Boston Globe
Pittsburgh threatened to tax college tuition. Providence sought to tax out-of-state students. And Philadelphia is pressing its colleges and universities to resume voluntary payments in lieu of taxes.
As Boston seeks new revenue, cities around the country are grappling with how to squeeze more money from the colleges and other tax-exempt institutions, as recession and lower property tax revenues prompt municipalities to seek alternate ways to pay their bills.
Efforts to impose greater obligations on nonprofits have increased tension and strained town-gown relations in some college-rich cities.
City officials argue that colleges rely on municipal services and should pay their fair share, especially in difficult financial times.
Colleges defend their tax-exempt status by citing the social and economic benefits they bring to their communities.
“Economic constraints have required cities and towns to look more aggressively for additional funds,’’ said Daniel Egan, president of the Association of Independent Colleges and Universities of Rhode Island.
“But quite frankly, when you put a figure on something, then the tax exemption is gone. If it looks like a tax and sounds like a tax, it’s a tax.’’
With its large number of tax-exempt universities and hospitals, Boston appears to be ahead of most cities in seeking to toughen its voluntary payment program for nonprofits. A city panel is finalizing a plan to ask nonprofits to gradually increase their voluntary annual payments to 25 percent of what they would owe in taxes.
The proposal, which many colleges and universities oppose, would raise the total amount of payments to Boston to $20.9 million a year.
Currently, 13 Boston colleges and universities pay the city $8.4 million a year, ranging from $4.9 million from Boston University to $13,125 from the New England School of Law.
In addition, several of the schools pay $5.7 million in taxes on property that would otherwise be considered tax-exempt. At least nine colleges pay nothing in lieu of taxes.
In Philadelphia, meanwhile, hardly any colleges make payments in lieu of taxes, although that could change.
University presidents there met with city officials last week to begin discussing how to quantify their current contributions to the city. Philadelphia is assembling a task force similar to the one in Boston to assess how a new system might work, whether through in-kind services or voluntary payments.
In 1995, the city received $6.78 million in voluntary payments from nonprofits, with the University of Pennsylvania contributing nearly $2 million.
But the payments slowed to a trickle after a 1997 state law calmed fears that the city might try to strip them of their tax-exempt status if they did not pay up.
Now, the city receives less than $1 million a year from nonprofits, mostly from outside higher education, said Lori Shorr, Philadelphia’s chief education officer.
Many Philadelphia schools, however, donate services and operate community programs, Shorr said.
Penn, for example, contributes $700,000 a year to a public elementary and middle school that it started in 2001 to attract families to a West Philadelphia neighborhood.
In January, a Chronicle of Higher Education survey found that only a third of 30 top research universities with large endowments made regular voluntary payments in lieu of taxes.
The largest single voluntary payment of any university to its host municipality comes from Yale University. Yale recently bumped its contributions to New Haven to $7.5 million a year, up from $5 million, because of the recession’s effects on the city, a university official said.
By comparison, Harvard voluntarily pays $2 million annually to Boston and $2.2 million to Cambridge, while MIT pays Cambridge $1.8 million. (Both universities also pay millions in taxes on property that is not used for academic purposes and run a wide range of community programs.)
On top of Yale’s contributions, New Haven receives $43 million from the state of Connecticut, which awards cities grants about 77 percent of the amount of taxes that would have been paid if college and hospital properties were not exempt from taxation, a rare model that some private education advocates in Massachusetts would like the state to consider.
While cities have to make do with whatever voluntary payments they manage to get out of local colleges, some mayors have resorted to more drastic measures to help close budget gaps.
The issue has spurred debate and tension in Providence.
Although four private colleges agreed in 2003 to pay the city nearly $50 million over 20 years, Mayor David Cicilline proposed last spring that the colleges also pay a $300-a-year tax on each out-of-state student. He said it would generate about $8 million a year.
But the plan failed amid opposition from students angered by the additional burden at already pricey schools. and Michigan colleges. Universities worried that the tax would hurt recruiting.
“I thought it was important that our large tax-exempt institutions that own a lot of real estate contribute more to the health and well-being of the city,’’ Cicilline said in an interview yesterday.
He said the city is continuing discussions with the colleges on how they can contribute, such as helping Providence create a streetcar system and increasing their involvement in the city’s schools.
Pittsburgh put together a plan last year to establish the nation’s first tax on college tuition to raise revenue for city retirees’ pensions.
But the mayor withdrew the proposal for the 1 percent tax in December after Carnegie Mellon University and the University of Pittsburgh agreed to step up voluntary payments to the city.
Pittsburgh takes in about $784,000 in voluntary payments from its nonprofits. City officials would not disclose how much more the two universities have agreed to pay.
Higher-education representatives hope that the unsuccessful tax proposals in Pittsburgh and Providence send a signal to mayors in other cities.
“That will probably tamp down enthusiasm to go in this direction, but probably only for a year or two,’’ said Don Francis, president of the Association of Independent Colleges and Universities of Pennsylvania.
