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Regional Hospital Tax Impact
No one wants higher taxes, but how else would Whitpain pay for all the increased costs that a hospital generates?
Don't hospitals pay taxes?
Many hospitals (including Albert Einstein and Montgomery) are not-for-profit and are exempt from paying taxes including property tax. Township officials were expecting to negotiate an agreement for "payments in lieu of taxes" (PILOT) but these fees are usually lower than a taxable entity would pay. They are also difficult to impossible to enforce should the exempt organization subsequently refuse to pay.
It was estimated that a taxable development of the size proposed would pay approximately $4.5M to the school district. Even if Whitpain were able to negotiate and enforce a PILOT, the school district would get nothing.
What additional costs do hospitals generate?
Hospitals place heavy demands on public services. Their busy 24/7/365 emergency rooms require enhanced traffic control. Their stores of controlled substances and hazardous materials require additional attention from police and fire departments. In an emergency situation, it is the Township that would be ultimately responsible for evacuation or other emergency services.
Hospitals serve all segments of our society including prisoners, people under the influence and victims of violence. More police manpower is needed to keep the peace among these members of society versus that needed among the general population
Water and sewer demands of hospitals are markedly higher than other commercial businesses. The sewer authority of which Whitpain is a part recently had lifted a State mandated moratorium on new hookups. This would suggest a system unable to meet the intense demand of a hospital without significant capital improvement.
Why won't the voluntary payments cover the costs?
When local governments do receive voluntary payments, they are typically an amount that is 30-50% of the property tax that would be collected from a for-profit company. Even with a negotiated agreement, local governments have had great difficulty in collecting the voluntary payments. In Pennsylvania, a 1997 law and court rulings led to a drastic decrease in the amount of voluntary payments collected.
How have voluntary payments from hospitals changed since the 1997 court ruling?
In Philadelphia, voluntary hospital payments fell from $5 million to $800,000 with service demands remaining constant. In Pittsburgh, contributions peaked at roughly $10 million a decade ago before falling to just $620,000 in 2003. In suburban Indianapolis, Clarian Hospital West opened in 2003 and was expected to pay $130,000 annually. Only under pressure from the municipality did Clarian agree to pay $30,000-$50,000.