Posted on 07/02/2012 7:53:39 PM PDT by Sybeck1
Memphis may join the growing list of cash-strapped cities that ask nonprofit and tax-exempt organizations to make payments in lieu of tax.
The City Council will vote Tuesday on a resolution to form a committee to explore the idea.
"We want to see if this is feasible, and if it is feasible, how much revenue it could generate," said council member Janis Fullilove, who sponsored the resolution.
Fullilove said the committee, if approved, would focus on tax-exempt and nonprofit entities that gross $15 million or more annually.
As municipal budgets have felt the crunch of the economic slowdown, cities across the nation are increasingly asking their major tax-exempt businesses — hospitals, universities and cultural organizations — to make payments in lieu of taxes.
Robert Lipscomb, director of the city's Division of Housing and Community Development, estimates that 30 percent of properties inside Memphis are tax exempt, including government buildings, churches, hospitals, nonprofits and universities.
"If you have 30 percent of your property not being taxed that relates to everything else the city does," said Lipscomb. "That's just a fact."
In April, Boston began for the first time sending tax bills to nonprofits, asking them to pay up to 25 percent of what they would owe if their property were not tax-exempt.
The new revenue-raising plan in Boston is based on the estimated cost of providing basic city services, such as police and fire protection and snow removal.
Over the last decade PILOTs for tax-exempt entities have been used in at least 117 municipalities in at least 18 states, according to a report from the Lincoln Institute of Land Policy in Cambridge, Mass. Large cities collecting these forms of PILOTs include Baltimore, Boston, Philadelphia, and Pittsburgh.
In Memphis, the existing PILOT program is an incentive tool used to lure businesses to the city and Shelby County. Under that system, businesses that secure a PILOT pay taxes on what the land is worth at predevelopment levels. Once they exit the PILOT program, they pay full taxes on the developed property.
Memphis officials will have to determine if nonprofits and tax-exempt entities should enter that program, or if a new program should be developed to get them to pay a portion of what they would owe if their properties were not tax-exempt.
"We'll have to determine if we need a new system," Fullilove said.
"I'm interested in these tax-exempt groups and asking them to be good stewards of Memphis," she said. "These tax-exempt groups use the same services the citizens use, fire and police services and protection, infrastructure like roads, so I'm asking them to help this community by paying a portion of their taxes if their properties were not tax exempt."
Councilman Jim Strickland, chairman of the council's budget committee, sees no downside in asking tax-exempt entities to make PILOT payments .
"I don't see anything wrong with asking," he said. "The worst thing that can happen with this is them saying no, so I think it's definitely worth asking."
Greg Duckett senior vice president and corporate counsel for Baptist Memorial Health Care, said tax-exempt institutions like Baptist already contribute to the city by bringing in jobs and research and by providing services the government doesn't.
"I respect and acknowledge the council's desire to look at this area, but in looking they need to look at the intended and unintended consequences of PILOTs," Duckett said. "You have to look at the purpose of nonprofit organizations and how they were created, and were it not for the services the nonprofits provide the public would probably have to pay for these services."
Duckett noted that Baptist provides free health care to the homeless and care for the poor that is not reimbursed, and provides facilities for the Church Health Center for $1 a year.
Baptist employs 5,700 people inside Memphis. Duckett said the hospital has a $76.5 million economic impact on Memphis.
"Obviously, if you are looking at the creation of some sort of taxes on nonprofits, items like that become legitimate issues for discussion over whether or not we can still do those things," Duckett said.
The talk of possibly including nonprofits and tax-exempt properties in a PILOT program comes as the current, business-recruitment-based PILOT is coming under review from city officials.
A council committee is considering a proposal to have outside auditors review the hiring and capital investment numbers submitted by companies enrolled in the PILOT program.
The Economic Development and Growth Engine board, or EDGE, tests about 10 companies a year to make sure they are producing the number of jobs and the amount of capital investment they promised to get the tax break. Around 75 companies are currently enrolled in the PILOT program.
The council has formed a six-member panel to examine economic development incentives offered by the city, including the PILOT program. The committee will explore whether the incentives currently in place have been effective and if the city should develop new incentives.
