Although almost half of the tax base in State College is tax exempt — the largest portion of which is Penn State — and revenue from these non-profits could be a positive thing, a tax will likely not be levied any time soon, Borough Manager Tom Fountaine said.
“Tax exempt property is certainly a serious issue in State College,” Fountaine said. “Additional taxes from nonresident taxpayers that are consuming municipal service would certainly be a positive thing for the borough.”
Last month State Sen. Jim Ferlo, D-Allegheny, proposed a bill that would impose a tax on non-profit organizations in Pittsburgh with more than 250 employees, including universities and hospitals, in an effort to bring revenue from the large percentage of tax exempt land in the city.
Ferlo said that one of the problems that led to the proposal is offering police and fire services to these tax exempt organizations without any revenue returning to the city’s operating budget that funds those services.
“For years, the city has struggled to get voluntary payments,” Ferlo said. “The problem is, most people don’t step up to the plate and pay.”
State College Borough Council President Don Hahn said that a similar tax to Ferlo’s proposal hasn’t been considered in State College, due in part to the fact that Pittsburgh has more large nonprofits than State College and the borough has a working financial relationship with the university.
“The issue is applicable, but the borough’s relationship and financial condition renders it less pressing,” Hahn said. “We’re not suffering as much as other cities, though we do still share a lot of problems.”
Hahn said that Penn State and the borough have a payment-in-lieu-of-tax agreement where the university pays a certain amount of money for the commercial activity on-campus, such as the businesses in the HUB-Robeson Center.
Last year, the university paid more than a half million dollars for this agreement, Fountaine said.
“That doesn’t come close to compensation for the tax exempt property, but that does help,” Fountaine said.
Penn State spokeswoman Jill Shockey said that Penn State entered this agreement in 1992 with State College, several other nearby municipalities and Centre County.
“From 1992 through the end of 2012, Penn State has provided a little more than $30.5 million in payments,” Shockey said.
The university also contributes to the municipal services it uses, Fountaine said. Penn State Police and the State College Police Department frequently work together to patrol neighborhoods near campus, Fountaine said. Penn State also pays into the Alpha Fire Company that services the borough, Fountaine said.
Shockey said that Penn State also funds a bomb response and disposal team and hosts the Centre County Certified Hazardous Material team.
Fountaine said that the borough has considered modifying sales tax and taxing the sale of alcohol to add to incoming revenue, but State College hasn’t considered these reforms for their next terms.