Rojas Questions Sharkey’s ‘Reverse PILOT’ Proposal
He might be the Speaker of the House, but Brendan Sharkey’s proposal to get private colleges and hospitals to pay property taxes to municipalities is not a slam dunk.
Sharkey told the Planning and Development Committee on Friday that there’s a growing amount of frustration in the communities that host these institutions because they are the ones “shouldering the burden of providing these tax exemptions to these corporations.”
PILOT is an acronym for Payment In Lieu Of Taxes. It’s a program through which the state reimburses cities and towns for the portion of the municipal taxes that can’t be collected on state-owned land, colleges, hospitals, and new manufacturing equipment, all of which are exempt from local property taxes.
He said his “reverse PILOT” proposal shifts the burden from the host community to the private college or hospital because those entities will have to pay a negotiated amount of taxes to the municipality and seek reimbursement from the state.
Rep. Jason Rojas, co-chairman of the committee, said he understands where Sharkey is coming from with his proposal because he sees both sides. Rojas is the director of community relations for Trinity College, which under this proposal would be asked to pay taxes to the city of Hartford. He also represents East Hartford, which is looking forward to collecting more tax revenue from Goodwin College, a private nonprofit.
Rojas wondered if any consideration was given to the cost of education and the possible increase in tuition that could result from this legislation.
“That’s why the provision to be able to negotiate the actual taxes paid is so critical to the proposal,” Sharkey said. “Because we all know the contributions Trinity does make to the community and I commend you for that.”
Sharkey also applauded the efforts of Goodwin College in remediating a brownfield in order to build its newest campus. The conversation with the local municipal official is what level of taxes should be paid based on the benefits the institution makes to the community.
Rojas wondered what was stopping a city or town from going after the full amount of taxes.
“The protection is your ability to negotiate your taxes,” Sharkey said. “Which no one else gets the opportunity to do.”
But Rojas said that if the state never gets to the underlying tax system the additional revenue will be consumed and cities and towns will be back asking for more money. In the meantime, the institutions could be dramatically impacted by this change, he said.
“I do get concerned that our inability to effectuate change around how our local government is structured and how it operates and the cost of the status quo,” Rojas said. “Given the difficulties in changing that, my concern is that these very same cities will be back to us seven years from now saying ‘we don’t have enough revenue’.”
Goodwin College President Mark Scheinberg said the bill holds institutions like his hostage.
“If you offer a starving man a loaf of bread, depending on how hungry he is, he won’t care where it comes from,” Scheinberg said. “Our municipalities are desperate.”
In 2013, Goodwin College was the second largest taxpayer in East Hartford, paying a total amount of $75.58 million in taxes.
“This mental image of this entity that is not contributing isn’t us,” Scheinberg said.
He said the college is also located on land that sat vacant for more than two decades.
If this proposal went through, Scheinberg said it would amount to a 20 percent increase in its budget. He said the college hasn’t increased tuition in four years, and it’s not as if it can pack up and move. He said his board just postponed going forward with two economic development projects because of this proposal. The buildings the school planned to develop would have gone onto the tax rolls, but they canceled them because “they’re worried about our survival as an entity.”
Scheinberg pointed out that state schools aren’t being asked to pay additional taxes to their respective municipalities.
But Sharkey said he would be interested in combining the state property PILOT with his private colleges and hospital proposal — even though it would cost the state more money.
Sen. Majority Leader Martin Looney, D-New Haven, has proposed combining the state’s PILOT for colleges and hospitals with the reimbursement for taxes lost from state facilities in a town, and eliminating the different reimbursement rates.
The bill would create a sliding scale of reimbursement under which the 20 municipalities with the most PILOT-eligible property would be reimbursed at 50 percent, the next 20 would be reimbursed at 45 percent, and all others would be reimbursed at 40 percent.
“Sen. Looney’s proposal is weighted more heavily to benefit New Haven by the way it’s constructed,” Sharkey said. “But what he’s getting at by factoring state property PILOT into the conversation is exactly the right way to go . . . In fact, I think that aspect of what he’s proposing makes a lot of sense.”
Looney’s bill received a public hearing last week in the Finance, Revenue, and Bonding Committee.