Thursday, July 23, 2023
Chair Moran, Chair Cusack, and Members of the Joint Committee on Revenue:
My name is Jonathan Cohn, and I am the Policy Director of Progressive Massachusetts, a statewide grassroots advocacy group committed to fighting for an equitable, just, democratic, and sustainable Commonwealth.
We urge a favorable report for H.2963 and S.1836: An Act relative to payments in lieu of taxation by organizations exempt from the property tax (Rep. Uyterhoeven & Sen. Gomez).
Massachusetts is lucky to be home to many world-class hospitals and universities. But these large institutions, despite often operating indistinguishably from for-profit institutions, do not have to pay taxes. Given their large footprint, that is a fiscal drain for many communities across the Commonwealth, especially as communities are looking to find much-needed funds for investments in schools, housing, and infrastructure.
This bill would address this discrepancy by requiring large hospitals and universities to pay 25% of commercial property taxes to municipalities, based on the Payment in Lieu of Taxes (PILOT) agreement in Boston. Under this bill, municipalities could opt in to requiring a mandatory PILOT rather than having to engage in drawn-out negotiations or chasing down institutions one by one.
Why 25%? This number reflects the costs posed by such large institutions to municipal services like police, fire departments, and departments of public works. It is still a good deal for the institutions, who are still paying far less in property taxes than an individual would have to pay. And, by applying only to institutions with property worth over $15 million, the bill would avoid risking any adverse impact on smaller institutions.
We need to be empowering municipalities to take action to address the many crises before us, but they need the funds to do so. Our cities and towns are severely limited in how they can raise funds, as municipal budgets are disproportionately based on property taxes—and we are stuck living in the misguided Reagan-era holdover of a “Prop 2 ½” regime. If our cities and towns have wealthy institutional neighbors, they shouldn’t be forced to be stuck in struggling fiscal straits.
Sincerely,
Jonathan Cohn
Policy Director
Progressive Massachusetts
