Providence, RI – With Providence government facing an ocean of red ink, the politicians are once again looking for help from the city's non-profits. WRNI political analyst Scott MacKay says this isn't the best time to squeeze money from colleges and hospitals.
Once we get beyond the financial mess of the moment, what ails Providence is somewhat typical of the plight of other old cities in the northeastern part of our country. The manufacturing industries that once were a font of jobs and tax dollars have left, gone to places with sunnier climes and cheaper labor.
In Providence, this means that the Brown& Sharpes, the hundreds of Jewelry shops and the red brick textile mills that grew up along the rivers and triple-decker neighborhoods are part of our past, not our present.
When the factories left and the working class residents who toiled in them fled to the suburbs, they left behind some important institutions: Rhode Island Hospital, Brown University, Providence College, Johnson & Wales University, Miriam Hospital.
These grand non-profits are the fulcrums of our new economy. They are the job generators of the 21st Century and they harvest millions in investment to the capital city. For decades, as industries from manufacturing to banking and media have cut back, hospitals and colleges have brought the well-paying jobs of the future to Providence.
There was a time someone with a middle-class job in the city was a machinist, factory foreman or draftsman. Today that job is held by a nurse, college teacher or physical therapist.
Even more apparent is where investment in the city is coming from. The forest of cranes that in the 1990s defined the downtown skyline and built the Providence Place Mall and the capital center projects are gone. Look around the city. The investment in recent years has come from Brown, which is pouring millions into a new medical school in the Jewelry District, and the hospitals, which continue to improve the South Providence medical complex anchored by Rhode Island Hospital.
Hospitals employ 18,000 workers in Providence in well-paying jobs - many of them unionized - with full benefits. Colleges have another 8,000 employees and draw thousands of people to the city each year who spend money in our restaurants and hotels. Ever try getting a prime restaurant reservation during a PC or Brown graduation weekend?
Providence politicians have sought payments from the colleges for years. In 1990, Democratic mayoral candidate Andrew Annaldo ran television spots aimed at Brown and asserting that a janitor at the Ivy League university paid "more in taxes that Brown University itself.''
In 2003, the colleges agreed to pay Providence $50 million over 20 years in payments in lieu of taxes. Now there is a bill in the General Assembly that would tax those institutions. But the colleges have laid off employees and sliced budgets in the recent recession. And the hospitals have increased their free care for the unemployed and uninsured by 17 percent in the past year to more than $110 million.
Governor Chafee's new budget ends the sales tax exemption for hospitals. This would force the hospitals to pay a sales tax on all purchases of goods and services and give the state new money to the tune of almost $10 million a year. Maybe the governor can take some of this money and channel it to Providence, if the city is prepared to do the right thing and prudently manage its money. The entire state uses the Providence non-profits and puts pressure on city services. It is not fair for city taxpayers to bear all of this burden, so the state ought to ante up.
Without robust colleges and hospitals, Providence is just another hollowed-out, beleaguered New England city, a more populous version of Fall River. There ought to be a way for the state to compensate Providence for being the host city for tax-exempt non-profits without curbing their investments in a vital capital city.
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Disclosure note: Scott's wife works at Rhode Island Hospital.