City of Providence turns up the heat on Brown University and other tax-exempts
The City of Providence is revving up its battle with Brown University and other tax-exempt institutions, pressing for larger PILOT (payment in lieu of taxes) contributions to help stabilize the city’s finances.
A report approved today by Providence’s Commission on Revenue, Sustainability, and Efficiency puts the cost of city programs that serve nonprofits at just under $165 million. The report recommends PILOTS “be set in an amount equal to 16% to 22% of the amount otherwise due for property tax, subject to offsets for a carefully defined class of benefits to the City of up to one-half of the indicted PILOT payment.”
The document, entitled “A System Out of Balance” — also recommends:
— In the FY 2012 budget, the City set a target of $7 million in additional PILOT payments above the current funding level of $2 million. This would result in a total PILOT program of $9 million. This does not offset the cost of providing city services to nonprofits.
— The Subcommittee recommends raising the global PILOT target to $13.3 [million] to $18 million to offset the cost of City services provided by the nonprofits.
In an interview after the meeting, Finance Committee chairman John Igliozzi called increased payments from tax-exempt institutions a necessity for Providence’s fiscal stability.
Mayor Angel Taveras issued a statement notable for its tough rhetoric:
I commend the Commission to Study Revenue Sustainability and Effectiveness for its analysis, which makes very clear that one of our biggest barriers to creating a balanced, competitive revenue structure in Providence is the failure of Brown University and our city’s other tax-exempt institutions to contribute fairly for the city services they use. The taxpayers have sacrificed. Our labor unions have sacrificed. It’s time for Brown and the other tax-exempts to step up and contribute fairly to the city they call home.
Daniel Egan, a representative for Brown and other universities in Providence, was one of a cluster of lobbyists for the tax-exempts attending the City Hall meeting.
Egan reacted favorably to the report’s “rubric” approach, using a variety of indicators, to gauge PILOT payments. “With regard to additional dollars, we would question how they got to that number,” he added. “We would question some of the math.”
Egan said the institutions he represents welcome additional dialogue, but he added that a push for additional cash payments to the city is likely to face stiff resistance.
The City Council will be the next stop for the commission’s report
Making property taxes more competitive in Providence is the other prime recommendations in the report.
The report says Providence’s property tax structure is the second most burdensome in the country, after Detroit’s. The document — called “A System Out of Balance” — says its recommendations, if implemented, would make:
— Providence’s business tax burden less uncompetitive by reducing both the commercial tax rate and the tangible tax rate by 9.9% and 5.7% respectively.
— Reduce the property tax rate on non-owner occupied property by 5.9%
— Maintain the efffective owner-occupied residential tax rate.