A 'Fair-Share' Future for Providence
The following is an op-ed written by Mayor David N. Cicilline, as seen in The Providence Journal on Wednesday, May 27, 2009
The long-term economic recovery of Rhode Island and Providence will only be accomplished by remaining focused on the basics: creating jobs, maintaining safe communities, improving public education, nurturing arts and cultural opportunities, creating decent and affordable housing and developing a more attractive business climate.
In the short term, we also have urgent work to do. Overcoming the enormous financial crisis facing our capital city will require us to do three things: (1) continue to control spending and make cuts wherever possible, (2) secure concessions from public-employee unions to produce savings and restructure pension and health-care costs and (3) broaden our revenue base by developing revenues outside of the property tax.
Providence hosts world-class colleges, universities and hospitals. These institutions are critical assets to our economy, health and the quality of life of our community. Together they employ tens of thousands of people, help shape some of the best young minds, keep us competitive in the knowledge economy and ensure that excellent health care is available right here.
We share values based in accountability and fairness, as well as a long-standing, common interest in advancing the well-being of this city. And this is why I am asking these institutions to work with me to address the enormous financial crisis facing our city today.
In the last weeks, I have conferred with the presidents and student representatives of Brown University, Rhode Island School of Design, Johnson & Wales University and Providence College, as well as representatives from Lifespan, Roger Williams Hospital and other health-care institutions about the role they must play in the city's fiscal survival. I have asked them to help me create a new model for ensuring their fair contribution to maintaining a safe, vibrant, growth-oriented community.
Consider:
The combined assessed value of all tax-exempt property, including the property related to state government, is about 40 percent of all property value in Providence. Tax-exempts are valued at roughly $8 billion. The private colleges, universities and hospitals account for more than $3 billion. While the educational and medical institutions generate substantial tax revenues for the state in income and sales taxes paid by their employees, there is no direct financial benefit to local government and local property taxpayers.
So our colleges and universities have no obligation to contribute to the cost of the roads the students drive on, the police and firefighters who protect them, the parks they enjoy, or any of the other city services.
We are at a crossroads that requires that we ask these institutions to participate in creating a new model that more fairly shares with local taxpayers the costs and benefits of being a member of this community.
To this end, I have suggested a number of strategies, something I call the Fair Share Plan. First, the private colleges and universities may increase the voluntary payment in lieu of taxes (PILOT) they agreed to in 2003 in the amount of about $50 million over 20 years. As the economic climate has changed dramatically since the time of that agreement, I believe an appropriate adjustment should be made by these institutions. At the same time, I am aggressively pursuing a similar PILOT agreement with the major hospitals in our city.
I am also proposing legislation to let cities and towns levy an impact fee on the largest tax-exempt institutions at a rate no greater than 25 percent of the applicable property-tax rate.
And finally, I have proposed legislation to let cities and towns assess a fee on private colleges and universities for services provided by the city. This contribution would be in a form similar to the fees students pay for student activities, laundry or dining, for example. I was a college student in Providence once, too (at Brown University), and struggled to cover the costs of my own education while at the same time weighing my obligations as an individual to the larger community, so I understand the fierce debate regarding this contribution.
The city is doing everything it must to bridge these difficult times. We're containing spending and making tough cuts across the spectrum. We've secured meaningful contract concessions from our largest public-employee union, Laborers Local 1033, and other city employees. We're pursuing a variety of strategies to broaden the city's revenue base through non-property tax revenues.
But much more is necessary to carry us through these treacherous times and into a positive future. To be blunt, the large and growing amount of tax-exempt property is crushing Providence taxpayers right now, with the burden of financial responsibility falling unfairly on resident property taxpayers already suffering the most difficult circumstances in a generation. That's why our esteemed colleges, universities and hospitals must work together with the City of Providence.
If all you have is a hammer, everything looks like a nail. I'm open to getting a few more tools out of the shed to build something extraordinary. I look forward to hearing any smart, effective, "fair-share" strategy proposed by the leaders of these institutions or the bright, motivated students I've met, or anyone else with a stake in the future of this city.
I know there's a way we can work together so that everyone pays their fair share. So let's get to work.
— Mayor Cicilline