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The Efforts to Tax Nonprofits Stink

by Jennifer Gray

OPPOSE EFFORTS TO TAX NONPROFITS 

Baby Skunk in Grass by Christa Gampp/CC BY

Sadly, the Governor has not given us a bouquet of spring flowers with the release of his bill, LD 1521 (MANP opposes). This bill is one of the two big bills attempting to charge nonprofits service charges that are really connected to property value and exempt status.

LD 1521, An Act to Amend the Property Tax Laws

  • LD 1521 is an attack on nonprofit property owners. Part B allows municipalities to impose new taxes labeled “service charges” on nonprofit property owners with property valuation in excess of $10 million.
  • The service charges allowed in LD 1521 are not true service charges; they are taxes because they are linked to the property’s assessed value and tax-exempt status. True service charges are based on actual services, with calculable costs, that apply to all users such as water and sewer districts.

TAKE ACTION

  • The public hearing has been scheduled for Tuesday, May 9 at 2p. before the Taxation Committee and the work session has been scheduled for  Thursday, May 11 at 1p.
  • Please contact members of the Taxation Committee about these bills and also write a letter to the editor to your local paper.
  • Our new Framing Toolkit provides some LTE templates that could be tweaked to add a few lines about the bill.
  • Please let me know if you plan to attend the hearing or have taken other advocacy action!
  • There’s a large land trust component (Part C) to this bill that we’ll be addressing in a manner consistent with the previous bills that impacted land trusts (strongly oppose).

KEY MESSAGES FOR YOUR ADVOCACY

Nonprofits are good for Maine.                             

  • We provide benefits and services that citizens expect of, or would like from, their government.
  • Nonprofits serve primarily the communities in which they are located. They are among the primary economic engines of many communities. Nonprofits make our communities more desirable places to live and raise a family.
  • Nonprofits work hand in hand with municipalities to offer services to their communities. As government at all levels has faced fiscal challenges, municipalities have been looking to nonprofits more than ever to help provide essential services.

Nonprofits work for Maine.

  • While 75% of Maine’s nonprofits are “small” with annual revenues under $100,000, they employ one in six Maine workers.
  • Additionally, Maine nonprofits contribute approximately $11 billion dollars per year to the economy through wages paid, retail and wholesale purchases and professional service contracts.
  • This group of vibrant nonprofit organizations invests significant financial and organizational resources in their communities and mobilizes over 345,000 volunteers annually – volunteers who donate almost $935 million in time and resources to their communities.

Proposals aimed at undercutting the sector’s property tax exemption threatens our work–the services nonprofits provide and the jobs of the people who provide them.

  • LD 1521 is an attack on nonprofits’ property tax exemption.
  • If passed, it would significantly impact nonprofits’ ability to serve their community.
  • No net gain for the community would be achieved – it would be a cost shift.
  • Taxing nonprofits is a redundant exercise –it’s taxing one public service to pay for another.

Service charges should be based on actual services, with calculable costs, that apply to all users.

  • LD 1521 addresses service charges but it’s really addressing property taxes as it focuses on the assessed value of the property and the property’s exempt status.
  • It’s a false correlation that higher valued properties use more services.
  • Examples of real service charges include water and sewer districts.

Many nonprofits are already paying voluntary payments in lieu of taxes (PILOTS).

  • Such payments are generally intended to address such costs as safety, waste removal and city maintenance.
  • The annual discussion of these PILOTS between nonprofits and municipalities encourages direct and open communication and understanding about the services provided by both parties.

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