In light of a controversial proposed state tax on Yale’s $25.6 billion endowment, the University has begun significant outreach to alumni and the general public alike with the aim of defeating the bill.
Vice President for New Haven and State Affairs and Campus Development Bruce Alexander ’65 wrote a Wednesday email to alumni living in Connecticut, voicing the University’s concerns about the bill and urging recipients to reach out to state legislators if they share similar worries. Alexander stressed that the General Assembly has overstepped its bounds on proposing two bills this legislative session targeting the University.
The first bill, S.B. 413, aims to tax unspent returns on university endowments of $10 billion or more, while S.B. 414 seeks to clarify which property taxes Yale pays on its nonacademic buildings. Though New Haven lawmakers, Senate President Martin Looney and Rep. Toni Walker have backed both bills, Gov. Dannel Malloy’s administration denounced the bill proposing an endowment tax earlier this week.
“My colleagues and I are confident these unprecedented proposals do not pass constitutional muster and we would challenge them vigorously if passed,” Alexander wrote in his email to state alumni. “It is ironic these attacks come at a time full of much positive news to share about our university: how it strengthens access, and how it strengthens its home community.”
A YaleNews press release from the Office of Public Affairs & Communications Thursday morning reiterated Alexander’s concerns to a broader audience of current Yale students, faculty and staff. Headlined “Yale opposes legislation to revoke its tax-exempt status,” the release reiterated the University’s consistent stance that the bills are unconstitutional and go against Yale’s right of non-taxation, established by its charter in 1701.
While Alexander’s office works to rally alumni against the bill, some former students said they doubt the bill will even pass the state legislature.
T. Wayne Downey ’57, who lives in Guilford, said alumni have maintained a sense of humor about the proposal, noting Florida Gov. Rick Scott’s March 29 invitation for Yale to relocate its campus to the Sunshine State.
Alumni living in Connecticut, however, expressed no clear consensus on the bill.
Milford resident Susan Beck ’75 said the proposal is preferable to other methods Malloy has used to try to balance the budget, such as cutting state funding for individuals with mental disabilities.
“So many of the other things [Malloy] wants to do are so unpalatable, and as usual, strike at the people who always come up on the short end of the stick,” Beck said.
But Downey said the bill was unnecessary, given the positive impact that Yale has on New Haven.
In his email, Alexander noted that Yale is one of the state’s largest employers and that New Haven was Connecticut’s only major city to see job growth from 2004 to 2014, with 7,000 new jobs created during that period.
Downey also referred to other, more intangible benefits that Yale provides to New Haven, like free art museums and music recitals that are open to the public.
Lisa Beth Savitz ’88, president of the Yale Alumni Association of Greenwich, said the legislation seems to misunderstand Yale’s commitment to New Haven and Connecticut. Like Downey, she said Yale’s presence has allowed for an economic revitalization in New Haven, adding that the University is also committed to ensuring that college is affordable for all qualified students.
“I just think it’s a very cynical political ploy by [Looney and Walker] to come up with this sort of a repressive proposition at this point in the history of our country, and at this point in Yale’s relations with New Haven, which I’ve thought have been generally … very good and continuing to get better,” Downey said.
Alexander also mentioned in his Wednesday email the current annual voluntary payment of over $8.5 million Yale has made to the city of New Haven, totaling over $96 million in the last 25 years.
Rep. Pat Dillon MPH ’98, D-New Haven, told the News she has not had a chance to look over the endowment tax bill closely, but voiced a preference for tax revenues on Yale to be directed to the city of New Haven rather than to the state at large. Dillon enthusiastically backed the other bill concerning Yale’s property taxes, however.
In 1990, Dillon spearheaded a similar bill reframing the University’s taxable properties. Though that bill did not pass, the legislation was instead used as leverage by the city government to force Yale into making the voluntary payments Alexander referenced, Dillon said.
During the bill’s public hearing in front of the state finance committee March 22, committee ranking member and Sen. Scott Frantz, R-Greenwich, questioned whether taxing Yale’s endowment would lead to a “chilling effect” on donors.
Testifying in front of the committee, Associate Vice President for Federal Relations Richard Jacob said a new law regulating the University’s management of gifts would lead Yale to be concerned about both the University’s fiscal stability and the views of its donors.
Most Connecticut-based alumni interviewed by the News, however, said the tax would have a negligible effect on how they gave to the University. Likewise, alumni still living in the Nutmeg State stressed that, tax or no tax, their engagement with Yale will remain the same.
“Those are all numbers that don’t have much to do with my feeling about Yale, and what I feel is my debt both emotional and financial to the organization,” Downey said.
At least six lawmakers currently in the General Assembly have graduated from either Yale College or one of the University’s professional or graduate schools. The state legislature also includes James Albis FES ’16, a Democratic representative from East Haven.
Correction, April 1: A previous version of this article used an unauthorized quote from Jenny Chavira ’89.