Purely Public Charity Bill Gets House Approval

HARRISBURG – The House of Representatives this week approved Senate Bill 4, legislation sponsored by Senate President Pro Tempore Joe Scarnati (R-25) and Senator Mike Brubaker (R-36) that would clarify the authority and criteria for charitable institutions in the Commonwealth.

Senate Bill 4 amends the Pennsylvania Constitution to clearly define a Purely Public Charity and ensure these organizations, such as hospitals, are eligible for an exemption from paying property taxes.

“The Senate took the first step of passing this important measure in March, and I commend the House for furthering the effort by advancing this legislation,” Scarnati said. “It is vital that we make sure that essential charitable organizations within our local communities are able to continue to receive the status of public charities.”

“I applaud my colleagues in the House for recognizing the need and urgency for this legislation. Senate Bill 4 simply allows the citizens, through their elected officials, to decide the criteria for purely public charity status and gives them the ability to modify those standards as they see fit,” Brubaker said.

The need for this legislation comes as a result of a Pennsylvania Supreme Court case (Mesivtah v. Pike County Board of Assessment Appeals) in 2012 which ruled a charitable organization must first satisfy a set of criteria outlined in the court’s opinion in order to qualify for tax exempt status. In this decision, the court marginalized a separate test for tax exempt status established by the Legislature under Act 55 of 1997.

Due to the Supreme Court decision, a number of charities have seen their property tax exemptions revoked by local taxing bodies. According to Scarnati and Brubaker, many other non-profits statewide may be impacted as some local governments plan county-wide reviews, resulting in widespread uncertainty and costly litigation as the criteria for purely public charity status is, again, left to the courts.

Scarnati explained, “Since the Supreme Court ruling, tax exempt statuses for organizations in my Senatorial District and across the state such as Warren Hospital and Warren County YMCA, Habitat for Humanity and other non-profit organizations have already been revoked.”

“Our non-profits and taxing authorities deserve a clear set of standards with which to base their charitable status decisions,” Brubaker continued. “That’s why this legislation is necessary --- to avoid costly litigation which every taxpaying citizen in the Commonwealth funds in one way or another, and most importantly, to allow the people of Pennsylvania to ultimately decide who sets the standards for purely public charities.”

Because Senate Bill 4 requires amending the Pennsylvania Constitution, the measure must receive approval by the General Assembly in two consecutive legislative sessions followed by the voters’ approval in a referendum.

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