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Cicilline bills would tax colleges and nonprofit institutions

01:00 AM EDT on Thursday, May 21, 2009

By Philip Marcelo

Journal Staff Writer

PROVIDENCE — Mayor David N. Cicilline, whose city faces a revenue shortfall approaching $50 million for the fiscal year starting July 1, unveiled two bills Wednesday that would allow municipalities to tax universities and hospitals.

One is the mayor’s much-discussed “student-impact fee,” which would assess private colleges a flat fee of $150 per semester for each full-time student who is from out of state.

The other would allow cities and towns to collect from large nonprofit institutions, such as major colleges and universities and hospitals, up to 25 percent of what the taxes would be on their tax-exempt properties.

The bill would affect nonprofit institutions that own property valued at $20 million or greater; the Roman Catholic Diocese of Providence would be exempt, according to Cicilline.

In Providence, those affected would be four private universities –– Brown University, Johnson & Wales University, Providence College and the Rhode Island School of Design –– and five private hospitals –– Butler, Miriam, Rhode Island, Roger Williams and Women & Infants.

The legislation will be introduced by House Majority Leader Gordon D. Fox, D-Providence, and state Sen. Maryellen Goodwin, D-Providence, Thursday.

The proposed laws represent a stark departure from the long-standing relationship between nonprofit institutions, which are tax exempt, and their host communities. No state or city has attempted to unilaterally tax major nonprofit institutions, say university and hospital officials, who oppose the measures.

“Government promotes the important public goods of education and religion by granting tax-exempt status to institutions like Providence College,” said the Rev. Brian J. Shanley, the college’s president.

But with the city and the state facing a fiscal crisis of “historic proportions,” Cicilline, a Democrat, argued that cities and towns need to find more ways to generate money, other than raising taxes or depending on the state for aid. He estimates that the student-impact fee and the property fee would give the city nearly $16 million in additional revenue next year.

“We’re not diminishing the importance of the hospitals and universities to the vitality of the City of Providence,” Cicilline said in a news conference in his City Hall office. “We are saying that they need to stand side-by-side with the local taxpayers. They must do their fair share for the sake of the city’s future.”

But Father Shanley, of Providence College, said that the mayor’s new proposals would be in direct conflict with the 2003 agreement between the city and the private colleges, which voluntarily agreed to pay a combined $2.4 million a year to the city for 20 years.

“We did not go to the city this year when we needed more money. We found other ways to meet unexpected expenses in such a way that we could honor our agreement. We believe the city should do the same,” said Father Shanley.

Governor Carcieri, a Republican, called the mayor’s proposal “ill-conceived,” arguing that there are “significant issues of fairness” in singling out the private higher education institutions and hospitals, which he said are major economic generators.

Sen. John J. Tassoni, D-Smithfield, worried about the proposal’s impact on the cash-strapped Landmark Hospital, in North Smithfield, also part of his district.

But Tassoni said he supported Cicilline’s proposals, if only to get Bryant University to pay something to the Town of Smithfield. “The taxpayer is choking. We need relief,” said Tassoni, who has submitted legislation that would have Bryant University pay 20 percent of the value of the taxes it would otherwise pay on its properties in Smithfield.

Warwick Mayor Scott Avedisian, whose city is home to the New England Institute of Technology, Kent Hospital and a tax-exempt Radisson hotel run by Johnson & Wales University, said he would not recommend that his city adopt Cicilline’s proposals if they are passed by the Assembly.

Avedisian, who met with Cicilline on Tuesday about his proposals, said Warwick already has tax-compensation agreements with the New England Institute of Technology and Johnson & Wales, and that he was concerned about the financial situation of Kent Hospital.

“The community hospitals are taking a beating. In the current economy, it would be difficult to ask Kent to go further in debt to help the city,” he said. He did not dispute the merits of what Cicilline proposed, though: “These are the sorts of things that everyone has to be looking at for the future.”

pmarcelo@projo.com

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