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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted: January 13, 2015 03:15 PM
From: Senator Ryan P. Aument and Sen. Joseph B. Scarnati, III
To: All Senate members
Subject: Purely Public Charities
 
In the near future, Senator Scarnati and I intend to reintroduce legislation to amend the Pennsylvania Constitution to clarify that it is the exclusive role of the General Assembly to write laws providing for the qualifications of institutions of purely public charity. Having passed the General Assembly in the 2013-2014 legislative session, the proposal must again be approved in this session before it can go before the Pennsylvania voters in a referendum.

This legislation is necessary due to a Spring 2012 Pennsylvania Supreme Court decision denying public charity status to Camp Mesivtah in Pike County. In Mesivtah v. Pike County Board of Assessment Appeals, the Court held that Camp Mesivtah was not a purely public charity even though it qualified as institution of purely public charity under the Pennsylvania Institutions of Purely Public Charity Act (Act 55 of 1997).

In the narrow 4-3 decision, the Court stated that charitable organizations cannot receive public charity status unless first satisfying a judicially created test. Particularly concerning is the Court’s judgment that a charitable organization does not relieve the government of some burden when it advances or promotes religion. This judgment conflicts with the language of Act 55.

It is important to keep in mind that the Act 55 was unanimously passed by the General Assembly to establish realistic and objective criteria for what is a purely public charity. Prior to Act 55, confusion and inconsistencies thrived and countless dollars were spent on litigation as the system relied upon the local courts’ interpretations of the HUP test. A clear set of standards was needed for the benefit of both non-profits and local government taxing authorities statewide and, as such, Act 55 passed with the support of state a local organizations representing both parties.

By elevating its own judgment above the will of the General Assembly, the Court has created uncertainty as to the qualifications for public charities in Pennsylvania. Charitable organizations statewide could have their public charity status called into question based on this decision. In fact, tax-exempt statuses for Warren Hospital, the Warren County YMCA, Habitat for Humanity, and other non-profits in the area have already been revoked since the Pennsylvania Supreme Court ruling.

The decision to revoke Warren Hospital’s tax-exempt status, a hospital which annually provides over $4 million of charity care to those most in need of services and unable to pay, causes concerns about the hospital’s ability to remain an independent community hospital. It also raises concerns regarding potential job losses due to service restructuring. Furthermore, Allegheny County has ordered the review of every tax-exempt property and in 2013, Philadelphia passed legislation requiring non-profits to recertify their charity status annually in an attempt to raise revenues.

In short, the 2012 court decision will continue to cause confusion regarding the criteria for purely public charity status and will lead to additional protracted litigation if clarification is not provided.

To address this issue, we intend to introduce legislation amending the Constitution to preserve the General Assembly’s role as policy maker in area of purely public charities and to provide certainty in this area of the law.

This proposal was introduced as SB 4 in the 2013-2014 legislative session by Senator Brubaker and was co-sponsored by: SCARNATI , ROBBINS , GREENLEAF , WHITE , YUDICHAK , RAFFERTY , ALLOWAY, BLAKE, BROWNE , MENSCH , HUTCHINSON, ERICKSON , PILEGGI , BAKER , ARGALL and EICHELBERGER.

If you have any questions, please contact Stephanie Buchanan at 717-787-6709 or sbuchanan@pasen.gov.


Introduced as SB4