House Speaker Brendan Sharkey, D-Hamden, is hoping the second time’s the charm for his signature legislation, which allows municipalities to continue to tax any new property acquired by tax-exempt hospitals and colleges.
Similar legislation died last year in the state Senate following a well-publicized dispute between Sharkey and then-Senate President Donald Williams.
Sharkey said he likes his chances for the legislation this year, even though it differs slightly from a bill introduced by Senate President Martin Looney, D-New Haven.
“The change of leadership in the Senate portends a more positive response,” Sharkey said Tuesday following a public hearing on several proposals impacting municipalities.
But he will still face opposition from colleges and hospitals that have built their budgets around tax-exempt status.
Augusta Mueller, community benefits manager for Yale New Haven Health System, said the legislation would “further destabilize Connecticut hospitals that have already felt the impact of several funding cuts.”
Last year, hospitals were removed from the legislation in an attempt to win greater support for the measure.
“We encourage the legislature to seek solutions that will not further destabilize Connecticut hospitals,” Mueller told the Planning and Development Committee on Tuesday. “We urge you to keep the current tax exemption and PILOT [Payment In Lieu of Taxes] funding structure in place.”
Judith Greiman, president of the Connecticut Conference of Independent Colleges, said the legislation would “impose a significant financial burden on these anchor institutions and will stifle innovation, research, and student support.”
She said the tax-exempt status of these colleges “is not a loophole.” She said it’s there because these institutions serve the public good.
But Sharkey maintains that if these colleges and universities or hospitals acquire new properties those properties should stay on the tax rolls.
“The premise of this is that most of the colleges and hospitals in the state of Connecticut today are nonprofit in name only,” Sharkey said. “These are major institutions with tens of millions of dollars in budgets. They’re paying, in many cases, high six and seven figure salaries to their executives. They operate in just about all respects the way any corporation would.”
Sharkey said the phenomenon is most evident with hospitals buying up physician practices and taking the property and equipment off the tax rolls.
“That’s a huge obligation being imposed on the other taxpayers in our towns and cities, which is not fair,” Sharkey said.
Sharkey also has offered another proposal to redistribute the state’s PILOT grant to cities and towns for non-taxable property.
Sharkey said his proposal would take all the non-taxable property in a city or town and rank it based on the percentage of non-taxable property and then tier them.
Those towns in the higher tier would get 40 percent of the PILOT grant and those in the second tier would get 33 percent and the third tier would get 24 percent.
Looney’s proposal is similar and calls for a “hold harmless” so that no town is receiving less than it is currently receiving from the state.
Senate Republican Leader Len Fasano, R-North Haven, said he hasn’t had a chance to go over Sharkey’s proposals, but he’s concerned about any proposal to redistribute PILOT funds. He said once the state gets involved in redistributing funds, those funds have a tendency to get swept up by the state.
“I have no great confidence our towns are ever going to see that money,” Fasano said.