Strapped Cities Hit Nonprofits With Fees

 

Facing budget gaps and an aversion to new debt and taxes, states and local governments are slapping residents with an array of new fees—and some are applying them to nonprofits. That marks a sharp departure from long-standing 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.

 

- The issue is on display in Houston, where some flood-prone roads are in such disrepair that signs warn drivers, "Turn around, don't drown." Houston's taxpayers in November narrowly voted to adopt a "drainage fee" to raise at least $125 million a year toward the cost of improving roads and storm-water systems. The city will charge fees to property owners, and it won't grant exceptions to churches, schools and charities.

 

- "Everyone who contributes to drainage issues has to share in the cost of correcting those issues." A number of groups—including schools, businesses, churches and senior citizens—are demanding exemptions. "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," he says. Some opponents have filed suit claiming the ballot wording was misleading.

 

- 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."

 

- Some cities are charging religious groups property taxes on buildings no longer used for worship. Other localities are soliciting voluntary contributions. 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.

 

- Such fees are emerging now because the federal government has been cracking down on how cities handle the rain that rolls off roofs, parking lots, and other impervious surfaces, sometimes causing floods and ripping up roads. The runoff can collect debris, oil and other pollutants and ultimately drag it all into the nation's waterways.

 

- As municipalities try to bridge budget gaps with fees that also hit nonprofits, some residents are kicking up a storm. Chicago and Dade City, Fla., scrapped proposals for drainage fees after protests from these groups. Cleveland suspended its proposal after community groups and businesses sued. In Arnold, Mo., a similar suit was filed in October. Residents of Mobile, Ala., rejected a referendum that would have imposed a drainage fee.

 

- The outcome came as a jolt to Greg Meyers, 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 a year. "One taxing entity taxing another is mind-numbing," Mr. Meyers says. The board intends to lobby for a new state law.

 

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http://online.wsj.com/article/SB10001424052748703548604576038080723678202.html

I don't particularly have a problem with restricting certain tax exemptions of nonprofits

 

...but it's 2am and I have to hit the gym in 6 hours so I'll just leave it at that.