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RI bill would let cities charge tax-exempt groups

By David Klepper
Associated Press / March 29, 2012
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PROVIDENCE, R.I.—Providence Mayor Angel Taveras called on Rhode Island lawmakers Thursday to pass a law allowing cities to make tax-exempt property owners like Brown University pay more for police, fire protection or other city services.

Taveras said city taxpayers cannot resolve the city's financial troubles without additional help from Brown and the other universities, colleges and hospitals that call the state's largest city home.

The mayor supports legislation that would allow cities to charge 25 percent of the taxes an institution would pay if not tax exempt. Brown voluntarily gives the city a few million dollars a year, but Taveras is seeking $40 million more over 10 years. The city faces a $22 million budget deficit.

"Everyone has a responsibility to be a part of the solution," Taveras told lawmakers reviewing the bill Thursday. "It is in their best interests to be part of the solution as well."

Dan Egan, president of the Association of Independent Colleges and Universities of Rhode Island, said college employees and students already create economic activity and pay income and sales taxes to the state. He said the voluntary contributions negotiated with the colleges are a fairer alternative to mandated payments.

"We do give," he said. "We are making payments to cover those costs that are our costs."

If Brown paid property taxes on all its property, it would pay the city $38 million annually according to city calculations. Currently, the university pays $4 million.

Taveras has asked the city's largest tax-exempt institutions to pay $7.1 million more this fiscal year to avoid a possible city bankruptcy. Last month he reached a deal with Johnson & Wales University to triple its annual voluntary payments from the current $309,000 to at least $958,000.

A spokeswoman for Brown said negotiations with Taveras "continue to be productive" and that the university is confident "that they will lead to a constructive, fair and equitable outcome.

"We know that the strength and success of Brown and Providence are intertwined," university spokeswoman Marisa Quinn said in a statement.

The legislation is under review by the House Finance Committee. No vote has been set. Similar legislation was introduced last year and did not receive a vote.

The bill's sponsor, Rep. John Carnevale, D-Providence, said he's tired of seeing cities struggle with deficits while large tax-exempt institutions buy up new properties and remove them from the tax rolls.

"We want them here, but they're a drain on our police and fire," he said. "Like the Wizard of Oz, they hide behind that 501(c)3, behind that curtain."

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