NONPROFITS PLACE FINANCIAL BURDEN ON CITY OF WASHINGTON

  

Nonprofits are critical to the welfare of communities across America. They range from small organizations with a charitable purpose to religious institutions, hospitals, and universities. Most U.S. organizations granted nonprofit status by the IRS have one thing in common. They are generally exempt from paying taxes. Cities and towns lose billions in tax revenue even though a nonprofit benefits from the same public-school systems and municipal services as the struggling individual or private business across the street.

It is astonishing that local residents complain about paying taxes and become furious at any tax increase but say nothing about nonprofits that have no tax obligation. After all, full time police and fire protection, municipal pensions, liability and vehicle insurance, city management and employee salaries, infrastructure and road maintenance are becoming more expensive every year. One fire truck can easily cost over $1million. Most nonprofits are contributing little or no financial support.

This commentary will examine how nonprofits in the City of Washington have placed an undue burden on finances. I recently met with Finance Director Ken Westcott and Deputy Finance Officer Susan Koehler in the beautiful Washington City Hall Council Chambers. They graciously explained Washington’s budget, growing expenses and shrinking revenue. Every city taxpayer should pay attention.

Mr. Westcott remarked that “while the world has changed, the Pennsylvania tax code regarding nonprofits has not.” There has been little attempt to legislatively update the definition of “public charity.” There has been no meaningful debate in Harrisburg to determine which nonprofits are operating to truly serve a charitable mission or which organizations require tax exempt status to perform their mission. While religious institutions and small chartable entities likely deserve tax exempt status, entities like hospitals, nursing homes, and colleges raise questions.

Adding to the problem, larger nonprofits have a history of expanding their physical footprint and removing additional private real estate from the revenue producing tax rolls. Over the years, Washington & Jefferson College has been a major local offender. The college has consistently purchased private property surrounding its campus and elsewhere within the city limits.

In another example, the City of Washington’s big brother, Washington County, recently struck a major blow to the city’s tax collection efforts. Not only did the County overpay to purchase the Crossroads Center building, the purchase denied the city $180,000 in tax revenue each year.

Mr. Westcott and Ms. Koehler described a grim picture of Washington’s tax base and efforts to provide all the services that city residents have come to expect. This year, the budget will be in the range of $16 million. Fifty-seven per-cent of the city’s tax paying residents are classified as low to moderate income. Eleven percent are over sixty-five and on fixed incomes.

On the revenue side of the equation, forty-seven per cent of the city’s real estate is tax exempt. There are 42 exempt churches within the city limits. Washington Hospital and W&J are tax exempt. The City of Washington is the county seat and receives no revenue from government related buildings. All local and state government offices, the courts, social service organizations that assist the entire county and public housing are off the tax rolls.

With little help coming from Harrisburg to address this municipal drain on revenue, “agreements to provide payment in lieu of taxes” have become an alternative. These voluntary agreements, known as PILOTs, typically commit a nonprofit to make some payment to the taxing authority. Ideally, the payment would be a reasonable percentage of the amount the nonprofit would pay if it were not tax exempt. Unfortunately, the city has little leverage to compel cooperation.

The city sends notices to nonprofits informing them what their liability would be for police and fire services if they were obligated to pay taxes. A robust response would bring in over two million. If a reasonable portion of the tax obligations of W&J ($513,000), Washington Hospital ($402,500), the County Housing Authority ($108,000), and others were actually paid, balancing the city budget would depend less on those who can least afford it.

The experience with PILOTs in Washington has been discouraging. Last year, the city collected only $10,000 in small PILOT payments from several churches and charitable organizations. A formal PILOT agreement with Washington Hospital pays $64,000, and one with the Housing Authority provides $25,000 in revenue. While many American colleges have formal PILOTS with the city where they receive substantial city services, W&J pays nothing.

What can be done to address this imbalance that places an undue burden on regular taxpayers and the city budget?  

First, nonprofits should step up and meet with city officials to establish fair agreements to produce revenue. Nonprofits could voluntarily contribute to city projects that benefit them the most. For example, stormwater management programs are typically calculated based on the road frontage on an owner’s property. This approach directly links fees to the stormwater impact of each nonprofit.

Second, Washington County must recognize that the city, as the county seat, is the heart of county government. The commissioners should avoid removing private property from the city tax rolls. The county should provide free demolition and other big-ticket services to the city.

