A Palladium-Item article with no by-line that I could see reported on an event with the six candidates for the three at-large Richmond Council seats. I was interested to note that I am acquainted with two of the candidates: Chris Hardie and Misty Hollis.
If I still lived in Richmond and had a vote to give, Chris would easily get my vote. He’s the kind of fresh energy that Richmond needs. The city needs something. In the 20 years since I moved away, the city feels like it’s gotten tired. Things have an air of “deferred maintenance” about them. Chris is a small business man with a strong sense of civic involvement. I’ve gotten to know him through his online activity and then in person at a conference or two.
Anyway, enough of the campaign plug. (But, since I mentioned her, my contacts with Misty suggest that she’s diligent, smart, pleasant and would make a dedicated public servant — I just know more about Chris and his ideas.)
The article spends a lot of time talking about the idea of payment in lieu of taxes for some or all non-profits. My knowledge of the issue is cursory – but, generally speaking, when the IRS designates an entity as a non-profit, this not only hurts the federal government’s revenues, it also deprives local government of property tax revenues (assuming, of course, the property would be used productively in the absence of the tax exemption.)
The problem, I think, is that some non-profits are engaged in activities that look fairly lucrative — universities and hospitals come to mind. But, others would simply go under if they had to pay property taxes: a lot of do gooder agencies are pretty much held together by spit and bailing wire. And, even if government officials think maybe they’re losing money by not getting the property taxes; they’d probably lose more if they had to perform the services of those do-gooder agencies directly. (Although there is a political subtext that some lawmakers would be just as happy if some of these services to the poor were not provided at all.)
The article concludes with a couple of “yes/no” questions that don’t serve the reader or potential voter too well. “Will you comply with open records and open meeting laws?” Not surprisingly, everyone said, “yes.” Even if a candidate intended to flout those laws in some fashion, which one is going to be stupid enough to say “no?”
(Although there is a political subtext that some lawmakers would be just as happy if some of these services to the poor were not provided at all.)
God forbid that townships try to do more “poor relief” than they’re already doing. Townships need to be abolished, and poor relief needs to be performed by the non-profit sector.
I do feel for municipalities in poor areas, especially African-American ones, where pretty much every storefront is filled with a non-profit of some sort, many times churches. Where is the taxable base? Combine that with people who really have no taxable incomes (so a LOIT is not a solution), as well as a state that doesn’t share sales tax revenue, and how can you fund a municipality?
I really think that the city form of government is not viable in tax capped Indiana. I think long term, a city like Gary is going to go bankrupt and revert to unincorporated Lake County. That’s all the service that they can afford (and it will be a massive subsidy from other areas into Gary). I would imagine that other poor cities in other parts of the state will be right on their heels.
I’m confused by this article. Can a city-council require not-for-profit entities to pay real estate taxes? I thought that the state deferred to the IRS determination, and statutorily made these organizations exempt.
My understanding is that PILOTs are voluntary (or, in some cases, “voluntary.”) Municipalities can’t require payment of real estate taxes. These are payments “in lieu of” taxes. Some non-profits see it as a way to ensure good relations with the government. Some feel like if they don’t go along with a PILOT program, the municipality will retaliate in some unspecified way — through zoning or permits or whatever. Probably there could be increased agitation to ask, for example, the Department of Local Government Finance, for a determination that some or all of the non-profit’s real estate is not being used for an exempt purpose and, therefore, some taxes are due.
I’m certainly not an expert though.
I will likely be crucified on the Court House square for this, but all entities that are consumers should pay for what they consume: police protection, fire service, infrastructure, etc. Any nongovernmental organization should be subject to fair share support through the mechanism all others are subject to, and here in Hoosierland that’s property tax. The only possible exception I could see is an actual worship area, but, it’s easier to have NO exceptions.
NPOs should be on the rolls along with everyone else, and the gamesmanship of PILOTs and user fees would be eliminated. Equity is insured, and the base is spread, perhaps reducing rates across the board.
This should extend to sales tax exemptions also.
Our whole tax system is unwieldy at present and needs simplified. And, puh-leeze, nobody trot out the tired horse of an argument that churches/NPOs pay their way in intangibles. Whinny!
Doug:
I’m no expert on the topic of nonprofit entities and taxes, but as an FYI, you should know there is one person in particular in the Richmond area who has latched onto the issue like a dog with a bone. He’s made several posts about nonprofits and the PILOT program in the Palladium-Item comments. He also seems particularly fixated on Earlham College for some reason. Perhaps he has some feeling that Earlham is draining resources from the community without giving anything back. I could be wrong about that, but given some of the conspiratorial nonsense I have heard about Earlham over the years, I would not be surprised. I should be fair, though: unlike many of the other regulars on the Palladium-Item website, the person who has promoted the PILOT program seems to be a reasonable fellow on most other issues.
As for the election, I think Chris Hardie would make a good coucilman, but he may be in for a rude awakening if he is elected. I think he will find it very difficult to work with the established political players in town.