Yale’s financial contributions to the city of New Haven may be a focal point of a commission re-established by the Board of Aldermen Tuesday night, potentially inviting a new understanding of an issue that has long colored relations between Yale and the Elm City.
In the wake of budget deficits and successive property tax hikes, the Board of Aldermen unanimously passed a resolution to give Aldermanic President Jorge Perez the authority to appoint a 13-member group to explore new ways of raising city revenues. Along with new efforts in the Connecticut General Assembly to reassess Yale’s “super tax-exemption,” the commission is likely to renew discussion over Yale’s fiscal impact on New Haven.
Perez said he did not want Yale to be the central focus of its deliberations, but he said it would be difficult to ignore Yale’s economic impact on the city.
“This is not an avenue for taking a shot at Yale,” Perez said. “But when you are the 800-pound gorilla, you are always going to be directly and indirectly be pointed at.”
Like other nonprofits in the city, Yale is exempted by state law from paying taxes on its property, although the state’s Payment-in-Lieu-of-Taxes (PILOT) program reimburses the city for about two-thirds of the revenues lost due to tax exemptions. While Yale pays taxes on much of its commercial property, its super tax-exemption — instituted by the state in 1834 for Yale and four other colleges — exempts all property earning incomes of less than $6,000 a year, regardless of its purpose.
Legislation is currently being considered in Hartford that would reconsider Yale’s super tax-exemption, but Julio Gonzalez ’99, executive assistant to New Haven Mayor John DeStefano Jr., said it was not yet clear what impact such efforts would have on New Haven’s budget.
The exemption, a hotly debated subject for over 70 years, currently reduces the city’s tax rolls by about $39 million, and $27 million of the budget is made up through the PILOT program and negotiated payments from Yale.
Ward 1 Alderman Ben Healey ’04, who represents most of the Yale campus and was a driving force behind the re-establishment of the commission, said that voluntary payments from nonprofits like the University would likely be a topic for discussion, along with considerations of the city’s property tax system, user fees and economic subsidies.
“Yale is an important part, but we have a systemic problem in the city in how we raise revenues,” Healey said.
But Yale Associate Vice President for New Haven and State Affairs Michael Morand ’87 DIV ’93 said the University’s contributions to the city — both in direct payments and increased economic activity — are much larger than its critics contend.
“The fact remains that New Haven gets more money for its budget because it’s the home of a nonprofit university than any other city in America,” Morand said. “A truly fair examination will demonstrate that the city budget and its economy benefit tremendously from the nonprofit educational facilities that help make New Haven thrive.”
Gonzalez said the mayor was supportive of the commission’s efforts, although he said it needed to create a “new consensus” to be effective. DeStefano, who was in South Carolina at a National League of Cities event yesterday, has expressed public support for the idea of voluntary payments from Yale, but he asserted last year that New Haven’s revenue problems were not created by the University’s exemptions.