Published March 07. 2014 4:00AM
Earlier this year, in welcoming the new president of Connecticut College, Katherine Bergeron, to New London, I suggested she might want to have lunch with Mayor Daryl Finizio, to help warm up town-gown relations.
I am sure President Bergeron is busy, getting adjusted to the new job. I'm sure lunch with the mayor is near the bottom of her to-do list, if it's on there at all.
But I think some legislation developing in the General Assembly should encourage President Bergeron to reorganize her priorities.
Not only should she have lunch soon with the mayor, but she should plan on picking up the check. It will help her get used to having to pay.
Connecticut College, Mitchell College and Lawrence + Memorial Hospital have all been getting pretty much a free ride in New London for all these years, not required to pay property taxes. But that would all change under a proposal sponsored by Connecticut House Speaker J. Brendan Sharkey.
Sharkey, a critic of the way Connecticut municipalities must rely on property tax for revenue, believes that making nonprofit colleges and hospitals pay property taxes would be a good step toward reform.
The proposal is evolving and moving along. Sharkey says he has support from both sides of the aisle, and the bill will likely get its first airing at a public hearing within a week or so.
Sharkey said the proposal could be tweaked and changed, and maybe the requirement to pay taxes would be phased in. But the concept is on track for consideration in this session of the legislature.
Under his initial outline of the proposal, Sharkey said, the municipalities would no longer get reimbursed by the state for the lost taxes from hospitals and colleges.
The reimbursement under the PILOT, or payment in lieu of taxes, program is at 32 cents on the dollar and could go up to 34 cents under a budget proposal from Gov. Dannel Malloy.
Sharkey suggests that colleges and hospitals be made to pay taxes for the first time and then apply to the state for assistance from the PILOT pool of money. He calls this reverse PILOT, and it would shift the burden of assisting colleges and hospitals from the municipalities to the state, where the assistance could be more fairly paid for by everyone.
The new law also would allow the municipalities and the institutions to come up with a compromise payment plan for taxes, presumably for more money than the PILOT funds now provide, but less than the actual tax due. The municipalities would have all the leverage in those negotiations.
The Sharkey proposal would be especially welcome in poor cities like New London, the speaker said. But it would also help any towns with sizeable satellite facilities run by nonprofit hospitals. L+M, for instance, would have to pay taxes on its new cancer center in Waterford and its health center in Groton.
The proposal, Sharkey adds, would also acknowledge that community hospitals are more frequently acting like for-profit entities, paying executives high salaries, for instance.
"In New London and other communities, the distinction between nonprofit and for-profit is getting blurred," he said.
Just a quick glance at the numbers makes this proposal a huge windfall for New London.
The old assessment for all L+M property, not reflecting changes through revaluation, was $199.3 million. At the current mill rate, that would be a $5.4 million tax bill. Connecticut College's assessments totaled $213.9 million, for a tax bill of $5.8 million. Mitchell's assessments were $40.9 million, for a $1.1 million tax bill.
The city in its current budget allows for $4.6 million in PILOT money.
Mitchell has been making voluntary payments to the city of a little less than $30,000 a year. Connecticut College is paying a paltry $12,500 a year.
L+M says it donates to community causes and treats the indigent.
I would give a proposal introduced by the House speaker, a Democrat in a heavily Democratic state, a good chance of passing. It has to help that it should get strong support from cities.
The Sharkey plan would put a lot of much-needed money on the table for New London, which would be the biggest beneficiary around here.
I would think the city could help its colleges and hospitals adapt to a new reality and compromise by accepting less than the full property tax bill, to start anyway.
There will be lots to talk about if President Bergeron does come down the hill for that lunch with the mayor. She can hear first hand his lecture about how broke the city is. He's good at giving it.
The well-paid executives at L+M, who may need to start dipping a bit into the offshore accounts where they have stashed tens of millions of dollars, might also want to start to make nice with the mayor, instead of scolding him in the newspaper.
This is the opinion of David Collins.