When all else fails, tax Yale — this seems to be the agenda of some in our community. Last Tuesday, the New Haven Board of Aldermen unanimously voted to form a committee to explore new ways of raising revenue and a bill that seeks to tax Yale on not strictly commercial properties is currently making its way through the Connecticut General Assembly. The issue of Yale, New Haven and taxes is a convoluted one in which effusive rhetoric is often cast about at the expense of facts. In examining this controversy, it is necessary to avoid the former and focus on the latter.
Yale, as a non-profit educational institution, is tax-exempt, and for good reason. Yale contributes to New Haven and the world in countless ways, through the education of young minds, scientific discovery, and the general expansion of human knowledge. Yale is the largest property owner in New Haven, and most of this property (the non-commercial) cannot be taxed by the city. To make up for this shortfall, the state of Connecticut’s PILOT (Payments In Lieu of Taxes) program reimburses New Haven for about two-thirds of the total assessed value of those properties the city is unable to tax. Taxation advocates are calling on Yale and only Yale (no other Connecticut universities have come under attack) to pay formerly exempt tax.
The effort to tax Yale is being led, not surprisingly, by the unions. The Connecticut Center for a New Economy (CCNE), a dubiously non-profit front group that disseminates union proposals such as the tax-Yale scheme, has initiated the latest attempt. Its vice chairman is the Rev. David Lee and the New Haven director is the Rev. Scott Marks, both vocal anti-Yale advocates, and CCNE works out of the same offices as locals 34 and 35. The tax-Yale movement, then, is not some organic citizens’ protest as its backers would have us believe, but rather a union-inspired attack on the University.
Yale already makes direct financial contributions to New Haven. Yale pays for its own police service, trash removal and sewers. It gives over $2 million in payments to New Haven for fire protection. Yale has instituted a lavish homebuyer program that doles out $1.4 million annually to University employees. These are just a few of the many charitable initiatives that Yale engages in, solely out of its commitment to making New Haven a better place for its students and employees.
Those who argue that Yale should pay more in taxes also ignore the indirect ways the University contributes economically to the city. Yale students alone contribute more than $100 million to New Haven simply by living here. The public events Yale sponsors are not only a cultural boon to the city but a financial one as thousands travel to spend money here. New Haven attracts myriad businesses due to the educated community that an institution of higher learning such as Yale fosters. Practically all of the income that Yale generates comes from outside of New Haven and Connecticut, but a disproportionate amount of its spending is done directly in New Haven. In their vehemence towards the University, anti-Yale figures forget the good things the institution does for the city. To get a better picture, these individuals would do well to travel to blighted cities of similar size like Bridgeport and Hartford to see what New Haven might look like if Yale did not to exist.
Yale’s capital improvements also bring millions of dollars to the city. As Yale invests in its infrastructure, the property value of these facilities increases and New Haven earns more money from the state via the PILOT program through no work of its own. The residential college renovations have increased the assessed property value of our dormitories immensely over the past several years. In turn, the state has paid New Haven more in reimbursements.
Supporters of increased taxation seem to think that Yale’s money grows on trees. They argue that Yale should devote a portion of its endowment, which registers at $11 billion, to the city as a voluntary gift. But the Yale endowment, like any endowment, is not a pot of money that the University can freely spend in any manner it wants. Most of the funds that comprise the endowment are in restricted accounts, money that has been contributed by donors for specific purposes like scholarships, faculty positions and building improvements. Those who contribute to the Yale endowment want their donation used to advance the University, not make up for New Haven’s inability to balance its books. The University is currently facing a $30 million budget deficit and has been forced to increase tuition by 5 percent over the next academic year. So essentially, the unions’ argument is “Yale has money. We want it, even if it means raising student tuition.” Perhaps if they made this their mantra, I would take their arguments more seriously.
Like all cities, New Haven has its problems. But unlike most cities, New Haven has a single and visible target that serves as a convenient scapegoat for these problems. Unfortunately, some in the community have decided to cynically attack the University. The Yale community would do best to ignore them.