Should private colleges and universities with annual tuition and fees of $50,000 and multimillion-dollar endowments remain exempt from paying local property taxes for schools, police, and fire protection?

When I was hired as the public-policy director at the Oregon Association of Colleges and Universities, that was the hot issue—along with the spectre of the related Smarts Bill. This job came with a slick office overlooking Oregon’s capitol dome in Salem. I’m a lobbyist. I’m at the capital all the time.

The Association of Colleges was well educated in the ways of the world: well financed, well informed, and now well under the gun. The Oregonian had just run a series of humiliating articles on penny-pinching scholarships, exploding endowments, student concierge services, soaring student debt, and even binge drinking—by alumni at fundraisers.

When I walked into a room designated for a hearing of the tax committee with my board chair, Dr. Hugo Sen, the university’s top pediatric surgeon, and Juanita Sanchez, the single mother of an extraordinary student from Portland, I expected things to be manageable. Javier was a charismatic senior who attended Kesey University on a trustee scholarship, a top physics student, an oboist, and the president of the Linux Programmers Club. Thanks to a committee aide, my witnesses would be the first to testify on the bill requiring private colleges and universities to pay local property taxes.

I saw trouble as soon as I entered the tax committee’s properly massive and ornate hearing room—Art Johnson, chief lobbyist for the realtors and a sworn enemy of property tax exempions. The Smarts bill was Senator Louis Smarts’s idea: to fund college scholarships by taxing the property of colleges and universities for local police and fire, freeing up state dollars.

Art smiled at me and said, “Nice suit, Phil. Come on—this is pocket change for your colleges. Property taxes are strangling us while you guys sock aways millions.”

I was used to Art giving me a hard time—he usually had some sneaky surprise up his sleeve. “Art, good to see you. Sorry about this damn real estate crunch—tough times.”

The hearing room was beginning to fill. I saw my association’s college and university members huddled in the back, near the TV cameras, trying not to appear too nervous or too rich.

Testifying first is usually an advantage. Dr. Sen and Senora Sanchez were scripted to make the case that losing our property tax exemption would only result in higher tuition, increasing student debt and more Oregon students having to go to California for a college education.

It was time to start, with Senator Smarts and 10 other tax committee members shuffling their papers and looking around the room. Suprisingly the speaker of the House and the president of the Senate stood behind the tax committee chair, who nodded to them and then gaveled the hearing to order.

“Our first order of business is Senate File 88, a bill defining eligibility for charitable property tax exemption. The first witness is Juanita Sanchez from Portland.”

Juanita was moving, articulate and on message—until the chair asked her the first question.

“Ms. Sanchez, would you support a modest tax on university property if it meant that thousands of students like your son Javier could get a college education?”

Juanita paused for about 10 seconds, and answered. “Mr. Chairman, of course I would! I’ve seen how the colleges spend their money, and they can obviously afford it.”

The room suddenly went quiet, Ms. Sanchez wouldn’t look at me, Senator Smarts was grinning, Dr. Sen was dumbstruck, and I jumped for the microphone.

“I agree,” I said quickly, as I scrambled to salvage the tax exemption. “College and university education is very expensive. We were fortunate 30 years ago when you went to school, Senator Smarts, that Oregon’s great legislature invested in higher education and made it affordable.”

The committee chair frowned. “Mr. Anthrop, are you saying your members would reduce tuition to 1977 prices if we restore tuition support? What would your colleges charge for a Venti Latte I wonder?”

“Mr. Chairman, may I answer?”

“Mr. Anthop, I know your colleges and universities don’t like this tax proposal, and wouldn’t buy so much land if they couldn’t remove it from the tax rolls. I want to hear your answer, Mr. Anthrop and Dr. Sen, if you have any. But right now, I’ll jump ahead and ask Javier Sanchez, who represents the Oregon Student Association as well as the Linux Programmers Club, to speak.”

As I gave up my seat at the table, I could see the association members in the back, scowling and gesturing at me like I was supposed to shut these people up.

Mrs. Sanchez was glowing like the mother of a winning quarterback. “Mr. Chairman,” Javier began.

“Is this the first time you’ve testified at the legislature, Mr. Sanchez?” the chairman asked.

“Yes, Mr. Chairman. But not the last, I hope. Today, on behalf of the students, I would like to say that Mr. Anthrop has made some good points, as has Senator Smarts,” said Javier, who paused to look first at me and then Senator Smarts. “But the world has changed in 30 years. It doesn’t work the same, and the students don’t look the same. The Oregon Student Association is pleased to propose a compromise in which the colleges will have to pay only 50% of the property tax, and the scholarships will start next year.”

It was so quiet you could hear the rattle of Lexus keys from the back row. “Anything else Mr. Sanchez?” the chairman asked.

“Plus free Linux software for all students. But of course that’s free anyway,” Javier replied.

A group of students broke into applause, and soon the entire room started clapping, astounded by the apparent wisdom of the younger generation. The speaker and the president of the Senate came forward and shook Javier’s hand, and suddenly the TV cameramen moved in close to get a shot of Mrs. Sanchez crying happy tears.

The speaker leaned down to the microphone. “Mr. Chairman, could I address this body?”

The chair smiled and said “Of course, Mr. Speaker.”

The speaker waved at me to come forward and said, “Mr. Chairman, I would like to call on Mr. Phil Anthrop and the members of the Oregon Association of Colleges and Universities to accept this splendid compromise.”

Somehow the TV cameras were in my face, and the chairman said, “Mr. Anthrop, we’re giving your quite successful members a break here, but you have to make a commitment now.”

Holy crap!

“Mr. Chairman,” I said, “I need five minutes with our college and university leaders.”

“Five minutes, Mr. Anthrop, and think of all the scholarships you’ll fund,” the chairman said.

I rushed out to the hallway and began some frantic discussions. Hands flew; voices were raised. But then a cool head prevailed with a quick plan of action. My colleagues were placated and actually thrilled, so we sailed back into the hearing room, nearly a minute early.

“Your response, Mr. Anthrop?” the chairman asked, clearly surprised that we had made it back in time.

“Mr. Chairman,” I began, “you have inspired a complete rethinking of the way we handle scholarships. All the member colleges and universities are on board. In addition, to make clear our commitment, I have been asked to make an important announcement. First, we are honored to award Javier Sanchez and all 10 members of the Linux Programmers Club full tuition for the remainder of their college careers as well as to any graduate school in the state.”

Again the room erupted in cheers. “Second, the new wing of the technology building, with a special lab and game room for the Linux Programmers Club, is being named the Louis Smarts School of Technology. Third, Ms. Sanchez, in honor of your remarkable sacrifices and dedication, we are creating a lifetime fellowship in political science for you, at $50,000 per year.”

And again, Mrs. Sanchez broke into happy tears.

“And finally, Mr. Chairman, Kesey College has proposed naming the new stadium after your parents, who were graduates—but of course, only with your permission.”

Standing up, in the stuffy committee room now positively electric with energy and grinning faces, I concluded by saying, “And this tax matter? We simply ask for more time for our staff to work out the details, probably over the next few years.”

Phil Anthrop is a consultant to foundations in the G8 countries.