“We Will Gladly Join You in Partnership in Harrisburg or We Will See You in Court”

Abstract

In 1990, Mayor Sophie Masloff warned large not-for-profits, like the University of Pittsburgh Medical Center (UPMC), that unless they started making an increased financial contribution in the form of payments in lieu of taxes, or PILOTs, the City of Pittsburgh would take them to court to recoup what municipal officials perceived to be their “fair share” of the local tax pie. Masloff’s threat represented only one potential strategy employed by city officials since the late 1960s to address the growing imbalance of power between large not-for-profit employers and local government. This study uses the debate over PILOTs, and the 1997 passage of the Insitutions of Purely Public Charity Act, or Act 55, to examine the changing role of large not-for-profits in the City of Pittsburgh from the late 1960s to the present. It argues that more attention must be paid to the emergence of large not-for-profits, especially hospital systems, as major economic actors and as a focal point for Pittsburgh’s current reinvention narrative. This decision has had real financial consequences for the city’s revenue collection stream. It has also placed elected officials into an uncomfortable role as an arbiter between sometimes-warring parties, as the growing rift between the large health care not-for-profits UPMC and Highmark Blue Cross Blue Shield has dramatically illumined. A more careful consideration of the role of large not-for-profits allows historians and policymakers to better understand the financial consequences of the “eds and meds” economy for the postindustrial American city.