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Pennsylvania House of Representatives
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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: April 24, 2018 01:33 PM
From: Representative Tim Hennessey and Rep. Thomas J. Quigley
To: All House members
Subject: Helping school districts deal with losses of tax revenues when “for profit” buildings are sold to non-profits.
Tom Quigley and I invite your co-sponsorship of a bill to address the loss of property tax revenues to school districts where a for-profit hospital sells its institution to a non-profit. The example that I’ll cite is the recent sale of six hospitals by Community Health Systems (a for-profit entity) to Tower Health (a non-profit.)

Each of these six hospitals used to pay substantial taxes to the school districts where they are located. In each case, the school boards had no say in the transaction which occurred, but they’ll suffer millions of dollars in lost revenues each year because of it.

The Pottstown School District will lose $970,000 each year because the executives of the two hospital systems decided to make this sale. The Pottstown School District is already hugely disadvantaged by the delay in fully implementing the Fair Funding Formula (to the tune of $13 million every year.) This additional loss of close to one million is crippling.

This is precisely the kind of problem which requires a statewide solution. Our proposal would create a stand-alone account within the General Fund to cover the loss sustained each year by these school districts. The money for this stand-alone account would come from current tax revenues which would be transferred into this account and would be in addition to the “new money” distributed by the fair-funding formula.

A school district would no longer receive the on-going subsidy when/if the building is returned to a tax-paying status.

By doing this we can assist these suddenly- imperiled school districts, while still addressing the long-term school funding problems across the Commonwealth.

These school districts did not have any say in the tax losses they face. This problem comes from the favorable tax treatment state law affords these multi-million dollar (and sometimes multi-billion dollar) transfers of ownership. While our school districts may have no say in the transfers, we can help protect them from the adverse consequences.

Please join us by co-sponsoring this proposal.

Introduced as HB2483