Saturday, January 1, 2011

Crumbling Infrastructure Turns Nonprofits On Their Heads

According to Ianthe Jeanne Dugan's article in the 12/27/10 Wall Street Journal, cities and localities nationwide are drastically altering the relationship between government and non-profits such as churches, schools and charitable organizations.

Infrastructure in our cities, states and localities has been allowed to fester to the point of threatening life and limb. Now voters and city governments are going after the non-profits with the theory that "nonprofits are property owners; therefore they should be taxed." This smacks in the face of:

[T]he longstanding tax exemptions mandated by state law or adopted on the theory that churches, schools and charitable organizations work alongside governments to provide services to the community.

In Houston, taxpayers voted 50.9% in favor of a petition drive called "Proposition 1" which approved a measure to allow "drainage fees" to be assessed against non-profits, among other entities.

"We'll defeat this," says David Welch, of the Houston Area Pastor's Council, who plans to lobby state legislators in January. "This is really a tax. It is the first time that churches would not be exempt from property taxes."

At a group called the National Council of Nonprofits, Tim Delaney, chief executive, says, "Governments are taking their public burdens and putting them on the backs of nonprofits, at a time when the demand for our services is skyrocketing."

Other cities nationwide are slapping fees on nonprofits to contribute to city services:

Albany, N.Y., recently passed an ordinance asking schools, hospitals and other nonprofits to contribute to city services. In Minneapolis, residents recently began paying a street-light fee that also applies to nonprofits, which in some places pay fees for elevator safety and fire inspection.

In Houston, the shock at the result of the vote on Proposition 1 was palpable:

The outcome came as a jolt to Greg Meyes, president of the board of the Houston Independent School District, which includes 300 schools. Mr. Meyers says schools will have to lay off 50 to 70 teachers or raise taxes to pay their share--$3 million to $4 million per year.

I've worked for several nonprofits and they were hit very hard by the recent economic downturn. More people than ever are utilizing their services, including those considered middle-class by government statistical standards, those who've lost their jobs and/or their homes or even those who are still working but can't make ends meet.

At a time when voters seem of two minds about taxation, whether tax cuts all the way up the line contribute to the well-being of the nation, or that taxes are so necessary to keep cities from going down the drain, whither go taxes for education?

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