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A Sept. 28, 2012 Albany Herald report, using information provided by the Dougherty County Tax office, showed that 24 percent of Dougherty County’s gross tax digest is owned by nonprofits and, therefore, is non-taxable.
City Manager James Taylor, in looking for ways to tame a $108 million beast of a budget, has proposed taking a close look at tapping into the almost 700 nonprofits located in the county — most in the city — for funding to help pay for such services as police and fire protection and stormwater management that, because of tax-exempt status, is provided to nonprofits at no charge.
In discussing the specifics of his proposed budget with The Herald last week, Taylor said collecting funds from nonprofits is a touchy subject.
“GMA (the Georgia Municipal Association) says we have no choice but to provide the services (at no cost) for nonprofits, and our city attorney (Nathan Davis) agrees,” Taylor said. “But there are others who disagree. I feel that we have an obligation to our citizens to look into it.”
The issue is not one being considered by Albany alone. All over the country, state, county and municipal governments are seeking budget relief through PILOT (payment in lieu of taxes) contributions from nonprofits. At last count, 117 municipalities in 18 states were receiving such voluntary contributions.
In education circles, well-known — and well-funded — universities such as Yale ($7.5 million), Boston University ($6.8 million), Princeton ($1.2 million) and Brown ($7.96 million) have agreements with their cities of location to make significant yearly PILOT payments. Other large cities such as Pittsburgh, Baltimore and Chicago are seeking similar payments from their nonprofits.
The rub, however, is that these institutions are making the payments to their respective municipalities voluntarily. It becomes a far different issue when nonprofits are either unwilling or financially unable to make such contributions.
“I’ve been looking into recent litigation in Florida and other places where certain jurisdictions imposed a fee (on nonprofits) for fire service,” Davis said. “And while that fee passed muster in Florida, I don’t think such a separate fee for a service like fire protection would stand in Georgia.”
All 50 states in the union have laws that exempt educational institutions, hospitals, churches and other nonprofits from paying taxes. The reasoning is simple: These entities provide services that would otherwise fall on the state.
However, many taxing entities point to property owned by nonprofits that is not being used for the specific services provided by that entity as a means of skirting tax-exempt laws. Government leaders lament the fact that, not only does the tax-exempt entity not pay taxes on property it purchases, its ownership of such property erases the possibility of private ownership and thus takes the property permanently off tax rolls.
Locally, that’s been a knock on Phoebe Putney Memorial Hospital. However, hospital officials say Phoebe Health System does indeed pay taxes on its property not used for medical purposes — confirmed by Dougherty County Tax Director Denver Hooten — and that’s part of more than $130 million in community benefits provided by the hospital annually.
“From indigent and charity care, unreimbursed Medicaid and Medicare, inmate health care, school nurses, free community health fairs and the agreement we have (with the county) to pay an amount equal to what Palmyra had been paying in taxes, Phoebe provides significant benefit to the community,” Phoebe Vice President for Strategy Jackie Ryan said. “Phoebe’s goal has always been not to be a burden to local taxpayers.”
A report by the Lincoln Institute of Land Policy indicates continued tax-exempt status by nonprofits has become an increasingly significant issue because of three factors: budget strain brought on by a decrease in tax revenue, the changing nature of nonprofits’ growing utilization of government-provided services and growing anti-tax sentiment in the country.
Certainly the city would come under considerable fire if it tried to impose any sort of PILOT plan on its nonprofits, both large and small. It’s hard to imagine worthy organizations such as The Anchorage, Faith Community Outreach Center, GraceWay and the Albany Rescue Mission, which struggle for every dollar they use, maintaining the levels of service they provide if they were imposed a hefty PILOT fee.
But, as Taylor stated, “The more money we collect from other sources, the less of a burden we have to put on our property owners.” And with something of a neo-anti-tax revolution now firmly entrenched locally, regionally and nationally, struggling nonprofits may find a large segment of the public willing to render them casualties of the revolution if it eases individuals’ tax burden.
Email Metro Editor Carlton Fletcher at firstname.lastname@example.org.