to institutions and organizations that don’t pay real estate taxes, including 911, emergency management, the criminal justice system and human services, Pedri said.
Pedri said he’s also collecting figures on voluntary payments made to other counties.
County officials must weigh whether to include religious organizations and entities that have no employees in the payment request, Pedri said.
Tax-exempts must be sold on the plan because they can’t be forced to pay, he said.
“We only get one chance at it to do it the right way,” Pedri said.
Wilkes University representatives, who recently attended council meetings on an unrelated request involving pass-through financing that has no impact on county funds, told the council the institution is open to discussing payments in lieu of taxes.
Pedri told the strategic initiative committee he also has received inquiries about whether some property should remain tax exempt, including the portion of the King’s College “King’s on the Square” property on Public Square in Wilkes-Barre, which is slated to soon house a Chick-fil-A eatery.
County Assessment Director Anthony Alu said county solicitors are researching that matter and have not made a determination.
Pedri told the Hazleton area leaders the county must explore the voluntary payments and other new revenue streams to get away from “the old tax-and-spend mentality.”
The county needs revenue to clear out a deficit pegged at $16.9 million the end of 2014 and cover rising expenses, such as a growing pension fund subsidy. The county’s 2016 budget also relied on $7 million in revenue that won’t be available again or is earmarked for other purposes.
Standard & Poor’s also likely won’t consider boosting the county’s speculative credit rating until the county implements some of Public Financial’s recommendations, Pedri told council members last week.