“We will see more of these kinds of proposals if we don’t find other solutions.’’
As Boston seeks new revenue, cities around the country are grappling with how to squeeze more money from the colleges and other tax-exempt institutions, as recession and lower property tax revenues prompt municipalities to seek alternate ways to pay their bills.
Efforts to impose greater obligations on nonprofits have increased tension and strained town-gown relations in some college-rich cities.
City officials argue that colleges rely on municipal services and should pay their fair share, especially in difficult financial times.
Colleges defend their tax-exempt status by citing the social and economic benefits they bring to their communities.
“Economic constraints have required cities and towns to look more aggressively for additional funds,’’ said Daniel Egan, president of the Association of Independent Colleges and Universities of Rhode Island.
“But quite frankly, when you put a figure on something, then the tax exemption is gone. If it looks like a tax and sounds like a tax, it’s a tax.’’
With its large number of tax-exempt universities and hospitals, Boston appears to be ahead of most cities in seeking to toughen its voluntary payment program for nonprofits. A city panel is finalizing a plan to ask nonprofits to gradually increase their voluntary annual payments to 25 percent of what they would owe in taxes.
The proposal, which many colleges and universities oppose, would raise the total amount of payments to Boston to $20.9 million a year.
Currently, 13 Boston colleges and universities pay the city $8.4 million a year, ranging from $4.9 million from Boston University to $13,125 from the New England School of Law.
In addition, several of the schools pay $5.7 million in taxes on property that would otherwise be considered tax-exempt. At least nine colleges pay nothing in lieu of taxes.
In Philadelphia, meanwhile, hardly any colleges make payments in lieu of taxes, although that could change.
University presidents there met with city officials last week to begin discussing how to quantify their current contributions to the city. Philadelphia is assembling a task force similar to the one in Boston to assess how a new system might work, whether through in-kind services or voluntary payments.
In 1995, the city received $6.78 million in voluntary payments from nonprofits, with the University of Pennsylvania contributing nearly $2 million.
But the payments slowed to a trickle after a 1997 state law calmed fears that the city might try to strip them of their tax-exempt status if they did not pay up.
Now, the city receives less than $1 million a year from nonprofits, mostly from outside higher education, said Lori Shorr, Philadelphia’s chief education officer.
Many Philadelphia schools, however, donate services and operate community programs, Shorr said.
Penn, for example, contributes $700,000 a year to a public elementary and middle school that it started in 2001 to attract families to a West Philadelphia neighborhood.
In January, a Chronicle of Higher Education survey found that only a third of 30 top research universities with large endowments made regular voluntary payments in lieu of taxes.
The largest single voluntary payment of any university to its host municipality comes from Yale University. Yale recently bumped its contributions to New Haven to $7.5 million a year, up from $5 million, because of the recession’s effects on the city, a university official said.
By comparison, Harvard voluntarily pays $2 million annually to Boston and $2.2 million to Cambridge, while MIT pays Cambridge $1.8 million. (Both universities also pay millions in taxes on property that is not used for academic purposes and run a wide range of community programs.)
On top of Yale’s contributions, New Haven receives $43 million from the state of Connecticut, which awards cities grants about 77 percent of the amount of taxes that would have been paid if college and hospital properties were not exempt from taxation, a rare model that some private education advocates in Massachusetts would like the state to consider.
While cities have to make do with whatever voluntary payments they manage to get out of local colleges, some mayors have resorted to more drastic measures to help close budget gaps.
The issue has spurred debate and tension in Providence.
Although four private colleges agreed in 2003 to pay the city nearly $50 million over 20 years, Mayor David Cicilline proposed last spring that the colleges also pay a $300-a-year tax on each out-of-state student. He said it would generate about $8 million a year.
But the plan failed amid opposition from students angered by the additional burden at already pricey schools. and Michigan colleges. Universities worried that the tax would hurt recruiting.
“I thought it was important that our large tax-exempt institutions that own a lot of real estate contribute more to the health and well-being of the city,’’ Cicilline said in an interview yesterday.
He said the city is continuing discussions with the colleges on how they can contribute, such as helping Providence create a streetcar system and increasing their involvement in the city’s schools.
Pittsburgh put together a plan last year to establish the nation’s first tax on college tuition to raise revenue for city retirees’ pensions.
But the mayor withdrew the proposal for the 1 percent tax in December after Carnegie Mellon University and the University of Pittsburgh agreed to step up voluntary payments to the city.
Pittsburgh takes in about $784,000 in voluntary payments from its nonprofits. City officials would not disclose how much more the two universities have agreed to pay.
Higher-education representatives hope that the unsuccessful tax proposals in Pittsburgh and Providence send a signal to mayors in other cities.
“That will probably tamp down enthusiasm to go in this direction, but probably only for a year or two,’’ said Don Francis, president of the Association of Independent Colleges and Universities of Pennsylvania.
“We will see more of these kinds of proposals if we don’t find other solutions.’’