Third, private citizens concerned about city taxes and services should contact their elected representatives and seek legislative reform. It is not enough to complain at the last minute when an increased tax bill shows up in the mail.

THE STATUS OF MEDIA IN AMERICA

 

The Oct. 21 issue of New York Magazine, in its usual sensationalist style, did a deep dive report titled “Can the Media Survive?” The magazine interviewed 57 of the most influential people in the media industry to determine what is going on and where media is headed. I found this mashup of opinions greatly entertaining and decided to use it as a basis for exploring the status of media in America.

According to Radhika Jones, editor-in-chief of Vanity Fair, the new environment is “like the fire swamp in the ‘Princess Bride’. It is treacherous in places, you could go up in flames, you could be attacked by a rodent of unusual size, but you can always be a bit of a pirate and anticipate those threats and figure out how to defuse them.”

Media executives agree that the Internet crushed the traditional advertising business. Nicholas Thompson, CEO of The Atlantic, sums up this digital “creative destruction:” “All newspapers lost their classified ads, the local newspapers lost their monopoly on distribution for certain regions, and the magazines lost their monopoly on distribution among certain interest groups. Twenty years ago, if you wanted to sell golf balls, you bought an ad in Golf magazine. Now you buy a Facebook ad targeting people who have re-upped their golf-club membership.”

It is interesting that several digital brands like news websites Buzz Feed and Vice followed the fate of many print publications and failed. These entities often forgot that the simple task was to make content and sell sponsorship against it. They became too dependent on venture capital. They also placed themselves at the mercy of Facebook and Google. Eventually the media giants strangled many of the small companies that depended on them for success.

The media mantra today has returned to the simple concept of “make something worth paying for.” Bloomberg editor-in chief John Micklethwait summed it up this way, “If you don’t have a system whereby you have consumers paying for your content, then you are generally in a perilous state.”

Subscription revenue through a paywall is now an important business model. But being an all-things-to-all-people digital news site is difficult to pull off. In 2024, the executives who run Conde Nast and People magazines spent $50 million to reach a massive national audience with a news website (The Messenger) and failed. There was no clear vision of who they were trying to reach and why they were relevant.

On the other hand, many niche news sites with limited viewership and low overhead are doing well. Betsy Reed, editor of the Guardian US, sums up this new perspective: “My generation was wired completely differently. We wanted to be read or listened to by as many people as possible. And now this new generation is like, I’m totally cool with having 9,000 die-hard fans.”

The New York article describes a number of small media sites I had never heard of. For example, Puck is a pricey digital newsletter that aims to cover our country’s four centers of power: Silicon Valley, Hollywood, Washington and Wall Street. The stories appear to be gossipy, provocative, and interesting.

What other niche players are having a good year? The article gives several examples. Mark Halpern founded a startup video platform called “2WAY”. He curates nightly live Zoom calls for an eager audience. “The Ringer” is a sports and pop culture website and podcast network acquired by Spotify in 2020. Ezra Klein co-founded a news website, VOX and is now named one of the best podcast hosts.

“The Daily Wire” is an American conservative media company founded by political commentator Ben Shapiro. It has expanded beyond the traditional audience that consumes only political content. Lastly, “Barstool Sports” captured the attention of young men. This “bible-of-bro-culture” started out in 2003 as a weekly print publication distributed for free and now generates yearly revenue of $90-$100 million.

When discussing the legacy newspapers, the article claims that “everybody is jealous of the New York Times.” The Times became relevant and wildly successful by pivoting from “the” newspaper for everyone to “the” newspaper for their core readers. The paper sits on 10 million paid subscriptions that are unlikely to dwindle. In the opinion of former CNN boss Jeff Zucker, “They figured it out first – how to make a killing off recipes and games like Wordle that could sustain the rest of their journalism.”

Many believe that the new Wall Street Journal editor, Emma Tucker, has taken the newspaper into the firm number two spot behind the NYT. On the outside, the L.A. Times and the Washington Post fight over the same educated, liberal readers.

Recently, the legacy newspapers have gotten into the social media game by launching email newsletters, driving traffic back to their paywalled websites. Legacy newspaper editors still seem to care about their print editions. At the same time, it is not where their focus is going forward.

Most of the executives interviewed expressed anxiety over how artificial intelligence will affect the media industry. Established media businesses can either sue AI companies for copyright infringement or strike a deal to license content for training AI models. Either way, if consumers get used to asking an AI interface for the news, AI could displace traditional journalism.

