Statement on Proposed Legislation to Tax Students and Universities
June 3, 2009
Members of the Brown Community,
At the behest of Providence Mayor David Cicilline ’83, two pieces of legislation have been introduced in the General Assembly that would enable cities and towns to levy taxes on institutions of higher education. I write to make you aware of these bills and to clarify the facts that are the basis of Brown's opposition.
The two bills that have now been introduced in the state legislature are:
Student Tax – This bill authorizes any city or town to assess a private college or university a student fee of $150 per semester or $100 per trimester for each enrolled full-time student. Students who are Rhode Island residents and who demonstrate payment of real estate taxes by the student or his or her guardian to a Rhode Island municipality during the relevant semester or trimester will be exempt. The institution will be responsible for the collection and payment of the fee.
Non-Profit Property Tax – This bill allows any city or town to tax any hospital or private university or college for real estate property of a value greater than $20 million located within the municipality up to 25 percent of the applicable tax rate set by the city or town.
We understand the city’s need to make tough decisions to balance its budget. We at Brown have also had to make sacrifices and difficult choices to meet budget shortfalls resulting from the impact of the economic downturn. Salary and hiring freezes, budget reductions and layoffs, and deferred and scaled back capital projects have been necessary to close the shortfall in revenue. Considering past and anticipated budget reductions, we would be loathe to ask the University community to shoulder even greater sacrifices – particularly not our students and their families, who work hard to plan and save for higher education.
This legislation undermines the partnership established between the city and our institutions of higher education. In 2003, all of Providence’s private colleges and universities, including Brown, signed a memorandum of understanding (MOU) with the city to establish a substantial and long-term financial contribution to Providence’s budget equaling nearly $50 million in voluntary contributions over 20 years. (See http://www.brown.edu/Administration/News_Bureau/2002- 03/02-148.html.) In addition to these voluntary payments, Brown also pays property taxes on real estate purchased in the Jewelry District, on 121 South Main Street, and on its leased properties. In FY 2009, Brown paid a total of $3.34 million in property taxes and voluntary payments to the city.
The mayor has made the case that the student head tax will cover city services, such as police, fire, and EMS. For the last several years, Brown has maintained an armed, nationally accredited campus law enforcement agency to supplement the Providence police and to ensure the safety and security of the Brown campus. Today, the force consists of 42 sworn officers, 31 civilian officers, and 13 administrative staff (including crime analysis and community outreach). Campus police and security officers patrol the campus community 24 hours a day, 365 days a year – a law enforcement responsibility that would otherwise fall to the city. The University provides space for a community policing station on Brook Street at no cost to the city and pays the city approximately $75,000 each year for Providence police details to supplement the force at peak periods such as Commencement. The University also operates its own ambulance service.
Colleges and universities in the city account for 9.6 percent of tax- exempt property in Providence – not the 40 percent often cited. The remainder of the tax-exempt property is held by city, state, and federal governments; churches; hospitals; museums; and other nonprofits. Through the MOU and our additional payments to the city, we already pay our ‘fair share.’
Members of the University community contribute in numerous other ways to the vitality of Providence and Rhode Island. A report conducted by Appleseed Inc., an independent consulting firm, cited the following:
- Brown University has a multifold impact on the economy of Rhode Island. It is the eighth largest employer in the state and indirectly creates almost 2,000 local, full-time-equivalent jobs through its spending on payroll, goods, supplies, services, and construction.
- In FY05, Brown spent more than $243 million on purchases of goods and services and on construction, $64.3 million of which was paid to Rhode Island companies; 72 percent of those dollars were paid to Providence companies.
- Brown spent $52.7 million in FY05 on construction and renovation of University facilities, of which $39.5 million was paid to Rhode Island- based contractors.
- Spending by Brown students totaled more than $40 million in academic year 2004-05. This spending, along with spending from visitors to Brown, generated more than 840 jobs throughout the state.
- Brown works with local school systems to improve educational quality. Brown students are community service oriented, and they work through various programs to contribute to the local community. (See http://www.brown.edu/Departments/Education_Outreach/.)
- Brown’s Swearer Center for Public Service supports approximately 40 partnerships with public agencies and community groups each year.
- Nearly 900 Brown students commit a total of 150,000 hours per year to community programs in the Greater Providence area and beyond, with a focus on education, youth development, arts and culture, and health services.
- Brown is Rhode Island’s leading center of scientific research and development and, along with its hospital partners, has made the Providence area a center for biomedical research.
- Since 2001, Brown has spent more than $100 million on research each year, the bulk of which is spent locally on salaries, supplies, equipment, and overhead costs.
- Brown and its hospital partners account for more than 80 percent (a total of $120.8 million) of the state’s 2008 NIH funding.
Because institutions of higher education and health care are major engines of growth in the city and state, the city has encouraged us to consider our investments and expansion in a way that would benefit a broader sustainable economic development strategy. City officials and Brown leadership have spent the last year and a half working with the business community to identify how Brown can grow in a way that supports the Knowledge Economy Initiative. Brown’s development of the Rhode Island Center for Innovation and Entrepreneurship and the IBM partnership are recent tangible evidence of our efforts to contribute to the knowledge economy. In fact, the decision to locate the Brown Medical Education Building in the Jewelry District was heavily influenced by the role the Warren Alpert Medical School can play in catalyzing economic development.
Local nonprofit institutions of higher learning have helped Providence and Rhode Island attract a steady stream of the world’s most promising young talent to southern New England. Brown has invested carefully to develop itself as a Rhode Island institution of international distinction. The proposed taxes effectively undermine these efforts and compromise the ability of Rhode Island colleges and universities to attract the best and brightest talent to our area.
I have written to the mayor and other elected officials to convey my strong opposition to the student and property tax legislation described above. Whatever one’s position on these measures, their implementation would have a significant impact on the University. I therefore encourage students, alumni, faculty, and staff to express their opinions on these matters to the leadership of the General Assembly. You can contact these individuals using the following addresses:
Representative William J. Murphy
Speaker of the House
Rhode Island General Assembly
State House Room 323
Providence, RI 02903
rep-murphy@rilin.state.ri.us
Senator M. Teresa Paiva-Weed
Senate President
Rhode Island General Assembly
State House Room 318
Providence, RI 02903
sen-paivaweed@rilin.state.ri.us
Thank you for all of your efforts on behalf of Brown and the communities we serve.
Sincerely,
Ruth J. Simmons