There is a move afoot in the state legislature to tax the billions of dollars in college endowments that colleges like Brown University, Providence College and Johnson and Wales, among others have acrued. Lawmakers say that if the schools paid the same property taxes as the average resident, then the city of Providence would have 90 million dollars in additional revenues that can fund projects throughout the city.
The colleges and univeristies although not paying property taxes- do contribute to the city through Payments In Lieu Of Taxes.
Separate from the PILOT agreement, Senator Tiara Mack (D-Dist. 6, Providence) and Rep. David Morales (D-Dist. 7, Providence) have introduced legislation (2023-S 0859, 2023-H 5603) that would enable cities and towns to tax private college and university endowments up to 2% of the school’s endowment, with money directed to that city’s public schools. The city or town would have to proactively pass an ordinance to levy the tax.
“While our Providence public schools have continued to struggle in terms of academic outcomes, a growing staffing crisis among educators, and crumbling infrastructure, most of our private universities, located just miles away from our public schools, have been financially thriving. Year after year, these private universities continue to rapidly grow in terms of property ownership, institutional wealth, the hiring of six-figure administrators and the massive size of their endowments. During a time where our city’s property tax base is limited, given that more than 40% of our land is exempt from taxation, and we continue to have a state education funding formula that does not adequately fund urban school districts, cities like Providence need to demand more accountability from the universities that we host,” said Representative Morales, a Brown University graduate. “In many ways, Brown University operates like an investment bank with a school attached. Meanwhile, Providence residents, business owners and students are struggling to get ahead. Therefore, we should allow the city of Providence and other municipalities the freedom to tax these enormous assets, separate from just negotiated PILOT agreements.”
The bill had a hearing before the Municipal Government and Housing Committee Wednesday. It is unclear when it will be reported out.
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