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THE PLANET HAS TWO MODEST PROPOSALS FOR INCOMING SCHOOL COMMITTEE, CITY COUNCILORS, AND MAYOR: INITIATE A TOP-TO-BOTTOM FORENSIC AUDIT OF THE SCHOOL DEPARTMENT BUDGET & REQUIRE EVERY ‘NOT-FOR-PROFIT’ ORGANIZATION RECEIVING HUGE TAX BREAKS TO APPEAR IN HEARINGS AND JUSTIFY THEIR TAX STATUS

By DAN VALENTI

PLANET VALENTI News and Commentary

(FORTRESS OF SOLITUDE, THURSDAY, DEC. 8, 2011) — The two topics that have taken up the majority of THE PLANET‘s interest recently, as well that of the values commentators to this site, have been the Pittsfield School Department and the complex financial and political position Berkshire Health Systems occupies in its monopolistic hold over regional health care in Berkshire County, particularly the city of Pittsfield. While we’ve been covering this, The Boring Broadsheet has told you all about the Rotary Club’s upcoming pancake breakfast.

Follow the Money

Don’t look for a Grand Scheme or Overarching Design, but the strategic commonality in THE PLANET’s pursuit of these two topics is money. The Pittsfield School Department eats up, depending on how you count it, $82 to $89 million of the city”s $120 million budget. That’s anywhere from 2/3 to 3/4 of the entire budget. Berkshire Health Systems, for its part, generates income in the hundreds of millions on holdings measured as portions of a billion dollars (yes, “B”illion with a “B”).

That’s a lot of cabbage, enough to keep an near-infinity of rabbits happy for a near-infinity of time.

For a city with an unfunded liability more than one-third of a billion dollars and a punishingly high commercial tax rate ($30.95 per thousand, which alone is enough to keep many businesses out of town) and residential rate ($15.19, which alone is enough to drive many families out of town), these two segments should be of vital and immediate interest of every elected and appointed official doing business in the name of We The People.

Uncle Gerry and His Ilk Represent the Past; There’s a New Way That’s Going to Take Pittsfield Politics by Storm

Instead, what Mary Jane and Joe Kapanski have received is non-representative representation, epitomized by the likes of Gerry Lee, former police chief, long-time council president, double-dipper at the public trough, and insider who’s job has been to take care of the GOBs, the Vested Interests, and the Fat Cats all these years. His tame councils, pretty much, have gone along to get along … and to survive politically.

Uncle Gerry is “a nice guy.” So it everyone, and that argument for justifying a co-opted government can no longer be good enough. He represents the past, however. His comatose style of rolling over and playing dead to appease his Big Shot masters, who, like the Wizard of Oz remain hidden behind the curtain, has passed. It’s time for Toto to draw the curtain and unveil the hoax.

It’s time that We The People begin to put pressure on our elected officials to do OUR business, and not at our own expense. It’s time for people to get more involved, to “Occupy” the incoming city council, new mayoral administration, and school committee. There are reps who have proven themselves to be on the side of The People, folks such as Melissa Mazzeo and Terry Kinnas. Now with a change of government, We The People will expect officials such as Dan Bianchi, Jonathan Lothrop, Barry Clairmont, Churchill Cotton, and all the others. From now on, THE PLANET declares that:

— Excellent performance shall be considered standard.

— Standard performance shall be considered sub-standard.

— And sub-standed performance will be UNACCEPTABLE.

The People are mad as heck, don’t you know, and they aren’t going to take it much longer.

In the Cause of Reform and Right, THE PLANET has Two Modest, Though Specific, Proposals, Both Eminently Doable.

It’s time for change. THE PLANET proposes:

(1) That the incoming school committee authorize a truly independent (these are the two, key operative words) forensic audit of all school operations. A similar review of just one school in nearby Springfield unearthed millions in corruption and waste. If this takes special hearings, so be it. The audit can’t be the usual check-the-math kiss in the mail. It must be aggressive, fearless, and follow where the trail leads, regardless of political consequences.

(2) That the incoming city council — Chris Yon, Kevin Morandi, Paul Capitanio, Chris Connell, Jonathan Lothrop, Jonathan Lothrop, Tony Simonelli, Kevin Sherman, Melissa Mazzeo, Barry Clairmont, and Churchill Cotton — with the new mayor (Dan Bianchi) order every not-for-profit organization getting off from paying taxes to the city to appear before council to justify continuing their non-profit status. Again, special hearings will likely be in order.

