Aldermen and city officials said they are negotiating an agreement with Yale-New Haven Hospital officials for the hospital to begin making voluntary payments to the city in lieu of the taxes from which it is exempt as a nonprofit institution.
Mayor John DeStefano Jr. will submit his 2006-07 budget request to the Board of Aldermen next week, and some aldermen said they are already anticipating that tax increases or spending cuts will be needed as New Haven struggles with a tax base anchored by large tax-exempt institutions. Last year, the University agreed to an 80 percent increase in its voluntary annual payment — it now pays the city $4.18 million — and aldermen have said they are in talks with the hospital to begin a program of similar payments.
“Given that our major employers are nonprofit institutions, they should be looking at the world differently and making voluntary contributions,” aldermanic President Carl Goldfield said. “Industry is gone, and they are our new industry.”
Yale President Richard Levin said that when he announced the increase in Yale’s payment to the city last April, he also encouraged Yale-New Haven to make a similar contribution.
The hospital is amenable to making voluntary payments to the city, Yale-New Haven spokesman Vin Petrini said. He said negotiations have been open between the hospital and the city on that matter, but the discussions were complicated by other negotiations with the city about the construction of the proposed Yale-New Haven Hospital Cancer Center.
“We remain open to the idea of voluntary payments,” Petrini said. “But we think that the most significant impact, in addition to voluntary payments, is the approval of the cancer center.”
Petrini said the hospital has estimated that the city would receive $3.5 to $4 million in payments from the state due to the construction of the center through the Payments in Lieu of Taxes (Pilot) program.
The city had already been discussing voluntary payments with the hospital before the agreement was reached with Yale, DeStefano Deputy Chief of Staff Rob Smuts ’01 said. Smuts said the city’s negotiations with Yale-New Haven faltered after the hospital rejected the formula the city used to calculate Yale’s payment.
Smuts also said the Hospital of St. Raphael, located in the Hill neighborhood, had agreed to begin voluntary payments, but that the agreement was contingent upon Yale-New Haven making similar payments.
Some have questioned whether the tax-exempt status of two of New Haven’s major corporations — the University and the hospital — creates a de facto obligation for nonprofits to make voluntary contributions to the city. But Associate Vice President for New Haven and State Affairs Michael Morand said the choice should ultimately be up to each corporation.
“The nature of voluntary payments [is] that they are voluntary,” Morand said.
Ward 14 Alderman Joe Jolly, chair of the Board’s Finance Committee, said the city’s budget will likely be tight this year. He said the city may have to leave some city jobs unfilled or reconsider the budgets of companies such as Tweed-New Haven Airport and groups including Market New Haven, which promotes the city to visitors and businesses. Jolly said both actions would have negative ramifications for the city.
“The annual disappointment is the state underfunds us on the Pilot by about 20 percent … so we never sort of can break even with our current tax rate,” he said. “We’re either going to need to raise taxes or cut spending.”
Jolly acknowledged the hospital’s failure to reach an agreement similar to Yale’s with the city might stem from Yale-New Haven’s displeasure with the delay in city approval of the cancer center, but nevertheless said he hoped the hospital would be willing to work out an agreement with the city.
“Yale has actually set a very good example for other non-profits in the city,” he said.
Representatives from St. Raphael were unavailable for comment Thursday.
Goldfield said aldermen will be meeting with state legislators from New Haven this morning to discuss ways to convince the state to allocate more funds to municipalities.