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.
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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