These two measures could add countless millions to city coffers, improve the quality of life in the city, and begin to give We The People a sliver of hope that We have retaken control of the government.

These two measures are not draconian. They are affordable. They are doable. Other communities have done  or are doing the same (1) (Springfield) and (2) (Boston), for example. There’s no reasonable excuse for this not being done in Pittsfield. If there is, we want to hear about it now. We call upon every incoming school committee member, city councilor, and the mayor, to speak now and explain, rationally and reasonably, why these two steps cannot or should not be done. Speak now, or as they say in shotgun weddings, stick a rag in it.

MOLLY Makes a Compelling Case Based on Reasonable Questions

In yesterday’s PLANET, we explained how not-for-profit is sometimes used as a tax dodge. In the case of BHS, a corporation that generates hundreds of millions in income on untaxed holdings of Who Know How Much, many people did not even know the company was “not-for-profit.” Our coverage has therefore done a great deal in giving people more of the true picture. We are educating them, more than the BB has done lo these many years.

THE PLANET received several FB, e-mail, and other messages to that effect. So to be clear, YES, BHS IS A NOT-FOR-PROFIT CORPORATION FOR TAX PURPOSES. FOR ALL OTHER PURPOSES, HOWVER, THERE’s PLENTY OF “PROFIT” (ONLY THEY DON’T CALL IT “PROFIT.”

We urge everyone to review our recent columns covering this issue.

Here’s a simple question that BHS refuses to answer, even though they could come up with it in ten seconds: In lieu of taxes, what is the “substantial” (BHS’ word) donation that you make to the city of Pittsfield? Is it $100,000? More or less? Are you embarrassed to tell us? If so, why? If not, why the silence? Also, why hasn’t anyone from the city of Pittsfield come forward with this figure? This is We The People’s business, and THE PLANET, in the name of The People, is DEMANDING this number. 

In this vein, we present this guest post, originally given to us by MOLLY, one of THE PLANET’s valued correspondents. We present MOLLY’s comments as food for thought. Feast away:

Now that I’m not fooling around and playing “Devil’s Advocate,” I have to agree with much of what you stated, Dan. Shouldn’t the amount of money that any and all persons and businesses (both forced as in taxes as well as ‘voluntary’ contributions) pay to the city, along with any and all grants given to the city, be a matter of pubic record?

Shouldn’t there be a line-item city budget that shows all revenues and expenditures? Why is this so difficult to find? (I’ve been looking around all night for it and I can’t find anything). I did come across a few items where Mayor Ruberto had to petition the City Council to accept donations of a few pieces of property (likely so that we would pay to have them torn down), but he was still required to do that, so this MUST be a matter of public record! Otherwise, what’s to stop him from just walking off with their donation (not that he would do that, but there MUST be rules that need to be followed regarding this and it must be a public record).

I also agree with you on the need for BHS to justify WHY it is a non-profit . What justifies it? I’d be willing to bet that it’s all legal and tidy, but from the bigger picture, why are these big profit corporations allowed to be considered “non-profits”? Isn’t this how Warren Buffet’s tax rate is lower than his secretary’s — because he gets paid from a “non-profit”?

This city, this state, and this country are all in financial ruin and yet this kind of stuff continues? Steven Colbert was right in some ways – how is it that Williams College and Mass General are non-profits? When I think of the % of income taxes that I’ve paid, it makes me FURIOUS!

BHS lists their total FY 2010 Revenue as $375,221,431 and total expenses as $384,362,294 for a LOSS of $9,140,863. Wages are the biggest piece of the expenses, at $255,492,704. That’s a LOT of wages!!! That would come out to every FTE (full time equivalent) making roughly $93,000. Since BHS is our largest employer and the median income in Pittsfield is (I think) around $33,000, that’s quite a difference. Total assets are listed as $404,120,015. So if you’re losing 9+ mil a year, how do you get assets of 404+ mil? I must be very naive…

No, MOLLY. you are not naive. You are intelligent, and you are part of The New Way that will refuse to take this type of crud for much longer.

