Projo 7 to 7 News Blog

PROVIDENCE, R.I. --- The House Finance Committee approved a bill late Thursday night that would assess colleges and universities a fee for all their non-Rhode Island students.

The so-called "student impact fee" is valued at $150 per semester per student. It would be billed directly to universities and collected by cities and towns in order to cover municipal services used by the student body.

"We're disappointed, but this essentially legalizes what we are already paying to the City of Providence," said Daniel Egan, president of the state Association of Independent Colleges and Universities.

Under a voluntary payment plan, four private universities pay Providence collectively about $5.9 million a year, in the form of a flat payment of $2.4 million, taxes on commercial properties valued at $1.8 million, and a reimbursement of $1.7 million for use of public safety services, according to Egan.

The new law, which applies to all municipalities, would earn the City of Providence about $6.4 million a year, based on the 25,000 full-time enrolled students at those universities, he said.

The bill, which now goes before the full House for a vote, was one of two controversial pieces of legislation giving cities and towns the power to assess substantial fees on major nonprofit institutions.

The other bill, sponsored by Rep. Thomas C. Slater, D-Providence, would authorize municipalities to collect a fee in lieu of taxes from nonprofit -- and thus nontaxable --entities that own properties assessed at $20 million or more. The fee would equal 25 percent of what the commercial tax bill would have been on the properties.

Both bills were introduced at the urging of Providence Mayor David N. Cicilline, whose city has the largest concentration of tax-exempt nonprofit institutions in the state and faces a budget deficit approaching $50 million next year.

House Finance Committee Chairman Steven M. Costantino, D-Providence, said that the committee has not made a decision on the bill taxing colleges and hospitals. "That's a more complicated issue. It would certainly face more challenges in terms of the legality of taxing nonprofits," he said.

The House Finance Committee held a three-hour-long hearing on the two bills earlier in the week.

Proponents of the bills, largely elected representatives from cities and towns, argued that they are crucial at a time when municipal revenues are declining sharply and the state is slashing local aid.

They argued that residents are paying higher property taxes to cover municipal services while large nonprofit institutions use the same services but do not pay a fair share.
Opponents, including officials from the state's largest colleges and hospitals and from the business community, said it is "counterintuitive" to tax institutions that, they asserted, are vital to the recovery of the state's economy.

The student impact fee is sponsored by House Majority Leader Gordon D. Fox, a Providence Democrat. A companion bill has been submitted by Sen. Maryellen Goodwin, D-Providence, and is before the Senate Finance Committee.

 Tags  Cicilline Fox Providence RI student impact fee

Comments

John Stark said:

This makes sense only if followed to it's logical conclusion. That is, taxation proportional to consumption of government services. The more you consume the more you pay. But the less you consume the less you pay. Result: Higher taxes for welfare recipients, those who utilize the public schools (perhaps a public school user fee), and all government employees. Lower taxes for high income earners (who use less public services), and those who send their children to private or parochial schools.

Link | June 27, 2009 9:18 AM
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Jeff said:

I just find it incredible that this has traction. I believe it is very short sighted and makes no sense given state spending is increasing 12%. The non-profits in Providence, in particular, add a great deal more than the mere $6vmillion that is going to be collected using this "fee" system. The total contributions of these institutions to the local economy in direct spending (hundreds of millions), employment (thosands) and economic development is no doubt a multiplier of significant proportions. This political move will hurt Providence in the long run, will negatively impact students at "private" institutions and will be a meaningless addition of funds by this time next year (e.g., it will be spent three times over . . .).

Link | June 28, 2009 8:15 AM
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