For those seeking to learn about cutting-edge media in our changing “age of information”, this wide-ranging article has much more to offer.

 

 

 

THE MOTOROLA SOLUTIONS RADIO CONTRACT: WHAT WE KNOW

 

On November 1, a letter from Commissioner Nick Sherman was published in this newspaper criticizing Allegheny County for its Home Rule system of government. Sherman also praised his efforts in being a conservative watchdog of taxpayer dollars.

Sherman said nothing to update the public on the status of the Motorola Solutions radio contract, a multimillion-dollar fiasco, orchestrated by his administration. The contract has all appearances of being badly mismanaged, or worse. This commentary will attempt to pull together all that we know and raise questions about what we don’t know concerning the recent efforts to install a costly emergency radio system for first responders.

As reported by the Observer-Reporter, “The radio system has been a divisive topic for nearly two years after the previous county board of commissioners, led by then chairwoman Diana Irey Vaughan awarded a $22.545 million contract to MRA Inc. in March of 2023.  Maggi sided with Irey Vaughan to approve that contract, while Sherman voted against it since he favored a [more expensive] proposal from Motorola.”

“Irey Vaughan retired in January and was replaced on the board by Janis, who voted with Sherman to terminate the MRA contract. Sherman and Janis then voted to select Motorola’s proposals despite the county having already spent $8.5 million on equipment as it began working to install the MRA system last year.”

We know that the $8.5 million in purchased equipment for the first contract is sitting in a hangar at the Washington County Airport with no plans to use or to return it.

We know that the terminated vendor, MRA, submitted a new proposal. It was again the less expensive option. For unknown reasons it was thrown out by the county public safety committee. Motorola was the only proposal approved by the committee. 

We know that an entity called Mission Critical Partners has been awarded two consulting contracts by the Republican commissioners to oversee the installation of the radio contract. Mission Critical Partners also worked closely with the public safety committee in recommending that Motorola be awarded the contract.

We know that inexplicitly, the Motorola proposal was initially approved in August by the two Republican commissioners, with no physical contract for the commissioners or the public to review. A second vote was taken at a special meeting on September 23, apparently after an actual contract was completed. The contract was not disclosed.    

We know that following the September meeting and vote to approve the contract the Observer-Reporter filed an open records request to obtain the contract and three proposals. The Republican Commissioners denied the request. An appeal was filed with the state Office of Open Records. Finally on November 1, heavily redacted copies of the documents were released that revealed few details on the cost or scope of the multimillion-dollar project.

We know that after the contract was awarded, Motorola informed the commissioners that county-wide radio coverage would be less than expected unless an additional 3-5 radio tower sites were included at an added cost in the millions.

When I questioned Commissioner Larry Maggi in early November, he stated, “I have not received the completed unredacted contract and the final costs of the radio contract are still unknown.”

We know that after terminating the less expensive MRA contract, two months later, the Republican Commissioners reversed themselves. They temporarily reinstated MRA to perform needed upkeep on the current system until a new network is built. According to the O-R, “After reviewing the intricate details of the current system, Sherman thought it would be better to maintain the status quo."

We know that possible conflict of interest questions remain unexplained between the Nick Sherman for County Commissioner political committee and Motorola Solutions. According to filed campaign finance reports, over the past several years, Motorola Solutions has been a consistent contributor to Sherman’s committee. Moreover, Motorola Solutions has sponsored Sherman fund raising and political events.

We know that the Pennsylvania State Ethics Commission’s guiding principle is that of public trust and that any effort to realize personal financial gain through one’s public office is a violation of that trust. This would include soliciting or accepting a political contribution based on an understanding that the public official would be influenced.

There remains a great deal we do not know about one of the most expensive contracts in the history of Washington County. What is the real reason for redacting the contract and bids? Why was the initial Motorola proposal approved without a contract? What are the total costs in terminating the MRA contract and now installing and maintaining the Motorola system? Why was MRA excluded in the second bid? What do we not know about the relationship between Sherman and the consultant, Mission Critical Partners, and with Motorola?

The Sherman letter to the editor criticizing Allegheny County’s Home Rule form of government, ignores the fact that before taxes go up there will be a spirited debate with the 15-member County Council. Under Home Rule, Executive Sara Innamorato’s proposals are subject to Council’s scrutiny and approval.

