As Brown students were recuperating over break, we received a rather dramatic email from President Ruth Simmons detailing the University's recent squabbles with Providence Mayor Angel Taveras over Brown's contributions to the city's coffers.
Last year, Simmons denied Taveras' initial request of a $5 million annual grant. Simmons then proposed a counter-offer of $10 million over the next five years in addition to the $4 million that the University already pays. Taveras rejected the offer.
I applaud Simmons for her courage. Brown is a tax-exempt institution, a designation that applies only to the buildings it owns that are used in educational activities. But Brown's contributions to the Providence and Rhode Island economy are enormous. For starters, Brown employs 4,455 people, making it the state's sixth-largest private employer. Of these employees, 82 percent live in Rhode Island. That is not to mention all the spending that occurs in Providence because of students, families and visitors. Appleseed, an economic consulting firm, estimates that Brown students spent $47.3 million in fiscal year 2009 alone.
Add to that the fact that in 2003, the University agreed to pay $50 million as essentially a voluntary donation to Providence over 20 years.
In short, Brown is a huge positive force in Rhode Island's struggling economy, despite its tax-exempt status.
In her email to the Brown community, Simmons expressed interest in trying to help the city in ways that "do not effectively cripple the University." As Brown students, we owe her a debt of gratitude for taking a stand. Though the University's endowment grew to $2.5 billion last year, Brown has significantly fewer financial resources than many of its peer institutions. Any new aid to Providence could lead to cuts in academic programs, financial aid or research.
Beyond the obvious financial strain that increasing payments to the city would create, there is also a larger issue of principle at play here. Yes, Providence has a $110 million deficit, which could be helped by increased contributions from Brown and other non-profit organizations. But the proper way for cities to weather the financial storm is not to bully into submission groups that bring jobs and opportunity to the region.
Rather, Providence has to face the reality that in tough times, tough decisions must be made. Brown did not put Providence into its budget hole, and it should not be responsible for solving the problem. The current situation is due to its past reliance on significant one-time revenue sources and high costs of health care coverage for city employees and retirees, according to the Municipal Finance Review Panel convened by the mayor. The city has to come to grips with the fact that it cannot continue to provide the level of services that it does now.
Despite all of this, there are still some angry protesters that demand that Brown be forced to pay taxes ("Outside U. building, protest targets Brown's tax exemption," Jan. 12).
This reaction is an understandable, if sad, response to desperate financial times. Rather than asking why Providence is in a difficult position, the protesters are rabidly searching for any source of money that will delay the inevitable tough cuts. What better source than the largest landowner in Providence, the elite, tax-exempt university on the hill?
I would like to remind this group that there is a reason why universities do not pay taxes. The government rewards organizations whose missions are in the interest of society as a whole with tax exemptions. This allows institutions like Brown to use their money to advance education, as opposed to paying Uncle Sam. To revoke the tax exemption of universities would be a giant step backward for the educational system of this country, one that is already falling behind those of the rest of the world.
It is easy for protesters to forget what Brown does for Providence. It is easy to yell and scream about how the University should "pay its fair share." But I urge the protesters to think deeper. If the city of Providence had its way, it could simply suck money from Brown at will, whenever a financial need arose. This is a slippery slope. If a government can simply demand that private institutions continue to pay more and more in taxes, what is to stop it from turning to individual citizens?
Now is the time for hard choices. It is time for cuts and tax increases so that the city is able to live within its means. Providence needs to end the culture of denial and kicking the can of budget balancing down the road. Now is not the time to coerce private entities to pay more in taxes than the law requires. Such a time should never come, not in America.
Garret Johnson '14 is double concentrating in biology and French and is enjoying a life free of taxes, and income.
