The Pittsfield City Council's unanimous approval last week of a petition to explore the possibility of nonprofits making voluntary payments to the city in lieu of taxes is a welcome initiative in a city that must find additional sources of revenue. With state aid to communities regularly being cut or in jeopardy of being cut, towns and cities across the state must explore this option.
The petition passed on to Mayor Daniel Bianchi was brought before the Council by Ward 6 Councilor John Krol and Councilor at large Melissa Mazzeo. Councilor Mazzeo broached this idea at the recent meeting during which the councilors wrestled with the question of whether residents or businesses should be burdened with the bulk of a necessary increase in the tax rate. There is no good answer to that question, but a way around it is the exploration of new ways to raise tax revenue.
The term "nonprofit" is misleading as many nonprofits are profitable -- it actually refers to the way in which they are taxed or not taxed. Not all nonprofits are created equal: There is a big difference between Tanglewood and Blue Cross/Blue Shield of Massachusetts, for example. The latter triggered the current focus on nonprofits when it paid tens of millions of dollars to get rid of a CEO who had fallen out of favor with the board of directors.
Councilor Krol proposed formation of a working group based on Boston's PILOT program to study and offer recommendations on how a program in which nonprofits in Pittsfield could make payments to the city in lieu of taxes. According to Mr. Krol's research into that program, PILOT produced an additional $19.5 million in revenue for Boston in fiscal 2012, an increase of 28 percent in voluntary, in lieu of taxes payments, with about 90 percent of that revenue coming from educational and medical institutions.
Pittsfield's nonprofits contribute to the city in many ways, and they should be closely involved in any discussion about implementing such a program, as should city officials and members of the public. Economic realities being what they are -- and they are not likely to change dramatically -- the city owes it to taxpayers to explore ways to generate new revenue.