Struggling to weather this wretched economy, two area school districts and two municipalities are pursuing an unexpected source of income: churches.They want to levy property taxes on the Catholic Diocese of Allentown, claiming that churches closed last summer have reverted from sacred, tax-exempt houses of worship to mere warehouses that belong on the rolls.
''If a private citizen had a warehouse, we'd have to tax them,'' said Superintendent Joseph Lewis of the Bethlehem Area School District, which is facing a nearly $5 million deficit.
The district plans to appeal the tax-exempt status of four closed south Bethlehem churches: Our Lady of Pompeii, St. John Capistrano, St. Joseph and St. Stanislaus. Those churches were merged with Ss. Cyril and Methodius, which became a new parish, Incarnation of Our Lord.
Elsewhere in the diocese, the Panther Valley School District wants to tax seven closed churches in Carbon and Schuylkill counties.
The Bethlehem churches, which were shuttered as part of a diocesan realignment, have a total assessed value of $928,700, according to Northampton County property records. Based on the school district's proposed millage rate of 43.12 for the 2009-10 school year, the churches would bring in $40,045 in revenue if their tax-exempt status is changed on appeal.
Allentown diocese spokesman Matt Kerr would not speculate on how the diocese might respond to the taxation effort, saying only that it is ''monitoring the situation and assessing our options.''
The law governing tax exemption of churches is ambiguous. Courts in other states have split in their decisions on whether shuttered churches still warrant a tax-free ride.
The Allentown diocese, faced with a priest shortage and a city-to-suburbs population shift, closed nearly 50 churches last summer in four of its five counties. In bittersweet and symbol-rich processions, priests and parishioners locked the doors on buildings that were, in many cases, built by and for immigrants and served generations from birth to death.
It was done in the name of efficiency, so pastors would no longer have to serve multiple parishes and the diocese wouldn't have to maintain what were, in many cases, aged and energy-inefficient buildings.
But the effort to streamline could end up being costlier than staying open if the diocese fights the tax appeals and loses, as dioceses have done in Buffalo, N.Y., and Nashua, N.H.
In Nashua, the city collected about $50,000 in taxes on two closed Catholic churches in 2004, according to published reports. The Diocese of Manchester appealed, arguing the storage of religious items at the buildings constituted religious use and thus preserved tax exemption for the properties.
A lower court agreed. But in 2007, the New Hampshire Supreme Court overturned that ruling. ''The mere storage of religious objects in a deconsecrated church does not rise to the level of using or occupying the space for 'religious purposes,''' the court ruled.
Kerr said some of the statuary and other items from the south Bethlehem churches were moved to the new Incarnation of Our Lord Parish. Much of the furniture and other items remain in the closed parishes, he said.
John J. Convey, provost of Catholic University of America in Washington, D.C., tracks the consolidation movement of Catholic dioceses. He said the consolidation of old ethnic parishes is driven more by lack of priests and changing demographics than finances. The fewer parishioners there are, the less money a parish generates.
He said it's ironic that churches, which were tax exempt when they had healthy flocks and finances, could have to pay for losing people, priests and money.
''I don't know what the dioceses would do,'' Convey said. ''It is quite a bit of land they left, and if it is taxed, that is a heavy, heavy burden on the dioceses.''
Northampton County Assessment Manager Cheryl Johnson said under the law, school districts and municipalities have the right to challenge any assessment to a county assessment board. Either side has the right to challenge the board's decision in court.
Only the Bethlehem Area School District has inquired about changing the tax status of any of the seven closed Catholic churches in Northampton County, Johnson said.
Dennis Reichard, Bethlehem city business administrator, said the city's lawyer is researching the assessment law to see if the churches' tax status can be changed.
According to the Carbon County Tax Assessment Department, Panther Valley School District, Beaver Meadows and Banks Township have filed appeals on closed churches. As a result, county Chief Assessor Kim Steigerwalt said her department plans to send the diocese letters saying the eight closed churches in the county could be reassessed.
''It will be every church that had closed,'' Steigerwalt said.
Robert Yurchak, solicitor for the Panther Valley School District, said he will file an appeal with the Schuylkill County Tax Assessment Office on two churches in Coaldale. He believes the closed churches are taxable simply because they are no longer used for religious services.
''It's similar to if you were putting a cross on top of your house,'' Yurchak said. ''Would that make it a religious exemption? I don't think so.''
But Schuylkill County officials are not so sure. Virginia D. Murray, acting chief assessor in the county, where 30 churches closed, said the Schuylkill solicitor's office believes the tax status of church buildings cannot be changed unless they are sold to a business or private citizen.
Donald Spry, solicitor for the Bethlehem Area School District, said at a board meeting Monday that case law is unclear. In ruling on the tax status of churches, he said, courts have said houses of worship must hold ''regular services'' to not be taxed. But Spry said there is no definition of ''regular services.''
Aside from extra real estate money, the issue of taxing a church can get personal, as Monday's meeting of the Bethlehem school board showed.
School Director Rosie Amato, who is Catholic, said the law is too ambiguous for the district to be challenging the diocese, which is experiencing the same economic problems that government is.
''Why are we going after them?'' Amato asked. ''I can't believe we would do something like this.''
But other directors and Lewis said school officials have to separate their religious beliefs from their civic responsibility.
''I believe we as a board have a duty…to determine what properties are exempt and what are not,'' said Director Irene Follweiler, who is Catholic.
''If they truly fall under the tax-exempt umbrella, fine. If not, we should tax them.''
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(Source: MCC)