In Washington County, there are presently few checks or balances on Sherman’s decision making. Janis votes with him without question. Maggi is denied information and input on important issues. The public is kept in the dark. It appears that the critical oversight, open debate, and full disclosure offered by a Home Rule form of government is exactly what Washington County needs.

 

 

 

 

AFTER THE ELECTION

 

“Democracy is the worst form of government except for all those other forms that have been tried from time to time.” Winston Churchill

By the time this commentary is published, several days after Election Day, we should know who will occupy the White House for the next four years. Whatever the result, following years of highly charged political rhetoric, misinformation, emotional manipulation, negative advertising, personal attacks, and foreign election interference, one fact is clear. Our nation is deeply divided on the direction the country should take.

Nonetheless, whatever final decision is made by the nation’s voters, those who supported the losing candidate should step back and accept the result. The new goal should be to collectively move our nation forward and not to normalize disruptive, partisan politics.

In the aftermath of an election, the attacks against the opposing political party typically calm down. This is also when finger pointing and second guessing within the losing party normally begins.  If the election is as close as predicted, there will be a barrage of lawsuits filed in the battleground states challenging voting irregularities that, if past is prologue, did not take place.  While there may be limited confrontations on Election Day, I would not expect any organized violence after the votes are counted.

How do we recover as a nation from this critical moment? After all, one half of the country voted for a candidate, Donald Trump, who was a convicted felon and equated with fascism by his own Chief of Staff. Many respected legal scholars have concluded that Trump’s goal is to end liberal democracy as envisioned by the founding fathers. The other half voted for Vice President Kamala Harris, who had low approval ratings for working in a Biden administration perceived to have caused high inflation, chaos at the border, and an inability to manage foreign conflicts. Tens of millions of voters expressed diametrically opposed hopes and fears for and against each of the presidential candidates.

On the economy, Social Security, tariffs, health care, taxes, abortion, other social issues, and foreign affairs, there were few matters on which the two candidates found common ground. The one exception was the decision by both campaigns to ignore the largest problem facing the economy – the national debt of $36 trillion.

I disagree with both candidates who have called this election the most divisive and important in our nation’s history. The election that unleashed the Civil War in 1860 had a greater immediate impact and lasting influence. Today’s America is the economic, military, and technological envy of the world. Other nations are baffled how such a prosperous, free society can be so politically divided. But then again, no other country had an election campaign that lasted four years.

The problem was former President Trump’s refusal to concede defeat in 2020. The country has been contesting the last election and gearing up for this year’s voting nonstop since the Jan. 6 attack on the Capitol. The endless stream of civil lawsuits, criminal indictments, primaries, conventions, rallies, and debates has brought the political polarization to a fever pitch. Now that the election is over, it is time for all of us to calm down.

After this divisive election comes an opportunity for some self-reflection. Each of us can accept the irrefutable fact that in a pluralistic society, there are many ways to view the world that do not match our own. Everyone who voted deserves our gratitude for participating in this important function that defines democracy. We should respect all widely held opinions, no matter how contrary to our own.

I have listened to and talked with hundreds of voters in our community and across America since 2020. Getting out of my comfort zone has been more enlightening than staying within my silo, only listening to and reading those who agree with me. The backgrounds, economic situations, and opinions of Americans are more diverse than any nation on earth. These differences are the foundation of democracy in a multicultural society.

The candidate who wins a national election for our highest office is a reflection of who we are as a people. It is not the winning candidate that is unthinkable, it is the inability to vote in a free and fair election. Unhappy voters should consider the plight of those living in Russia, China, Iran, North Korea, and other authoritarian states where there is no choice.

In my case, living this past election cycle through the lens of a dedicated liberal and lawyer, a Republican victory will challenge many of my core beliefs and policy positions. However, in a healthy democracy, my place is not to lodge personal attacks against those who supported the winning candidate. My task going forward is to continue to follow my values and to expose actions that I believe undermine democracy. Hopefully, my reasoned arguments, backed by verifiable facts, will convince some voters in the next election to consider my analysis.

After the election, we must hold on to our shared humanity and love for community alongside our political differences. Healthy democracies build on their common ideals rather than wallow in negativity.

On a lighter note, there is a small consolation for those who supported the losing candidate. Each day you will be able to nod your head in agreement and smile rather than cringe, when reading the daily political cartoons making fun of the president.