The churches don't have a bucket to piss in. Yet, local Democrat governments are going to squeeze the basis of their political support. Should be fun to watch. Problem is where will the third world flee to?
The churches don't have a bucket to piss in. Yet, local Democrat governments are going to squeeze the basis of their political support. Should be fun to watch. Problem is where will the third world flee to?
The churches don't have a bucket to piss in. Yet, local Democrat governments are going to squeeze the basis of their political support. Should be fun to watch. Problem is where will the third world flee to?
“The left is not happy unless they are finding more ways to loot the populace.”
I used to work in Memphis a number of years ago, but I didn’t live there. It’s not only Left, it’s Black Left, which means Marxism run by idiots! Someone posted that Fullilove was a crazy drunk. Have a look at this: http://www.youtube.com/watch?v=IK6UKJ6wjWk
It is my understanding that mandatory payments to the government--at any level--is a pretty good working definition of taxes...
Ping
Pay their way, as in contributing to the retirement funds of elected politicians and their croneys? If they are free to tap the respources of religious congregations, then you are taxing double those parisioners.
You mean its going the same way as Detroit and Cleveland?
In France they took over Church property to keep the state from collapsing. At the same time, they tried to force the clergy to become employees of the state.
I would then suggest that churches ask for payment for its charitable missions within the community. Think the city could afford it?
Yes, My family and I lived in Memphis almost 40 years. Summer 1961-April 2000).
The first 15 years were very blissful (except for the riots in 68) years.
By the early 90’s, I overheard a man say: “I’m about ready to move out of Memphis and just let them cannabalize it, then come back.”
If the city, county and state take over running the Hospitals, Churches, they will cannabalize them.
Let me ask; “If the City, County & State cannot regulate & run it’s self, why should it try to take on more?”
Sell some government buildings - raise money and increase tax base.
This is a good thing. Too many non-profits benefit from the system. If they suffered along with us then we wouldn’t see our taxes rise so high.
The Feds should do the same thing. There are plenty of massive endowments that exist just to enrich the staff and owners. That wasn’t the purpose of the non-profit tax exemption.
I think you need to read a book. The title of it is now my tag line.
The government in Cleveland as it now exists,makes the older locals long for the days when Dennis Kochinic was mayor.
My hometown, shocka!! This is the same city where a Ford proposed to increase the gas tax. Demorcat machine, fiscally incompetent.
You mean Janice Fulladrugs? I’m in Germantown on the front lines.
I agree that some businesses that are classed a non profit should be taxed since they are truly a shell and are evading taxes.
Churches on the other hand are a different story, the average church has less than 70 members and most of the time the pastor has to have a second job just to pay the bills. If we put taxes on top of their fixed and variable expenses there will be a lot of churches that will close their doors and people will suffer as a result.
The government needs to change their business model as a small business owner would have to when the economy gets bad!
Make no mistake, if ANYONE says that they want to tax the churches, they REALLY mean that they want to *destroy* the churches. They may claim that churches are a "gravy train" but they know very well that the majority of churches are functioning Sunday-to-Sunday and would fold up overnight if they had to pony up taxes. The ones that survive would be forced to scale back non-essential services like charity and community outreach. They know this, and welcome it. There would be fewer churches, and the ones that remain would focussed on survival and would be blissfully quiet and disengaged. There are a lot of "conservatives" that would like that very much.
I live in Collierville, which is fighting school and government consolidation with every fiber of its existence.
The consolidation of Memphis City Schools (which simply dissolved its charter to affect this) and Shelby County Schools represents the proverbial camel’s nose under the tent to full-on consolidation of Memphis and Shelby County. Which is, in and of itself, simply a money grab. The City Gubmint apparatchiks in Memphis want the suburban tax revenues so badly that they can barely contain their drool.
Ain’t goan’ happen.
There is a ballot referendum in Collierville to establish a separate Collierville school district, and to enact a small local sales tax to pay for it. I’ll be voting in favor. In my opinion, while I oppose tax increases generally, it’s the most workable way to get it done. EVERYBODY will have to contribute - which is opposed to a property tax increase (that would hit only home and property owners).
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