Legislation Alert: Senate Bill 4

Purely Public Charities

Legislation known as the “Purely Public Charities” legislation, Senate Bill 4, would grant the General Assembly the ability to “establish uniform standards and qualifications which shall be the criteria to determine qualification as institutions of purely public charity”. Currently, in Pennsylvania, the Supreme Court has the sole authority to define a “purely public charity” and the General Assembly has the authority to set standards for tax-exempt status.

This legislation has previously passed both the House and the Senate last session. This session it has passed the Senate and is currently in the House Finance Committee. The legislation requires these extra steps because it would result in an Amendment to the Pennsylvania Constitution. A Constitutional Amendment has to pass two consecutive sessions of the General Assembly and then a voter referendum. It would be a voter referendum issue in the first primary, general or municipal election which occurs at least three months after the proposed constitutional amendment is passed.

Those opposed to this legislation worry that it could significantly impact tax revenues for municipalities, because it could allow for more organizations to be recognized as purely public charities and more charities means less tax money for municipalities. Additionally, they are concerned it would make it harder for local governments to challenge the tax-exempt status of non-profit organizations.

Those supportive of this legislation contend that it could protect municipalities by providing certainty, a more a uniform standard. Supporters claim the legislation is needed to clarify confusing court rulings where differing standards were used which made it easier for local governments to challenge the non-profit charities.

The Office of the Auditor General, Eugene DePasquale is holding a series of informational meetings on this important, potential voter referendum issue. The closest one for members of the York County Economic Alliance is in Harrisburg on Tuesday, March 31. From 1 to 3 p.m. in the East Wing of the Capitol (Room 8-EA). This opportunity to learn more may be of particular interest to Municipal employees and to Non-Profit organizations.