New Haven saw an increase in property tax revenue during the 2005 fiscal year, but the growing presence of tax-exempt property continues to threaten the economic health of the Elm City, a statement issued by city officials Tuesday said.
PILOT payments — reimbursements from the state government for tax-exempt property — have failed to keep pace with the increases in the amount of tax-exempt property in New Haven in recent decades. Although Connecticut statutes set the level of reimbursement at 77 percent of revenue lost from exemptions, New Haven only received 53 percent this year, costing the city $12 million, Mayor John DeStefano Jr. said in the statement.
“Our taxpayers continue to shoulder an unfair burden — supporting and hosting a regional hub of educational, health and social service providers without receiving fair compensation from the state or federal governments,” DeStefano said.
Deputy Director of Economic Development Tony Bialecki said the city receives less PILOT funding than it is legally entitled to because of budgetary problems at the state level. PILOT payments are distributed to cities across the state, and when increases in funding for the PILOT program fall short of increases in the amount of tax-exempt property, payments for all cities get diluted, he said.
New Haven is especially vulnerable to fluctuations in PILOT payments because it is a center for nonprofits, Bialecki said. Forty-seven percent of the city’s real property, which includes commercial buildings and residential homes, is tax exempt, and that proportion has been increasing steadily, the statement said.
Though city officials have often criticized Yale, the city’s largest nonprofit employer, for not contributing enough money to New Haven, Yale Associate Vice President for New Haven and State Affairs Michael said the University gives New Haven more than its fair share of voluntary contributions, which he said exceed those of any other private university in the nation.
“Most cities get nothing due to nonprofit universities, yet New Haven gets over $46 million this year because of Yale,” Morand said. “Yale generates 12 percent of the city’s revenue directly even though Yale nontaxable land occupies only 4 percent of town. Moreover, Yale places little demand on city services since it has its own police, fire marshal and trash pick-up and there are very few kids in public schools in nontaxable Yale housing.”
Morand said New Haven’s financial problems can be attributed instead to a tax base with low incomes.
“Concentrating low-income populations in city centers also creates a situation where there are high-cost service needs without property or income sufficient to create enough revenue to pay for the services,” he said.
Ward 2 Alderwoman Joyce Chen ’01 said Yale could stand to contribute more than it already does, but that the University is not responsible for the city’s financial problems. Instead of asking Yale to continue increasing its voluntary contribution, city officials should focus on changing the law that gives nonprofits tax exemptions, she said.
“We’ve always lobbied for more PILOT funds,” Chen said. “Is that really going to change? Probably not.”
Connecticut and Rhode Island are the only states with PILOT programs. New Haven received approximately $40.8 million in PILOT funds in the 2005 fiscal year, an increase from the previous year’s payment of approximately $40 million.