Officials representing hospitals, private colleges and other nonprofit organizations told lawmakers on Thursday that a proposal that would require them to pay property taxes to municipalities would devastate their budgets, forcing them to hike costs or slash programs.
Republican Gov. Paul LePage, in his more than $6 billion budget plan, is proposing to allow cities and towns to collect taxes from nonprofits that have properties with at least $500,000 of assessed value. It's designed to help municipalities grapple with the potential loss of revenue sharing, but the Maine Municipal Association has said that most cities and towns don't have large nonprofits that would qualify.
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A lobbyist for the Maine Hospital Association, Jeff Austin, said that the measure likely would cost the state's hospitals between $10 million and $20 million a year. Hospitals are already running on thin operating margins and would be forced to pass those costs on to patients, he said.
"We would have to turn to our customers," he told the Appropriations Committee. "Our customers just happen to be sick people."
LePage says that nonprofit organizations use municipal services like police officers and firefighters and need to pay their fair share. But nonprofits counter that allowing them to be tax exempt lets them provide low-cost and free services to the community.
Husson University provost Lynne Coy-Ogan said that making private colleges pay taxes would force them to hike tuition costs, making education less accessible.
"In an aging state that needs an influx of educated workers, it is completely counterintuitive to tax nonprofits, especially colleges," she said.