Pa. Senate sends charities amendment to House

Pennsylvania’s Senate has passed a proposed constitutional amendment to restore the power of lawmakers to define organizations known as “purely public charities.”

Such entities might be places of worship, theaters, universities, and hospitals. Once deemed nonprofit, they are tax-exempt. But right now, a court ruling determines tax-exempt status, serving as a kind of trump card over an older state law defining purely public charities.

Sen. Ryan Aument, R-Lancaster, said the Legislature should decide which ones are in that category, “not a judge.”

“We have this erratic patchwork of court decisions across the commonwealth that is not proper and not appropriate tax policy that we are charged to correct,” said Sen. John Eichelberger, R-Blair.

But at a recent hearing on the proposal, two law professors said the Legislature doesn’t actually have the power to define tax-exempt entities known as purely public charities, and an amendment asserting as much might serve to muddy more than it clarifies.

Local government groups wary of losing tax revenue prefer the court ruling to the state law defining charities. Municipalities and counties say the court decision gives them the upper hand when challenging an organization’s tax-exempt status.

Several senators recognized those concerns, vowing to revisit fine-grain rules for tax-exempt entities if the amendment is approved.

“I want to see something become even stronger and tougher as far as these so-called public charities that are anything but public charities,” said Sen. John Rafferty, R-Montgomery.

The process for changing the state constitution isn’t finished yet. The amendment must go to the House. If it passes, it goes to a voter referendum.