In another attempt to increase payments from tax-exempt institutions, Mayor Thomas M. Menino last week formed a task force of college presidents, hospital officials and city agency representatives to regulate the payments that tax-exempt institutions make to the city instead of taxes. In a statement released Tuesday, Menino said agreements on upping PILOTs, or payments in lieu of taxes, are not about generating new revenue, though the city faces a $140 million budget deficit. Instead, he said, it is about making up for what the city loses on property taxes and for what students cause in damages.
"It's about creating PILOT agreements that are equitable in terms of in-kind services, scholarships, and community opportunities," Menino said.
Backed by several members of city council, the task force includes the presidents of Boston University and Wentworth Institute of Technology, officials from Partners Healthcare and John Hancock Financial Services, as well as representatives from several city service groups, including the Boston Police Patrolman's Association and the Codman Square Neighborhood Development Core.
More than 50 percent of Boston's land is owned by tax-exempt organizations. Boston's 12 major hospitals and 16 institutions of higher education sit on land assessed at more than $10 billion, and according to iThe Boston Globe/i, contribute only about $14 million annually in voluntary tax payments. If fully taxed, they would pay least $350 million, which would help to cover most of the nearly $440 million the city is spending on the police and fire departments each year.
In terms of institutions of higher learning, Boston University individually makes the highest contribution with a $4.6 million annual PILOT payment. Northeastern University provides $30,571 in PILOTs, while Emerson pays $126,936. If the college paid full property taxes, it would cost $788,428 annually, according to the Boston Assessing Department's Web site.
Emerson junior Billy Trauernicht said he feels Emerson is indebted to Boston because of its downtown location and should pay more in PILOT taxes.
"We live in the city. It sucks for us, but we're in recession. Money's tight for everyone. They all need to pay their dues," the interactive media, visual and media arts major said.
The task force, called the Commission on Tax-Exempt Institutions, is trying to institute a payment system that would be followed by all major exempt non-profits in the city. Proposed contributions can be in the form of money or community services such as scholarships, internships, jobs, and other benefits. If necessary, it will give recommendations on legislation changes to be voted on in the city council or state assembly.
At the moment, universities make voluntary payments negotiated with the city independent of the tax code, a system that has presented a wide spectrum of donation amounts.
"It definitely makes sense," said District 7 councilor Chuck Turner in a telephone interview. "When you look at the salaries that are made by the faculty in those institutions and the large amount of money that students pay to go to the institutions... They should pay their fair share for the services provided."
This is not the first time the city has sought PILOT payments from educational institutions. In 2006 City Councilor-at-Large Stephen J. Murphy proposed that universities should greatly increase their payments in lieu of taxes, and in 2004 he sought a student tax that would have required each Boston student to pay $100 a year to the city. iThe Globe/i reports that Murphy, who holds a seat in this new commission, said he also believes that the expansion of these institutions takes more money away from the city since less property would be taxable.
The four councilors-at-large and several other district councilors are in agreement that tax-exempt institutions need to start giving back to Boston, and in the midst of the current recession, if the task force succeeds, it may ease the city's budget shortcomings.
District 8 councilor Michael P. Ross, whose district includes Northeastern, sides with the efforts of the newly created task force.
"The city provides a lot of waste management and fire services everyone benefits from," said his communications director Amy Derjue. "He believes everyone should pay their fair share."