Providence, R.I. Mayor to Nonprofits: Pay Much More or City Will Go Bankrupt

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February 6, 2012; Source: Associated Press | If you nonprofits don’t start forking over bigger moneys, the city of Providence, R.I. could go bust and you’ll be to blame. That’s essentially the message—though not in those words—from Providence, R.I. Mayor Angel Taveras, who says that the city faces bankruptcy unless tax-exempt institutions such as the city’s several colleges and universities, including Brown University, don’t ante up larger payments in lieu of taxes (PILOTs).

At a city hall press conference, the mayor warned that the state’s capital city will run out of money by June. “Everyone must sacrifice or everyone will suffer the consequences,” he said forebodingly. One target is government pensioners. Mayor Taveras said that the city cannot afford to make the annually guaranteed cost-of -living increases of five or six percent.

According to the Associated Press, Taveras also wants nonprofit property owners to contribute an extra $7.1 million on top of their existing PILOTs payments just for this year, and to increase their multi-year commitments. For example, he would like to see $40 million more from Brown over the next ten years; currently, Brown pays the $4 million a year in “voluntary” PILOTs. Brown’s board has approved an increase of $2 million a year over five years, but that doesn’t look like it will satisfy the mayor, who says he favors state legislation that would compel nonprofit property owners to make payments to their municipalities. Mayor Taveras believes that Brown had agreed to—but eventually reneged on—the deal for an additional $4 million annual payment to the city. The largely corporate-supported Rhode Island Statewide Coalition has endorsed the mayor’s efforts to whack retiree benefits and to go after the nonprofits for higher payments.

Nonprofits disagreed. For example, the Hospital Association of Rhode Island, which defended the $9.5 compensation paid to the CEO of the Lifespan hospitals in FY2009 (compared to one-third that amount a year before), said the compensation didn’t indicate that the hospitals could afford to pay more to the city

The battle lines are being drawn. On one side, the mayor, local businesses, and homeowners think that nonprofit property owners should be paying something closer to the $105 million the mayor says that Providence’s nonprofit property owners would have to pay if they were taxed at the full assessed value of their properties. Across the battlefield stand the nonprofits, an array of big and small organizations that worry about facing increasing demands on their coffers based on a property tax analysis that contravenes the meaning of “tax-exempt.” –Rick Cohen

  • george richmond

    Now just how and why did the City promise such impossible cost of living payments?

  • John Fike

    The city should bite the bullet and raise taxes so that all the citizens are paying what it really costs to provide them with the services they want. They shouldn’t be taking it out of the hides of the institutions that keep society civil and provide the education that should be our nation’s number one priority. They need to bring all citizens of the community into the process of paying what it costs to provide municipal services.