Posted 11:55 a.m.
PROVIDENCE -- Four private colleges and universities in Providence have
agreed to make payments in lieu of taxes to help pay for city services
such as public safety, Mayor David N. Cicilline announced this morning.
The agreement provides for nearly $50 million in voluntary payments to
the city over a 20-year period, Cicilline announced during a press
conference at his office.
Cicilline was joined by the presidents or representatives of the four
schools: Brown University, The Rhode Island School of Design, Providence
College and Johnson & Wales University.
"This is truly an historic agreement," Cicilline said.
In an effort to convince the tax-exempt institutions to support public
services and help close a projected $58.9 million budget gap, Cicilline
has been pushing the schools to make payments in past months.
He threatened to introduce legislation in late April but backed off when
the colleges asked him to continue talks.
The $552 million budget Cicilline presented on May 1 cut the projected
gap by more than $34 million by cutting the school budget by $6 million,
cutting some management positions, freezing management salaries and
instituting co-pays for managment health care.
Payments from the colleges will help close the remaining $24.4 million
gap.
In a commentary published May 5 by The Providence Journal, Cicilline
wrote, "The private colleges and universities of the city simply must
begin to pay their fair share.
He noted that the city's private colleges and universities own "more
than three-quarters of a billion dollars in tax-exempt city real estate."
"As they buy more land, they further undermine the city's capacity to
generate its own revenue through property taxes. With total annual
budgets of $750 million, combined endowments of $2 billion, and over
25,000 students — the vast majority of them from outside of Providence
these institutions are thriving in our city.
"Yet for all the annual police, fire, public-works and other services
these enormous institutions consume, they pay virtually no compensation
to the city," he wrote. "Other colleges and universities across the
country are paying millions of dollars to their local cities, in
payments for services and payments in lieu of taxes.
His budget does not raise city property taxes. He said he would do that
only as a last resort.
The tax-exempt status of the schools adds to the tax burden for other
property owners, according to Cicilline.
"Half of all city property is exempt from taxes, leaving the remaining
property owners to shoulder twice their fair share of the tax burden,"
he wrote.
Only four states rely more heavily than Rhode Island on property taxes
to pay for public services. Providence taxpayers already face the
highest tax burden in the state, 50 percent higher than the state
median, he wrote.
