Editorial: Gainey overplayed his hand with Highmark announcement
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Commitments are agreements. They are an acknowledgment of accord.
When a couple gets married, both parties agree to the love and honor, sickness and health vows. When that couple buys a house, they sign on the dotted line, with the seller and the mortgage company agreeing to their parts in the process. Buying a car, adopting a baby, going to college — no matter what you’re doing, the process has to be mutually accepted to be valid.
So when Pittsburgh Mayor Ed Gainey announced Tuesday that Highmark had agreed to make financial contributions to the city, was that really a commitment?
Highmark is a health insurer and the parent of Allegheny Health Network. It also is a nonprofit. That means, despite the $22.1 billion it brought in over the first nine months of 2024 alone, it doesn’t pay taxes the way a for-profit corporation in the same field would.
Nonprofits are given this exemption because of the charitable nature of their mission. That is understandable and even laudable in organizations that seem a little closer to a vow of poverty.
But, in a city like Pittsburgh, the landscape is dominated by organizations that don’t pay taxes. UPMC is even larger than Highmark. Between the two, the map is polka-dotted with gigantic hospitals that pay no taxes. In between them are colleges (University of Pittsburgh, Carnegie Mellon University, Duquesne University and more) that also don’t pay taxes.
It is not a new problem. It is one Gainey inherited. Predecessor Bill Peduto tried to solve it to no avail, too. It is likely to be the albatross around the city’s neck forever.
The goal is to get the nonprofits to agree to give money they aren’t obligated to provide. No one wants to pay taxes they don’t have to pay. Payments in Lieu of Taxes (PILOT) are great if a city can get them, but getting them is the trick.
Highmark did not agree to a PILOT. The nonprofit said it was open to a discussion if — and only if — those other major players such as UPMC, Pitt and Carnegie Mellon also come to the table.
And let’s be clear: A discussion is not an agreement. Pennsylvania has discussed tax reform for more than 30 years and accomplished nothing. Discussion is a first step, not an end result.
Gainey made an announcement that he won a poker game just because Highmark agreed to sit at the table if everyone else bought in. With no real agreement, it just made it look like what it was — a bluff.