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City of Boston Targets Tax-Exempt Non-Profit Organizations to Help Fill Budget Hole
File photo of Boston's Mayor Thomas Menino. AP Photo/Elise Amendola.

By: Ros Krasny

BOSTON (REUTERS).- Boston moved on Wednesday to ask hospitals, universities and other tax-exempt nonprofit organizations to pay more to support basic services like fire-fighting, police and road maintenance.

The city, whose property tax accounts for some 64 percent of its revenues, is already among the more than 100 U.S. municipalities with programs designed to get tax-exempt nonprofits to make payments in lieu of taxes -- known as PILOT schemes.

But Boston, where reduced revenue due to the deep recession and foreclosure crisis has resulted in layoffs and cuts in services, said it wanted a more structured method to encourage nonprofits to make payments for city services.

"It's about fairness," Boston Mayor Thomas Menino said in an interview with WBZ radio.

"It's about how do you want to participate in this city that you get city services from: police, fire, public works. I think you should share in those costs."

A 128-page plan issued on Wednesday by a task force asks non-profits to kick in more, both in cash and services, such as community health initiatives.

It followed a two-year study about how to formalize the patchwork of individual arrangements with the many non-profit entities within the city's boundaries.

A recent study by the Lincoln Institute of Land Policy showed that under Boston's PILOT scheme there has been a wide variation in payments by non-profits. The plan by the city's task force takes aim at the discrepancies with proposals of specific payment formulas.

The program will remain voluntary. It is planned to be phased in over several years and will exempt smaller institutions.

Some non-profits have already voiced opposition to the higher proposed payments.

"We're opposed to the principle," Jack Dunn, spokesman for Boston College, told the Boston Globe.

The task force's report showed that Boston College, located mostly outside the city border, made $289,531 in PILOT contributions in fiscal 2010. Boston University paid almost $5 million. The Museum of Fine Arts, which recently opened a new $504 million wing, paid $99,400.

Under the city's plan, contributions would be based on 25 percent of what the nonprofit's property would yield if it were taxable, with each nonprofit granted an exemption on the first $15 million. The increased revenue from hospitals and schools could bring in $5 million the first year.

The nine-member task force included representatives from the city council and the business community, as well as several nonprofit entities.

(Reporting by Ros Krasny; Editing by Leslie Adler)





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