Penn's wage tax contributions fly past PILOT controversy

Student protests against the University’s PILOTs policy — or lack thereof — have brought Penn’s relationship with the City of Brotherly Love under public scrutiny. Yet, these protests themselves have garnered backlash for their failure to acknowledge Penn’s role as one of the largest tax contributors in Philadelphia.

In December, students involved with Penn’s Student Labor Action Project disrupted President Amy Gutmann’s holiday party and demanded the University pay six million dollars in Payments In Lieu of Taxes — or PILOTs — to improve local Philadelphia public schools. This protest was part of a push for PILOTs that has gained traction over the past three years, said Lee Huang, senior vice president and principal of Econsult Solutions, a firm that was paid by Penn — as well as nine other area universities — to defend its anti-PILOTs position.

SLAP’s movement has received backlash from those who believe that Penn already contributes significantly to the community. Financially, with 34,000 employees, Penn is the largest private employer in Philadelphia and generates eight percent of the total wage taxes, which are the single biggest source — almost half — of local tax revenues.

“Penn employees paid in almost 100 million dollars just for the year and about 62 million from University people and 37 million from health system people,” Vice President for Finance and Treasurer Stephen Golding said. In total, the University generated approximately $106 million in total tax revenue for the city in fiscal year 2014.

Penn’s impact reaches far beyond the city’s coffers. It makes the community safer through its work with the Division of Public Safety, which is the city’s largest private police force, and saves the city money it would otherwise have to spend on increased policing, Executive Director of the Office of the Executive Vice President Anthony Sorrentino said. Penn also invests in the University City District, which provides supplemental safety and conducts municipal services including cleaning the streets, removing graffiti and jumpstarting cars.

In terms of economic development, the University has attracted over $1 billion in commercial development in University City over the past decade and these new dollars, in turn, generate taxes. Finally, Penn has addressed the need for better public education in the city, which is SLAP’s primary goal, by investing in Penn Alexander Elementary School, teacher training for public schools and in the Lea Elementary School.

“There’s this big picture of what we do in Philadelphia that is complementary to the taxes that we do pay,” Sorrentino said. “We are a large stable employer in a city that needs to be dedicated to jobs and job growth to function, to generate that large piece of the pie.”

Still, some students and Philadelphia residents believe Penn could be doing more to contribute to public education. Two hundred eighteen localities paid PILOTs in 28 states in 2011. Penn is one of two Ivy League universities that do not pay PILOTs.

Huang argues that Penn is different from the rest of the Ivies in that it operates in a wage tax city.

“None of the other Ivies is in a municipality that relies on many taxes besides the property tax,” Huang said. “The only major tax that towns and cities in Massachusetts can levy is the property tax, so if Harvard doesn’t pay property tax, they’re really not making any contribution to the city that they’re located in. If Penn doesn’t pay the property tax, they’re still paying tons of business tax, sales tax, wage tax and on and on.”

Jobs With Justice, SLAP’s labor-union backed national collaborator, however, points to the fact that Penn did in fact pay the city government PILOTs until 2000 and believes that, despite wage taxes, PILOTs, which directly fund the public education system, are crucial.

“Penn is a nonprofit, so it doesn’t pay taxes on any of its properties, and Penn is the biggest property owner in the city, so this is a big reason why schools are closing and the district is really underfunded,” SLAP member and College senior Chloe Sigal said.

One of SLAP’s biggest complaints is that the University wholly ignores their side of the argument and denies that they have any validity or basis to complain. Students from SLAP attempted to meet with Gutmann to discuss the PILOTs program, but the meeting never came to fruition. Instead they met with Vice President for Government and Community Affairs Jeffrey Cooper, who defended the University’s stance on PILOTs.

A representative from Cooper’s office later denied the existence of a PILOTs controversy, asserting that a few students were simply advocating for a proposal lacking government support.

“The strength of our comprehensive program of local initiatives is an enhancement to the quality of life in our city,” Cooper wrote in an email. “It yields more benefits than cash payments [PILOTs] that would have little impact on the fiscal health of Philadelphia and would reduce the resources available to support Penn’s core mission and local engagement activities.”

This controversy certainly isn’t the first Penn has faced regarding its relationship with the Philadelphia community. In the past, students have chastised Penn for causing real estate prices to soar by 600 percent from 1980 to 2013 through its expansion, while the University countered that this was the product of it making Philadelphia a safer and better place to live, specifically through the development of the Penn Alexander School.

Regardless of Penn’s tax contributions to the city, SLAP’s efforts are far from over.

“A campaign doesn’t just end when you hear ‘no’ from the institutions that you’re targeting or trying to reform,” Sigal said. “There are definitely next steps that we are going to be taking.”

Correction: This article has been updated to reflect that the Division of Public Safety is not Philadelphia's largest police force, but largest private police force. The DP regrets the error.

Clarification: This article has been updated to clarify that Penn is not the only university that has called on Econsult Solutions to write a report on PILOTs, but is one of ten universities.

Please note All comments are eligible for publication in The Daily Pennsylvanian.