Two bills heading to the legislature would tax endowment and property of private universities

PROVIDENCE, R.I. (WLNE) — Two separate bills could tax property and endowment of privately owned universities and colleges across Rhode Island.

Representative David Morales has spearheaded these bills, saying it is time these universities did more for their community.

“If you are really committed to our community, then you will pay your fair share,” said Morales, directing those universities.

The first bill would allow communities that host private universities to charge a tax on the school’s property.

The second bill would allow host communities to tax a school’s endowment up to 2%. That money would go towards the public school district.

Mayor Elorza explained to ABC 6, “I hope that this helps to rebalance the scales so that it doesn’t just come out of the taxpayers in the city or homeowners in the city, but they do their part as well.”

Brown University released a statement to ABC 6.

“Brown continues to believe that taxes imposed through legislative efforts impede the efforts of higher education institutions to help students, improve education, expand the boundaries of knowledge, advance technological innovation, and enhance health and well-being in our local communities. Each year we spend funds from our endowment to support this critical work that benefits Providence and Rhode Island. We oppose both the effort to tax properties used for the academic activity that enables universities like Brown to benefit the local economy so extensively, as well as the tax on charitable giving to institutions that contribute to the public good in significant and enduring ways. Endowments are not kept in reserve to be drawn on only occasionally or on a rainy day. In fact, the collection of thousands of restricted, donor-designated funds that makes up an endowment supports a significant and growing portion of our operations, providing a bulk of annual revenues, and enabling us to make a positive impact.

Legislative efforts such as these tend to overlook that Brown provides extensive contributions to the community we call home in significant areas that meet public need and offset the need for greater public resources. From teacher training, tutoring, mentoring and other programs in public schools; to care provided through health clinics, addiction centers, and programs for victims of violence; to public health surveys for lead paint and partnerships with the city and state on other community health concerns, the University makes a significant impact every day. This is in addition to the millions of dollars in voluntary payments to Providence annually, the taxes Brown pays on all commercial properties, and our role as top employer, employing 4,700 local residents. We also inject more than $200 million in research spending into the local economy each year and continue to play a transformative role in the Jewelry District, having invested more than $225 million to bring new economic vitality to that area of the city.”

Morales explained, “Nearly 40% of our land is exempt from taxation largely due to the tax-exempt footprint property owned by private universities. If small businesses are contributing to our tax space, our private universities have the same responsibility as it comes to accountability.”

Gabe Mernoff, a Brown student and member of the Coalition for University Accountability, explained, “I’m a lifelong providence resident and I think it’s crazy that my family pays regular property taxes, all my friends and their families, small business owners– we all pay property taxes to support the city and Brown does not.

Brown has an endowment of just under $7 billion. The tax on their endowment would bring in just under $50 million for Providence.

Mernoff concluded, “The students care. We’re not just sitting here on top of this hill enjoying this wealth at the expense of the residents in the city and state.”