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York City budget could get a boost from bill tackling tax-exempt properties

Logan Hullinger
York Dispatch
The York County Administrative Center on East Market  Street in York City Thursday, January 23, 2020. Philadelphia Street in York City Thursday, January 23, 2020. State legislation could help municipalities that have a number of tax-exempt properties which burden their bottom lines. Bill Kalina photo

Legislation at the state Capitol could boost York City and other municipalities that grapple with a high number of tax-exempt properties burdening their bottom lines. 

The bill, authored by state Rep. Robert Freeman, D-Northampton, would set up a "Tax-exempt Property Municipal Assistance Fund" for municipalities that are composed of at least 15% tax-exempt properties. The committee passed the measure 22-1 Wednesday, Jan. 22, with one Republican voting "no."

"(The bill) gives us the opportunity to get funding and offset the taxes we don't get from these exempt properties," said state Rep. Carol Hill-Evans, D-York City, who is co-sponsoring the bill. "These funds would alleviate the burden for our municipality."

Rep. Carol Hill-Evans discusses concerns as York County Commissioners meet with state lawmakers and poll workers to discuss last weeks election as well as  address necessary improvements needed for future elections, at the York County Administrative Center in York City, Thursday, Nov. 14, 2019. Dawn J. Sagert photo

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Tax-exempt properties include churches, schools and nonprofits. In county seats such as York City, the number of properties can be even greater because of the variety of government buildings, which also qualify.

The legislation, if passed, would set up a fund that would supply more than 600 municipalities 10% of the tax revenue they would receive if such properties paid their fair share of taxes. The bill caps the aid at $1 million.

The fund would be made possible by the state's 18% liquor tax, which at one point was used for flood relief in Johnstown, Cambria County, after flooding devastated the area in 1936. The tax is now just a line item in the state budget streaming into the general fund.

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Mike Straub, spokesman for the House Republican Caucus, said on Friday that the GOP hasn't yet discussed the legislation.

Heidelberg United Church of Christ on West Philadelphia Street in York City Thursday, January 23, 2020. State legislation could help municipalities that have a number of tax-exempt properties which burden their bottom lines.ÊBill Kalina photo

Roughly 38% of York City's properties are exempt from taxes. Based on 2019 statistics, they would generate more than $11.5 million in revenue if they were taxed, according to the city treasurer's office. That's more than 10 times the bill's maximum backfill.

That missing $11.5 million would account for 10.9% of the city's total 2020 budget. 

The city does have a payment in lieu of taxes, or PILOT, program that gives nonprofits an option to cut the city a check. In 2019, the city received nearly $698,000 from 11 organizations.

Edgar Fahs Smith STEAM Academy in York City Thursday, January 23, 2020. State legislation could help municipalities that have a number of tax-exempt properties which burden their bottom lines. Bill Kalina photo

WellSpan contributed $585,000 toward the PILOT in 2019, making it by far the largest contributor. However, that number is far less than it would owe if it were taxed: $5.4 million to the city and $9.5 million to York City School District.

City Council President Henry Nixon, who worked with former Mayor Kim Bracey's administration to expand the program, said the city's situation isn't good financial practice.

"If you had a business and 38% of your customers didn't pay you, but you still had to service them, how long would you last in business?" Nixon said.

— Logan Hullinger can be reached at lhullinger@yorkdispatch.com or via Twitter at @LoganHullYD.