An article in the Community Advocate yesterday focused on how much (or little) Southborough private schools contribute towards the Town’s budget.
The story notes:
Southborough raises $52 million annually through property taxes, the town’s primary funding mechanism, accounting for 77 percent of the community’s total municipal revenue. Because only 5 percent of the town’s taxable properties are classified as commercial or industrial, the tax burden falls heavily on homeowners.
One way to grow the town’s coffers is for nonprofits — which are exempt from property taxes — to voluntarily contribute funds to help the towns.
The reporter (Thomas Grillo) covers the status of current PILOT payments, plus the differing stances of a couple Select Board members, our State Senator, and some school representatives.
Read the full story here.
I thought Mr. Grillo’s article was fair to all viewpoints. But I did want to add the following. The reason Mr. Pfaff and I support the state legislature passing the bill that has sat in committee limbo for so long is that it would put all private schools on the same footing. That is, they would all have to add a line item to their budgets for the required payments to the towns that attempt to equate to the cost of the services their host Towns provide the schools – e.g. public safety and public works mainly. (And up to one-half of the required payment can be made in-kind – e.g. fields’ use, etc.) The private school business (and yes it is a business) is very competitive. Schools need to set their tuition rates with their competitors’ tuition rates in mind. Having a state law that settles what the schools pay for the local services they receive would help level that competitive playing field. All schools would have a new expense on their P & L – just like every other expense already there.
I also take issue with Senator Eldridge’s position on this. He states that private schools are struggling. Well so are towns who are trying to keep their budgets in check. In essence the current system requires individual homeowners to help support the operations of the private schools through their real estate tax assessments. Those taxes would be less if the private schools paid for the services they use.
I’m curious as to the impact of increased business occupancy in Southborough. Anecdotally, it seems that a number of commercial properties have remained unoccupied for years, even decades, with no tenants (i.e. Andrea Restaurant, Downtown Gas Station), I’m sure there are several more.
Would accelerating or incentivizing business occupancy have an impact on town property tax revenue?
The boy who grew up in the culture of Lowell, attended a state-funded college while living at home, graduated with honors in Mechanical Engineering, and then spent years attending night school to earn a *cum laude* degree in Computer Engineering might seem like someone who would favor taxing nonprofit private schools. You might assume that—but you would be wrong.
My education taught me to value institutions that strengthen communities, and Southborough’s independent schools are among those institutions. Southborough’s reputation and desirability are closely tied to the presence of its independent schools. They help define the character of the town and are part of what attracts many prospective homebuyers. That appeal is reflected in our property values.
Some have suggested—including the *Community Advocate* editorial board and several local elected officials—that the solution is for the Massachusetts Legislature to require nonprofit institutions to pay significant real estate taxes. That may sound appealing in the abstract, but such a policy would extend far beyond Southborough. It would impose substantial new financial burdens on nonprofit colleges and universities, museums, nursing homes, land trusts, hospitals, charitable organizations, and countless other nonprofit institutions that provide educational, cultural, environmental, and human services throughout the Commonwealth.
Rather than lamenting our inability to tax nonprofit institutions, we should focus on an issue we actually control: the imbalance in Southborough’s residential and commercial property tax policies. As long as we maintain our current tax structure, simply adding more commercial development will not produce substantial residential tax relief. The experience of the Massachusetts communities that contain roughly 80 percent of the Commonwealth’s commercial and industrial tax base—nearly all of which use a split tax rate—demonstrates this clearly.
If Southborough truly wants to reduce the residential property tax burden, we should spend less time hoping for changes in state law and more time examining the tax policies that are already within our own control.