A bill proposed by state Rep. John Carnevale, D-Providence and Cranston, would grant cities and towns the authority to assess a fee on tax-exempt hospitals and private institutions of higher education like Brown. Carnavales introduced the bill on the same day that Providence Mayor Angel Taveras announced his intention to renegotiate the city's agreements granting tax-exemption to non-profits in an attempt to close the city's $180 million two-year budget deficit.
The fee — which would go towards city services such as fire, rescue and police — could amount to at most 25 percent of the value of the non-profit's tax-exempt holdings.
But the level of legislative support for the bill is unclear.
"Mayor Taveras is interested in examining ways that Providence's non-profit institutions can contribute to the city's economic future," wrote spokesman David Ortiz in an e-mail to The Herald. "The city continues to have healthy, ongoing communication with its non-profit partners."
Veteran state Rep. Edith Ajello, D-Providence, said she has seen many variations on the bill during her 18 years in the General Assembly. But she has never seen Providence's finances in such a dire state.
"Some of the things the mayor has proposed make sense," Ajello said. "But they're painful choices, and people will be looking for money wherever they can."
The fate of the bill may depend on the mindset with which House members approach the issue, Ajello said.
"There is, in the state and in the city of Providence, a lot of resentment against what people imagine to be the wealthy East Side, the wealthy Brown University," she added. "If people think about it that way, it gets some legs."
In 2009, former mayor and current U.S. Congressman David Cicilline '83, D-R.I., proposed a similar measure to close the then-$17 million deficit and called for a yearly $300 per student "impact fee" for the use of city services. The legislation met immediate opposition from state colleges and universities. A comparable student tax proposed in 2005 by Stephen Alves, D-West Warwick, was also scuttled in the state legislature.
"I'm not in support of it at all," said Sen. Rhoda Perry P'91, D-Providence. "I think the mayor needs to do his work, and he needs to renegotiate what we currently have."
According to Perry, a similar bill has not been introduced in the state Senate. "I don't think the bill has too much of a chance of passing," she said.
"A strong Providence is good for Brown, just as a strong and successful Brown is important for the health and vitality of the city and state," wrote Marisa Quinn, vice president of public affairs and University relations, in an e-mail to The Herald. "Taxing nonprofit institutions of higher education and their students is counterproductive, however, and is not the solution."
The legislation could be a way "to get people's attention and maybe force them, as they say, to the table to get some negotiations started," Ajello said.
One of the most widely voiced arguments against the 2009 proposed tax was that private universities already voluntarily contribute to the city. Perry said she hopes Taveras will take time to re-examine the "package of support" that tax-exempt institutions currently provide. "The colleges and universities and hospitals know the fiscal problems that the city of Providence is facing," she said. "I think they're going to be open and willing to talk about it."
The University makes payments in lieu of taxes under a 2003 agreement with the city. Brown's financial contributions amount to nearly $50 million over 20 years, Quinn wrote.
The University is one of the largest employers in the state and consumes a significant chunk of state-produced goods and services. Opponents of the new tax point to the thousands of hours Brown students spend volunteering in the city and the positive impact of the University's work in aiding local communities.
"For as long as I can remember, I have heard people say that without Brown University and the Rhode Island School of Design, Providence would be like Fall River," Ajello said. "All of the schools in the state contribute a tremendous amount to the quality of life."
According to Quinn, higher education institutions account for only 9.6 percent of tax-exempt property in Providence. In fiscal year 2009, the University paid $3.34 million in property taxes and voluntary payments to the city. Tax-exempt property represents roughly 40 percent of all property in Providence.
The bill could also have unintended negative consequences. Assessing the fee on non-profit hospitals could drive up the cost of health care in the state because non-profits would have to charge more for their services, Ajello said. Carnevale's proposal does not extend to places of worship, which both Ajello and Perry agreed should be included among non-profits that would be taxed.
"It's only fair that religious institutions should have to pay their share," Perry said, emphasizing her belief that the bill stands little chance of passing the Senate.
Gov. Lincoln Chafee '75 P'14 has yet to take a position on the legislation, according to his spokesman Mike Trainor. "It's currently under review," he said.