THE PLANET awaits the response of the incoming elected officials to our modest proposals. We also await comment from a far-more-important constituency, The Little Guy, because we are the only #$%^@*& place in town that cares about you.

—————————————————

AND SO MY GOOD FRIENDS, HUFFING AND PUFFING ALL THE WAY, EXIT, STAGE LEFT.

“OPEN THE WINDOW, AUNT MILLIE.”

LOVE TO ALL.

24 Responses to “THE PLANET HAS TWO MODEST PROPOSALS FOR INCOMING SCHOOL COMMITTEE, CITY COUNCILORS, AND MAYOR: INITIATE A TOP-TO-BOTTOM FORENSIC AUDIT OF THE SCHOOL DEPARTMENT BUDGET & REQUIRE EVERY ‘NOT-FOR-PROFIT’ ORGANIZATION RECEIVING HUGE TAX BREAKS TO APPEAR IN HEARINGS AND JUSTIFY THEIR TAX STATUS”

  1. Shakes His Head
    December 8, 2011 at 10:15 am #

    I think there is an opportunity to put all tax exempt properties on notice.

    I don’t think that required public hearings are appropriate, but perhaps an ‘open mike’ forum where the not for profits are invited would be a telling first step. At least we would know who shows up.

    Also, each year the city assessor should be verifying the tax exempt status, this isn’t a political dog and pony show, but rather a technical analysis that needs to be professional and air-tight. Having a Council determination period makes the issue political, this is an executive issue, not legislative. Each company should be treated in the same manner, for profit or not. Not surprisingly, tax payments are potentially litigious. There is a ‘bright line’ established for tax exempt and I’m somewhat unsure that this, or other cities, pay it the attention it deserves.

    Why doesn’t BMC print one of those mammoth checks and have a photo-op with Sneaky Jimmy for their ‘donation’? Because they don’t really want anyone to know they are doing it.

    • Ray Ovac
      December 8, 2011 at 12:08 pm #

      Better yet, tax ALL not-for-profits as the City taxes all commercial entities, and let the chips fall where they may. Simultaneous with that, take a serious look at every line item in the City budget. It’s time to cut spending drastically — and do it with the knowledge that with all those unfunded liabilities the city faces, there really is NO money in city coffers. Pittsfield is technically bankrupt.

      • Shakes His Head
        December 8, 2011 at 2:00 pm #

        Many not-for-profits are legit not-for-profits and exempt from property taxes, if they own the real estate / personal property. But they should still be valued in the same manner as all for all other properties, then the assessor takes them off the roll.

        • Ray Ovac
          December 8, 2011 at 5:17 pm #

          SHH, problem is there are soooo many NFP’s abusing the system. Perfect examples of this would be Boston Symphony Orchestra, KRIPALU, UMASS, etc. wherein the CEOs of those respective organizations are making in the mid-six figures and all that compensation and fringe benefits are being subsidized by federal and state taxpayers. There are just too many instances wherein NFP status is a ruse to reward overpaid senior executives and to create overly large bureaucracies mostly for the sake of bureaucracy and so as not to end up in the profit column. If execs want to make that kind of money, that’s great, but why should taxpayers be subsidizing that level of largess? Further, why should the CEO of an NFP seeking tax-deductible contributions from the general public be paid compensation more than the average salary of those being asked to donate to the organization? Why not use as the determinant which NFP’s should be allowed to retain tax-exempt status the level of compensation paid the organization’s senior executives? Under this formula, those orgs compensating senior execs more than the compensation paid the average city taxpayer would lose NFP status. That should get rid of 99.9% of the charlatans currently occupying the NFP universe.

          • Shakes His Head
            December 9, 2011 at 8:08 am #

            That is why, after a decade, I no longer support the United Way here in the Berkshires. I’ll give resources directly to the chairties I support, in addition to my time.

            My comment is to really address the local property tax issue.

  2. Still wondering
    December 8, 2011 at 10:16 am #

    Dan, you’re lucky this isn’t Chicago. You’d be measured for cement overshoes already.

