BRUNSWICK, Maine — Gov. Paul LePage’s proposal to allow communities to make up for the elimination of state revenue sharing in the second year of his biennial budget by taxing large nonprofit organizations such as hospitals, colleges and private schools would place an “undue economic burden” on students, force changes to financial aid for Mainers and impair longstanding relationships with host communities, college officials said Monday.
The change also likely would leave towns and cities scrambling to assess those properties for the first time, according to officials in Brunswick, where Bowdoin College is located.
LePage announced Friday a plan to achieve $300 million in savings by 2019 through methods that include eliminating state aid to municipalities via the revenue-sharing program by 2017.
LePage’s budget proposes that larger communities — so-called service centers — could compensate for lost state aid by collecting property taxes from nonprofit organizations with valuations greater than $500,000. The organizations would be taxed at 50 percent of the property tax rate for assessed value above $500,000, according to Michael Allen, Maine’s deputy commissioner of finance. Hospitals, colleges and private schools represent the bulk of those organizations in Maine.
Communities without such organizations would need to make up for lost state revenue by coordinating services with neighboring communities, the governor suggested Friday.
College officials were guarded with their response to the proposal, but many suggested the plan could cause collateral damage to students.
“I would note that institutions receive not-for-profit status after careful review and must serve a public good,” Husson University President Robert Clark said, in part, in an email Monday. “Selectively taxing private higher education institutions would place an undue economic burden on students.”
Laurie Lachance, president of Thomas College in Waterville and former state economist during Gov. John Baldacci’s administration, said the plan would cost Thomas about $600,000 a year — “a direct hit on the affordability of college to the students we serve who are 75 percent from Maine and 70 percent first-generation. … A new tax would push college costs higher and would, ultimately, diminish our ability to raise the educational attainment of the region’s economy.”
Ruth J. Jackson, assistant vice president for communications at Colby College in Waterville, said in a statement that Colby President David A. Greene “has begun considering ways in which Colby can invest significantly in the city in coming years.”
Jackson said “anchor institutions” best support their communities by stimulating economic growth and that Colby would continue to do so. The college enrolls “a large number of students” from Maine, 72 percent of whom receive financial aid, she said.
Bates College President Clayton Spencer said the change in tax status would threaten the college’s ability to provide many services to the city of Lewiston and the state.
Bates provides about $4.7 million annually in financial aid to Maine students, based on the most recent figures the college had available Monday. Among other services, Bates provides 38,000 meals annually to food banks, offers reduced-cost meals for children and contributes more than 70,000 volunteer hours in labor to the community, at an estimated value of $1.5 million, according to a statement from Spencer.
“We understand the very real financial constraints our state and local leaders face, however Bates and other nonprofit institutions provide enormous economic and social benefits to the community that will be undercut by the imposition of new taxes,” Spencer wrote in the statement. “Adding significant new expenses to our budget, as the governor’s proposal would seem to do, would threaten our ability to provide these services.”
In a release Monday, the Maine Independent College Association said, “These institutions are a major industry in many localities, create significant local economic activity, and provide cultural benefits to their communities. Without the property tax exemption, Maine private nonprofit educational institutions would be placed at a competitive disadvantage with other states’ institutions and with the public colleges of Maine (which are provided exemptions). The state should not be in the business of picking winners and losers.”
In Brunswick, home to Bowdoin College, Mid Coast Hospital and Parkview Adventist Medical Center, town officials said Monday that municipal coffers stand to lose another $1 million in revenue sharing should LePage’s proposal become law. Then they essentially would need to start from scratch to determine the assessed value of the college and the two hospitals.
The town lists the value of Bowdoin College’s exempt property as $150 million, but Town Manager John Eldridge said Monday, “that’s just a number at this point. We haven’t spent a lot of time analyzing or assessing properties that aren’t going to be taxable. That [figure] is based on old information. And again, it’s not one anyone has paid a lot of attention to.”
“We don’t even have measurements for all the buildings. We would have to hire someone to go out and list the properties,” Brunswick tax assessor Cathleen Jamison said.
Eldridge said assessing the two hospitals would require a similar process.
Bowdoin College pays property taxes on several buildings not used for educational purposes, such as faculty housing. In 2014, the college paid $223,000 in taxes, plus a $126,000 “gift” in lieu of taxes, though the college isn’t required to, according to Eldridge.
Bowdoin College officials declined to comment Monday on LePage’s proposal. University of New England spokesman Nathan Town and Unity College President Stephen Mulkey also declined to comment Monday.
However, Mulkey said in an email to the Bangor Daily News, “You will hear more from Unity College on this matter as things unfold.”
Darron Collins, president of the College of the Atlantic in Bar Harbor, said in an email Monday that his school benefits Maine by a “reverse brain drain,” because while only 17 percent of its students come from Maine, more than 30 percent stay in the state.
“I would love to invite the governor here to Bar Harbor and show him person-by-person, business-by-business of how the College of the Atlantic has brought tremendous benefit to the town of Bar Harbor,” Collins wrote. “I’d then take him to see the same across all of Mt. Desert Island and to points further Down East, to The County, and … Portland and he would see that public benefit of inspired, creative, sustainable entrepreneurship and the palpable public benefit nonprofit education brings to this amazing state.”