New Jersey Town Cites College's $219,000 Table as BurdenRomy Varghese
In the feud between New Jersey’s Kean University and its hometown Union Township, everything is on the table -- including the table.
The school is waging a legal battle to expand on land that the town wants for development. Union Mayor Manuel Figueiredo said allowing Kean to take more property off the tax rolls is as offensive to the public as the $219,000 the state university spent last year on a multimedia room anchored by a custom-made, electronics-loaded conference table.
Tension between communities and nonprofits simmers from Alaska to Maine as public officials with tight budgets look to wring cash from the organizations that say they boost their localities. Maine Governor Paul LePage last month unveiled a plan to tax nonprofits, a first for the nation.
“When you’re trying to steal from the pockets of the Union taxpayers, then we get upset,” Figueiredo, a 58-year-old Democrat, said by telephone.
Even as the U.S. economy improves, municipal taxes aren’t growing as quickly as they did before the recession, while expenses continue to mount, said Naomi Richman, a managing director at Moody’s Investors Service in New York. The “steady beat” of town officials targeting nonprofits show that they’re struggling with antiquated tax structures and deep fiscal imbalances, said David Thompson, vice president of public policy at the National Council of Nonprofits in Washington.
“This is not a nonprofit tax-exemption problem,” he said by telephone. “It’s a municipal government fiscal problem.”
Politicians have brokered payments in lieu of taxes from large organizations such as hospitals and universities, whose charitable status exempts them from most levies. Princeton University agreed in April to boost contributions to its New Jersey hometown to more than $24 million over seven years. Brown University increased payments to Providence, Rhode Island, as the city teetered on the brink of insolvency in 2012.
Increasingly, municipal officials are looking at mandatory measures. A budget commission in Anchorage, Alaska, last month recommended ending some property-tax exemptions that apply to nonprofits, according to Thompson’s group. Pennsylvania may ask voters this year to allow the legislature to determine which groups should receive it.
LePage’s overhaul in Maine would require most nonprofits to pay levies based on 50 percent of their assessed value over $500,000. Asked for comment, spokeswoman Adrienne Bennett referred to a printed summary of the plan, which said, “the growth of non-profits in our communities and their use of municipal services requires them to contribute.”
While exempting nonprofits from taxation dates to the 1800s in the U.S., people no longer assume the groups should be able to avoid levies, said Daphne Kenyon, a fellow at the Lincoln Institute of Land Policy who has written about the issue.
They think, “well, they get public services, why shouldn’t they contribute?” as they see hospitals and colleges appear more like profitable enterprises by running cafes and stores, she said from Cambridge, Massachusetts.
For Union, a community of 56,642 that’s a 35-minute train ride from midtown Manhattan, Kean University’s purchase of a multimedia conference system is an example of how school officials disregard taxpayers as they pitch a legal battle to annex more property.
The university lies on the former estate of the Keans, a prominent political family in New Jersey that includes former Governor Thomas Kean. A quarter of nearly 15,000 students come from Union and nearly 100 residents work there, said Susan Kayne, a spokeswoman for the school. The university does more than $6 million in local business annually, and investments in research and other facilities over the past decade generated more than $1.8 billion in regional economic activity, she said.
Kean’s campus spans 189 acres, mostly in Union Township. The only potential for expansion is about 50 acres being vacated by Merck & Co. that was once part of the Kean estate, Kayne said. The school, through a Kean family connection, is pursuing a legal claim to the land over the wishes of township officials.
Property owners would have to shoulder more in levies if the parcel, which at one time generated $4 million in taxes, goes under the university’s exemption, said Figueiredo, the mayor, who is a Kean graduate. A developer’s plan of residences and retail shops, in motion before the school filed legal action, would be “an economic engine for the whole town,” he said.
Kayne said the university’s expansion could entail taxable components. “We do look at ourselves as really good public citizens,” she said. “We are really hoping that the township will see our investment in this property as an investment in the future of the university and the township.”
As for the $219,000 conference room, Kayne said it involves mosaic artwork, a motorized turntable, microphones, speakers, power outlet panels, power manager unit, equipment cabinet and lighting that helps connect the Union campus to its Chinese one and hosts public policy discussions. Figueiredo asked New Jersey’s acting comptroller Marc Larkins to look into the expenditure in a Feb. 2 letter.
Public officials will continue to look at nonprofits for revenue even as the economy improves, said Kenyon, the Lincoln Institute fellow.
“We’re still in this era of anti-tax sentiment,” she said. “As long as you have that, doing things that don’t look like you’re raising taxes on ordinary citizens are going to be more politically salable.”