  3. Ron Kitterman
    December 8, 2011 at 10:16 am #

    A couple of interesting sites on PILOTS ..
    Keep up the good work Dan…

    http://www.commonwealthmagazine.org/News-and-Features/Inquiries/2011/Winter/Piloting-through-shortfalls.aspx

    http://www.mass.gov/dcr/watersupply/watershed/pilot.htm

  4. Ray Ovac
    December 8, 2011 at 11:58 am #

    Since DV chose to reproduce Molly’s comment from yesterday’s blog, please link to a response to Molly’s question: “Isn’t this how Warren Buffet’s tax rate is lower than his secretary’s — because he gets paid from a ‘non-profit’?”
    Link:http://planetvalenti.com/2011/12/a-substantial-donation-in-lieu-of-taxes-the-planet-begins-to-define-substantial-non-profit-status-of-mega-companies-like-bhs-are-often-a-tax-scam-plus-how-to-address-this-in-the-n/comment-page-1/#comment-45613

    • Molly
      December 9, 2011 at 5:42 pm #

      Ray: Of course you are correct. What was I thinking? My brain must have been confusing two different topics (getting old I guess! Or was too tired. Something!) Mea Culpa! Thanks for pointing this out.

      • Ray Ovac
        December 9, 2011 at 9:30 pm #

        Not your fault, Molly, both Warren Buffett and Obama have been quite disingenuous in regards to this stuff in order to push for higher taxes on the wealthy — exactly the opposite of what should be prescribed to get out of economic Depression. Note the added hypocrisy: WB, for all his talk about taxing the super-rich, is sheltering the bulk of his fortune from estate taxes upon his passing by pledging to transfer it to the tax-exempt Gates Foundation.

  5. joetaxpayer
    December 8, 2011 at 1:57 pm #

    The other problem that the city has is,that they own too much property.It is time to start selling off some of the buildings and parcells of land that they own.They owe it to the tax payers to get lean in these tough times.Also would like to see a committee to look into how to cut down on the excessive overtime, that is costing taxpayers. Would like to have yearly auctions of property,where the owners are not paying there taxes.

  6. Molly
    December 8, 2011 at 9:27 pm #

    So sorry to be a “downer” on this, but the problem is going to be that it’s the State who makes the decision if a corporation qualifies for the much sought-after “Not-For-Profit” designation and then the Federal Gov’t (IRS) makes the decision if a “not-for-profit” corporation (required designation) qualifies for the MUCH sought-after Federal “Tax Exempt” designation. Then the State can also designate it as “State Tax Exempt” and it really only takes the IRS tax exempt status to obtain the State one. So even though it is The City Of Pittsfield’s property taxes, it’s the State that exempts them from that. Really, the City and the entire Community have nothing to do with those decisions, and so Pittsfield will be powerless to “investigate” them, question them, etc. Even if via politics, favors, or taxpayer demands we get the state and the IRS to investigate them, I have no doubt that what they are doing is “legal” and so again, nothing would happen.

    What needs to happen is that the requirements for “not-for-profit” and for “tax exempt” designations needs to change on both the Federal and State level. And good luck with that! Look at the money that these “not-for-profits” have and can legally spend in fighting that! Billions!

    In order to apply for any grants, a corporation must be “tax exempt”. How many Federal & State grants would you guess that BHS receives? I just discovered that “tax exempt” also means paying a MUCH reduced postage rate! There’s also a huge organization (non-profit I’m sure) that is dedicated to supporting “not-for-profit” corporations, called Tides (http://www.tides.org). Just one quote from their website, “As CEO Melissa L. Bradley comments, Tides is proud of #OccupyWallStreet and looks forward to the future of the movement”. Hmmmmm

    Here is a good site and speaks in simple English about becoming a “non-profit” and “tax exempt” and it’s only a few pages of reading to get a good overview:
    http://ctb.ku.edu/en/tablecontents/sub_section_main_1308.aspx
    And I quote from their site the following: “A nonprofit organization in its simplest variation, is any organization for which those who control or support it do not earn a profit. This doesn’t mean that a nonprofit can’t make a profit–quite the contrary is true. A nonprofit organization can produce goods and services, and it can earn a profit while doing so. It can even invest those profits (in the stock market, for example) in hopes of earning more money. However, all of the money made must go back into the organization–there is no “profit sharing” among members. Generally speaking, these organizations don’t have any owners. This is one reason that nonprofits are known more and more commonly as “not-for -profits.” They may make a profit to help them stay in business, but making money is not their reason for being.” And apparently, there is no limit on the amount of profit they can make either!!!! The sky is the limit!

