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When Cities Attack(!) Their Ivy League Schools

Like other poorly-governed cities, Providence, Rhode Island has spent itself into oblivion, faces huge budget shortfalls, can’t pay its bloated public sector employees, etc., etc. What’s a desperate city to do? Well, the piles of cash sitting atop College Hill–home of Brown University and its multi-billion dollar endowment–are looking mighty tasty. In fact, Providence may cannibalize its Ivy League school:

Brown would pay the city $38 million in property taxes each year – more than enough to solve the city’s budget problems – if only it wasn’t tax exempt.

And so city officials and state lawmakers applied some pressure to the university, and last week Brown agreed to contribute $31.5 million to Providence over the next 11 years. The money comes on top of nearly $4 million that Brown already voluntarily gives the city every year.

The town-vs.-gown confrontation reflects a trend across the nation as cities desperate for revenue try to get more money out of tax-exempt institutions such as universities and hospitals.

These institutions argue they already contribute to a city’s economy and quality of life through jobs, economic activity and community services. But as cities grapple with deficits and cash-flow crunches, they are succeeding in getting nonprofits to pay up. …

But “it is simply unfair to ask our residents and businesses to pay more and more in taxes each year, while preserving a 250-year-old special privilege for an organization with a $2.5 billion endowment,” City Councilman John Igliozzi said in January, when he introduced a resolution calling on the state to remove Brown’s blanket property tax exemption.

Really, though, that’s a false choice. If big cities could get their spending under control, they wouldn’t need to ring more money out of residents, businesses, or universities.

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