Scott MacKay Commentary
Mon January 23, 2012
Taxing Brown, nonprofits not a silver bullet fix for Providence finances
By SCOTT MACKAY
PROVIDENCE, RI – There has been more rhetoric than reality in the latest dispute between Brown University and Mayor Angel Taveras and his city council allies. With city government awash in red ink, the pols are hungrily eyeing the tax-exempt Brown property on College Hill as a source of sorely needed money.
You can't blame the mayor or the city council. Residents are maxed out on real estate and car taxes. Businesses are fleeing. Two iconic downtown buildings - the Jazz Age Superman Building and the Biltmore Hotel - house tenants facing huge financial hurdles.
Now, Taveras and Brown President Ruth Simmons are jousting over how much Brown can, and should, contribute to the city.
A bit of history is required here. The town-gown relationship between working class Providence and the Ivy League College on the Hill has always been fraught. And pols viewing Brown as a Sugar Daddy or Mommy for city coffers isn't anything new. Rhode Islanders of a certain age will recall the 1990 mayoral campaign, when Andrew Annaldo, the Democratic candidate, ran the famous television ads asserting that a janitor at the college ``pays more in taxes than Brown University itself.''
Brown can surely do more to help the city. But it and the city's other private colleges cannot be seen as a panacea to the city's chronic financial difficulties. Perhaps the biggest farce of the latest dust-up is the picket line protest thrown up by firefighters and police officers at a recent speech by the Brown president.
Hello. Do the firefighters and cops - the vast majority who no longer live in the city - really think they deserve to lecture Brown on the city's financial solvency? When are the younger firefighters and police going to wake up and understand that it is their retirees that are pushing the city to the brink of bankruptcy.
Why should the colleges contribute more money so it can go to pay the bloated pensions of retired public safety employees, such as Gil McLaughlin, the former fire chief whose pension is nearly $200,000 a year?
Providence is mired in a 20th Century economy. Most of the 21st Century jobs in the capital are being produced by colleges, hospitals and other non-profits. There was a time when a middle-class Providence job was held by a machinist, factory foreman or jewelry designer. Now that job is as a college-teacher, nurse or physical therapist.
The four private colleges in Providence pay the city $8 million annually in payments in lieu of taxes and in taxes paid on property not used for educational purposes, such as the Brown Bookstore. Roughly half of that sum comes from Brown.
Taveras and Governor Lincoln Chafee are touting the Jewelry District as the next fulcrum of economic growth. This historic area is being rebranded as the Knowledge District and is intended to be a lodestone for health sciences and industries employing highly educated workers.
Well, who do the pols think is moving into this area? So far, the biggest investment in an area that is still a jumble of vacant lots, bars and empty, crumbling red-brick buildings is the $60 million Brown has poured into its new medical school there. If there are private sector companies lining up to move in, we haven't heard about it.
Yes, other Ivy Schools, notably Yale, contribute more to their respective cities than Brown gives to Providence. Brown has the smallest endowment in the Ivy League, dwarfed by the Harvard and Yale endowments. Yale's annual budget is more than twice Brown's.
And Brown admits Rhode Island students at about twice the rate of students from the other 49 states.
Taveras, in cooperation with the City Council, has done much to reign in spending in Providence. Some of this has been done with cooperation from the city council and city unions.
Instead of trying to put the squeeze on the colleges, it is time for Providence politicians to lobby at the State House for increased state aid in Payments in Lieu of Taxes to communities that host the storied colleges and hospitals that make Providence so much more than a more populous version of New Bedford.
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