    Another important item to note is that the 501(c)(3) corporation cannot lobby or do political advocacy work. Hmmmmm No wonder we had Steven Colbert jump on here to discount any lobbying by BHS over the Meth and Suboxone clinics… No wonder there has not been one single word from Mr. Krol!!!

    So now that I’ve been a big downer to hopefully being able to change this so that we (Pittsfield) can collect property taxes from them (sooooo sorry), it is worth noting that the city of Boston somehow was able to strong-arm all those hospitals and Universities into at least paying a % of what they would normally have to pay if they weren’t “tax exempt” and so I’ll look into that more this weekend. I really don’t like the feeling that “We The People” can’t do anything to correct this wrong AT ALL!!! And so “where there’s a will, there’s a way”!! Now to just find it…

    One last note — how is it that Pittsfield provides BMC (and the other 26 companies under the BHS umbrella) Police Protection and Fire Protection (just to name two) and they don’t pay a dime for that? How many times A DAY is there at least one fire truck going to BMC? MANY! I’d like to see what the cost of that is!! Why don’t we tell them that they need to provide their own Fire Department?? And Police Department (like a University has and not the Barney Fife security guards that they have now)? What about city water – do they use city water? I wonder if they’re exempt from paying that, too? Do they use city sewer? Water and sewer are seperately paid services and not provided via property taxes…

    • Molly
      December 8, 2011 at 9:38 pm #

      “Your comment is awaiting moderation”??????? Why does it say this on my post?

      • dusty
        December 9, 2011 at 7:10 am #

        All I know is that the Berkshire Eagle has its content “moderated” by the corner office

        hopefully this a different kind of moderation but ya never know

    • danvalenti
      December 11, 2011 at 6:09 pm #

      MOLLY
      Even though the state has the ultimate control over not-for-profit status, the local authority has the right to investigate anything it wishes. It can do as we have said: conduct hearings for non-profits to justify their status. The city can then take the results and forward the data to the state, for advisory action. Don’t forget, we have representation in the legislature, and the city can petition the state in all sorts of ways. The situation you outline does not mean the city is helpless. The city can do what it wants … if only it wants it. Political will, and the determination not to take no, can make anything happen. The situation is not the downer that you indicate. You only give ammunition to those who say it can’t be done, because they don’t want it done. Anything can happen in politics, if you won’t take “no” for an answer.

  7. CONCERNED
    December 8, 2011 at 9:29 pm #

    Off subject for some good news. This country is going crazy with this stupid crap coming from people who are in charge. This one got me. 9 year old boy thrown out of school for 3 days for telling his teacher she is cute. Reason “sexual harassment” Are you kidding me. First of all he is 9 years old. Second telling someone you think they are cute is not sexual harassment. ( read what sexual harassment is) So where the hell is this Principle coming from.

    Here is the good news!!! We now know where he is going OUT THE DOOR. He was fired by the School boss. Jake take notice and hope your department uses their head when dealing with stuff like this.

  8. Molly
    December 8, 2011 at 9:41 pm #

    YES!! Good to hear that there are still some people who posses “common sense” and showed the Principal the door!

  9. Eric Vincelette
    December 9, 2011 at 3:45 am #

    @ Molly…It said the same thing on my post from yesterday and it never got posted..Whats the word DV?

  10. Tim
    December 9, 2011 at 8:20 am #

    Federal not for profits are given that status by the federal govt. can the municipal govt override the feds and force a company that is tax exempt to pay taxes just because they dont like the way the company appears? not for profits have other ways that are supposed to keep them in check, and while the system isnt perfect, not sure if the chity can legally do anything about it.

    Other than that I think its a good idea, interesting concept.

    • Shakes His Head
      December 9, 2011 at 10:39 am #

      different kinds of taxes.

  11. Eric Vincelette
    December 10, 2011 at 5:19 am #

    Why is this comment STILL awaiting moderation???

  12. Pat
    December 10, 2011 at 7:51 am #

    there’s a ghost in the machine

    • Dave G
      December 11, 2011 at 2:39 pm #

      Not a ghost it’s the GOB’s they got him incognito

  13. Karl Atwater
    December 10, 2011 at 8:43 am #

    Does Pittsfield still post a copat each school? Whose budget covers this?