The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.
April 28 — The outlook is unclear for a measure that would make Connecticut the first state to tax the academic property of nonprofit colleges and universities by revoking the tax-exempt status of certain parcels of land owned by Yale University.
Consideration of the controversial measure may be set aside as Connecticut lawmakers turn their attention to passing a budget package that makes significant cuts and structural readjustments and struggles to cover a projected deficit of over $900 million.
Democratic lawmakers said during a press briefing April 28 that they intend to have a balanced-budget bill pass before the General Assembly adjourns May 4.
It is unclear whether lawmakers will have time to consider passage of the so-called Yale bill while attempting to finalize a budget and move forward a number of other pending measures before that mandated adjournment date.
Regarding the outlook for the Yale measure, Finance Committee Co-Chair Rep. Jeffrey Berger (D) told Bloomberg BNA April 28 that the legislation “is quite contentious” and noted it would have to proceed through both chambers and could be expected to “consume a considerable amount of time” during a period when lawmakers will be focused on other issues.
Berger also said “it is not a mechanism for tax that I agree with,” as he opposes singling out Yale through a special action to tax property that wasn't previously taxed.
A pair of proposals that would have taxed Yale's endowment and revoked the tax-exempt parcels of land at the New Haven university were introduced earlier in the legislative session. However, only the bill that would revoke the tax-exempt status of certain property was reported out by the Joint Committee on Finance before a legislative deadline (2016 Weekly State Tax Report 27, 4/22/16).
A fiscal note on the bill projected that the revenue generated for the municipalities where the property is located could be “significant.”
At a press conference in New Haven April 27, officials from Yale as well as statewide business and community representatives spoke out against the measure, which they said would stifle economic development by imposing tax burdens on Yale unlike those faced by any other university in the nation.
The university said the bill would tax the academic property in which basic scientific research occurs if any companies beyond campus are later formed based on that research.
Yale has expressed disappointment that the measure was reported out of committee. The university noted in an April 21 e-mail to Bloomberg BNA that it already makes a voluntary payment to New Haven of more than $8.2 million, as well as contributions to other communities. And, the school said, it already pays property taxes on its commercial properties, and it paid $4.5 million in property taxes on commercial space in 2015.
The school also said its academic property isn't taxable, as set out in Yale's charter, a legally binding contract between the state and Yale.
A university spokesman told the finance panel that the measure is unconstitutional and if it were enacted, Yale would be forced to “defend its constitutional right of non-taxation.”
To contact the reporter on this story: Martha Kessler in Boston at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.com
The text of the bill is at http://src.bna.com/ewb.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)