Entry tags:

boston, education, policy, politics

Boston's Long Overdue Reformed PILOT System Is Still MIA
Last week the Mayor of Providence created a controversy by announcing a Payment In Lieu of Taxes (PILOT) system by which students of local Colleges and Universities pay a $150 fee per semester. This would be the first time a city levied a per-pupil fee to charge local schools for their use of land and municipal services. Naturally, the Universities balked and cried crocodile tears for their students who would suffer as the result of yet another fee. Students and their families already burdened with exponentially increasing tuition joined in too.

If things are bad in Providence, they are much worse in Boston. In 2002, the BRA found that 50% of property in Boston was tax exempt. This study was conducted before the massive land grab by Harvard in Allston and Northeastern's expansion into Lower Roxbury. It's safe to assume that with these notable expansions along with many others, the amount of tax-exempt land is notably larger than 50%.

Boston gains a tremendous economic and cultural benefit from its large number of colleges and universities. But their presence does come at a high cost that is paid by the rest of us. The worst economy in a generation has caused municipalities to slash budgets for essential services and forced local governments to look for new means of creating revenue. It's hard not to notice that despite being similarly hit by the economy, many schools are flushed with cash and just sitting on hundred of millions (and some even with billions) of dollars. The economic reality has pushed a long-ignored issue to the forefront of Boston's Mayoral race.

Per-Student Fees
I find the per-student tax to be a very interesting approach to a PILOT system. It strikes me as infinitely more transparent and fair than the current system that happens mostly behind closed doors and from the beginning uses a flawed methodology to calculate fees levied on the colleges and universities.

Negotiations begin by looking at the value of property owned by the college or university. The problem with starting with property value, is that it ignores the largest cost to the city which are the students. It ignores that schools over-enroll forcing many more students to live off campus and naturally the many more students who choose to live off-campus. Off-campus students are even more apt to use municipal resources and yet are not accounted for at all under the current system. This is the way I see the advantages and disadvantages of per-student fees broken down.

Advantages:

• Accurately taxes Colleges and Universities for impact and use of services in the city


• Includes students who live off campus who use municipal and city services more than their on-campus counterparts


• A public, accountable, and equitable system across the board. No more closed-room dealings with City and university officials that lead to some schools paying more than others.


• Per-Student fees become a separate part of tuition fees rather than squirreled away inappropriately under Student Activity or Maintenance fees

Disadvantages:

• Fee paid directly from students


• Potentially higher cost to students


• Doesn't address needed reform PILOT fees required of Hospitals and other non-profits

It's important to note that any progressive changes to the PILOT system will likely lead to students paying more. So it becomes a question of whether you tax the students directly (per pupil, per semester) or indirectly (an overall negotiated fee to the city). I happen to think the former is fairer to everyone involved.

Where is Boston heading? Good question!
In January, Boston's Mayor Menino announced the formulation of a task force to revise Boston's PILOT program. Thankfully not lost in the Mayor's typical fanfare, was the announcement that the four of the six committee members represent organizations that would pay more under a more aggressive PILOT structure. These members include Robert Brown the President of BU, Zorica Pantic President of Wentworth Institute of Technology, Patricia McGovern the general counsel of Beth Israel Deaconess Medical Center, and Thomas Glynn the Chief Operating Officer of Partners Healthcare.

The conflict of interest here is obvious. Even moreso to the rest of us left footing the bill.

Originally published at Blueblooder.com.