Pittsburgh's proposed tax would have been a first: a 1 percent levy on all tuition paid by the city's 100,000 college students. If it had passed, it would have raised $15 million a year by, in effect, rescinding a tax exemption.

In 2009, Providence asked Rhode Island lawmakers to allow it to assess $150 per semester for every out-of-state student at each of the city's four major private colleges.

Hawaii has some bright ideas along tax-exempt lines too. The state is debating whether to require charities to pay a 1 percent tax, and Honolulu's City Council is considering eliminating property tax caps-it's currently $100 a year-on nonprofit organizations.

Kansas legislators are considering making nonprofits pay a sales tax on items they buy, while some localities in the state want to revoke nonprofits' exemption from property taxes.

n Georgia, nonprofit hospitals would lose their state sales tax exemption under a new round of budget reductions Gov. Sonny Perdue announced in mid-March.

The tax exemption focus for nonprofits is cyclical-it happens every recession. But this time around, it's a little different. States and localities are not just looking to the nonprofit sector to recoup some property tax revenue, they are attacking on all tax fronts-income, sales and property. They may be emboldened by the growing scrutiny of nonprofits' business models. Where regulation of nonprofits was once the almost-exclusive purview of state attorneys general, the federal government-from the IRS to members of Congress-has turned a more skeptical eye on them. Nonprofit hospitals, for instance, have been asked to distinguish what they do from what for-profit hospitals do. A recent ruling by the Illinois Supreme Court found that the state could strip a Champaign hospital of its tax-exempt status for the year in which it did not offer enough charity care to the poor. The hospital now must pay millions of dollars in property taxes for 2002. Similarly universities have been questioned about their various revenue streams and asked to delineate what is related to the public benefit of providing services and what is, in effect, unrelated business income.

While several states and localities may try this year to extract revenue from nonprofits, it won't be easy to do. Those who decide to try should keep three key points in mind.

First, all nonprofits are not created equal. There are four kinds of tax-exempt entities: health-care institutions, colleges and universities, social service organizations, and religious groups. One policy will not fit all.

Churches and religious groups are usually not included in the nonexemption discussions-taxing them raises constitutional issues and no one wants to go there.

Social service organizations are, in effect, an arm of government. Their existence relieves government of some of its burdens, which compensates a government for the loss of revenue. Moreover, governments fund most social service nonprofits by buying the services the agencies provide. If they then tax the nonprofit's income, they are sending the money back to the government with the added layer of administrative costs. Two other reasons to steer clear of the social service providers: There's not much money there to get. It's like looking for nickels and dimes under couch cushions. Furthermore, says David B. McGinty, adjunct professor of law at Villanova University, there's the problem of taking on "the political backlash when you talk about taxing Meals on Wheels."

Health-care facilities and universities generate the lion's share of revenue in the nonprofit sector. In many localities, they employ thousands of people and own lots of land. The argument for taxing them is a simple one: They consume government services-fire, police and the like-and should pay their fair share just as their for-profit counterparts or competitors do.

Second, taxing nonprofits is a tough row to hoe. Health-care organizations and universities are economic engines with a lot of political clout. Universities have the additional backing of alumni, who are personally invested in their alma maters. Philadelphia's attempt to assess a nonprofit-the Dad Vail Regatta-shows how tough it is to assess a tax-exempt organization. The regatta, which has been held every May since 1955 on the Schuylkill River, is the largest collegiate rowing event in the country and is worth an estimated $2 million to Philly's economy. When the city tried to increase the regatta's owed fees for city services-police overtime, fire department emergency technicians, marine-police units and fees to the riverside park-regatta officials found a New Jersey township willing to pay it $250,000 to change the venue. Philadelphia negotiated to keep the regatta-but with compromises on fees the group would have to pay.

And last, PILOTs-payments made in lieu of taxes that are voluntary-are an alternative. A survey by The Chronicle of Higher Education found that nearly two-thirds of the 30 research universities with large endowments had no arrangements to make routine payments to their local governments. But some do, and their payments are significant. Harvard and Yale pay their local hosts in excess of $5 million and $7 million per year, respectively; and the Massachusetts Institute of Technology, Princeton University and the University of California at Berkeley top the $1 million mark.

Pittsburgh shelved its attempt to tax tuition in favor of pledges from the University of Pittsburgh and Carnegie Mellon University, among others, to donate more to the city than they had previously. Pittsburgh may have made temporary peace with its universities, but two state legislators-state Sen. Wayne D. Fontana and Rep. Timothy J. Solobay-have introduced legislation that would allow for the imposition of an "essential services fee" on tax-exempt organizations that own property within a municipality. While municipalities could continue to rely on existing voluntary agreements, the Fontana bill would give them the option of imposing a fee based on total square footage of properties or establishing a limited real estate tax for properties owned by charitable institutions.