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Nonprofit Newswire | Boston Asks Nonprofits To Share Budget Pain

Bruce S Trachtenberg
April 7, 2010
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April 6, 2010; Boston Globe | It’s beginning to look like tax-exempt status doesn’t quite mean that for many nonprofits anymore. Add Boston to the growing list of recession-battered cities and states that are seeking to boost revenues from new or increased levies on exempt organizations. But what makes Boston’s situation different is that nonprofits already make annual, but voluntary, contributions to the city.

The negotiated amounts include both cash and services, but still equal to a small fraction of what they’d pay if they weren’t exempt from property taxes—from one to 8 percent, for example. Now, according to the Boston Globe, a task force is readying recommendations that would eventually seek up to the equivalent of 25 percent in contributions from tax-exempt entities.

The new rules wouldn’t mandate payments; they’d still be voluntary. But, according to the paper, a “revised formula would make it easier to compare similar institutions and increase pressure on those paying proportionally less.”

Under the current system, the amount negotiated varies widely from one group to the other, and has led to criticism. For example, last year Berklee College of Music made $361,000 in payments, or more than 8 percent of what it would have paid in property taxes. In contrast, Wentworth Institute of Technology only paid $40,000, or less than 1 percent of what would have been a $5.6 million property tax bill.

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“There was a perception of unfairness for institutions because nobody was exactly sure what the agreements for their peers included,’’ said Stephen W. Kidder, the task force chairman. “One of the principal goals of the task force was to . . . put it in a framework so the rules would be the same for everyone.’’

While the recommendations seek to bring fairness to the system, hospitals and universities, among those that would be affected, say they’d be forced to layoff workers, and raise tuition for students and charge more for medical services if the rules change. So far there’s been no talk of including religious institutions in a new plan.

Still Boston, like other municipalities, is being hurt by the recession and is looking at how to afford basic services without asking taxpayers to share the pain alone. While acknowledging “the predicament the city is in,” John Erwin, executive director of the Conference for Boston Teaching Hospitals, adds “we are also in a similar predicament.’’ The 158 reader comments (last we counted) are all over the board and worth scanning in and of themselves.—Bruce Trachtenberg

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