At the December 17, 2024, East Stroudsburg Borough Council meeting, residents expressed outrage over a proposed 29% property tax increase. The meeting highlighted a striking financial disparity: non-taxable properties, including hospitals, East Stroudsburg University (ESU), and public schools, account for an estimated $3-$4 billion in property value, while taxable properties total only $400 million.
Borough Manager Kelly Lewis emphasized the financial challenges caused by these exempt entities, described as “charitable institutions,” which are exempt from property taxes under Pennsylvania law.
A Growing Burden on Property Owners
One council member, Jane Gagliardo, argued for an even steeper 39% increase to address future budget concerns. However, her suggestion was met with strong opposition from residents, particularly given that over 15% of the borough’s population lives below the poverty line.
“It's absurd,” one resident said after the meeting. “Why should property owners bear this burden when massive institutions are profiting but contributing nothing to local taxes?”
Charity or Profit? The Tax Exemption Debate
One concerned citizen highlighted examples from other Pennsylvania municipalities where hospitals lost their tax-exempt status after courts found they no longer met the definition of “purely public charities.” According to Pennsylvania law, an institution must meet five strict criteria to qualify as a charitable organization, including operating without a profit motive and relieving the government of its burdens.
Local governments, including school districts and municipalities, have successfully challenged hospitals’ tax-exempt status in Chester County and elsewhere, resulting in millions of dollars in property tax revenue.
East Stroudsburg University (ESU) was also scrutinized. Critics pointed to the university's high administrative salaries, consistent tuition increases, and continued expansion as evidence that it functions more like a business than a charitable institution.
A Call for Legal Action
Residents are now calling on the Borough Council to investigate the tax-exempt status of these institutions. While some council members expressed concerns about the legal costs of such a challenge, proponents argue the potential revenue could more than offset the expense.
One resident urged the borough to consult with law firms experienced in property tax litigation. A recent blog by Cohen, Feeley, Altemose & Rambo highlights how municipalities can take legal action against non-profit hospitals that no longer meet the criteria for tax-exempt status.
With a $1 million annual budget shortfall looming, many argue it’s time for these institutions to pay their fair share.
What’s Next?
The Borough Council has yet to announce whether it will pursue legal action against the tax-exempt institutions. For now, the proposed tax increase will remain a contentious topic, as residents demand solutions that don’t disproportionately impact struggling property owners.
Stay tuned to MonroeCountyPA.com for updates.