 

 

 

 

HAS PROFESSIONAL BASEBALL STRUCK OUT?

 

On a recent Thursday night, I found myself watching a major league baseball game (MLB). The New York Yankees were battling the Cleveland Guardians to determine who would represent the American League in the World Series. I could not identify any of the players with the exception of a few well-known Yankees. 

Tuning into a baseball game not involving the Pirates was unusual for me. I had little interest in which team won. Nonetheless, the game became an exciting sporting event with a fairytale ending. Cleveland was winning until the eighth inning when the Yankees hit back-to-back home runs to take the lead. The Guardians came back in the ninth inning to hit two home runs, each time with a man on base to win the game. The Cleveland stadium crowd was over-the-moon, and the baseball world was astonished at the turn of events. 

This game was not my normal baseball experience. I find most games tedious to watch. Baseball provides little of the non-stop action found in almost every football and many basketball and hockey contests.  What was once “America’s Game” is now a sport that is finding it difficult to recruit our best young athletes or the attention of spectators. Has professional baseball struck out and become a minor sport in America?

The 162-game MLB season is a good place to begin when analyzing the problems facing the sport. The long schedule now opens at the end of March when many parts of the country are experiencing cold weather or worse. As the temperature warms, baseball must compete with the NBA basketball and NHL hockey playoffs that run from mid-April to mid-June each year. From the end of June until the beginning of September, MLB only competes with professional golf tournaments and the Olympics every four years. However, during these warm weather months, there are many alternatives to attending a game in person or watching on television.

The month of October should be MLB’s time to shine and captivate the sports fan. This year’s World Series features the game’s two best teams, the Yankees and Dodgers, and two best players, Aaron Judge and Shohei Ohtani. Unfortunately, every night in October other attractive sporting events are available. The NFL, NCAA, and high school football seasons are in full swing. Professional basketball and hockey are opening their seasons. Sports fans who attend games and spectators on the couch must make hard choices on what to watch.

Boston University did a deep dive into baseball’s problems and concluded that “Baseball’s days as America’s pastime are long gone. Football is the top-watched sport by US adults. In a recent Gallup poll, 41 percent of respondents named football as their top choice. Baseball and basketball only earned about 10 percent. While older adults remained loyal to baseball, young adults increasingly pick basketball and soccer as their first choice.” Simply stated, baseball is too boring and is losing younger sports fans.

Team owners and general managers would argue that MLB has held its own in recent years. In 2023, attendance increased by 9.2 percent, with a total of 70,747,365 fans buying tickets. MLB revenue increased by 10 percent to an average of $378 million per team.  The All-Star game attracted 7.6 million viewers, a 6 percent increase from the previous year.

Other observers argue that these statistics are misleading and that the trends are not promising. In 2003 fan attendance was 9 million less than in 2007. Even newer ballparks and those of popular teams are awash in empty seats representing billions in lost revenue.

TV viewership is down. The 2023 World Series was the least watched on record at under 10 million, a staggering 23 percent drop from the prior season. In contrast, the NCAA Women’s March Madness final drew an audience topping 15 million.

What can MLB do to reverse the trends and to address the number of challenges it faces? First, the Guardian Newspaper places the major blame on the pitching dilemma, “Many of MLB’S most talented star pitchers are falling to injury as their elbows buckle under the stress of throwing max-effort on nearly every pitch…Remarkably, all of these injuries have come during a time when ballclubs have cradled and coddled pitchers to the point where getting more than five innings out of a starter feels like something to celebrate.”

Many critics believe that starting pitchers should be required to remain in the game for 6 innings. Pitchers would then modify their throwing style, and the game would become more interesting with fewer pitching specialists.

Second, the Pirates are a good example of a team that has not been competitive in decades. MLB needs to adopt measures to produce team parity. In the NFL a salary cap produces more competitive teams.

 

Third, baseball technology has led to more strikeouts and homeruns at the expense of other facets of the game. Recent rule changes to speed up play and generate more stolen bases were a good start.  More innovations are needed.

Fourth, the regular season should be shortened. Beginning the schedule in warmer weather and ending it before football season takes over would make for a better sport with increased interest.

The author and commentator George Will has written, “Baseball is Heaven's gift to mortals.” With some well-placed modifications, the game of hitting, fielding, pitching, and managing can maintain an important role in American professional sports.