'Bed tax' punishes city's nonprofits

Don't balance Baltimore's budget on backs on those who pick up government agencies' slack

May 05, 2010|By Janice Frey-Angel and Darryl A. Jones Sr.

Nonprofit organizations in Baltimore are committed to supporting the people, communities and quality of life here. As a group, they hope for opportunities to work with city officials to resolve the city's fiscal problems in a constructive way. These problems are the result of a severe national recession and policies that are allowing the deterioration of important services across the state.

Baltimore City has lost more than $60 million from the statutory levels of state aid for the coming year. Nonprofit service providers and institutions have also suffered severe cutbacks of state funding, and many critical services are jeopardized. Worse, these budget problems are projected to continue. We hope to work in Annapolis with Baltimore and other local jurisdictions to balance these and future funding cuts with the adoption of adequate state revenue measures to meet the needs of people and communities across Maryland.

That said, measures such as the "bed tax" proposed in Baltimore's fiscal 2011 budget are not part of a constructive solution.

From soup kitchens and homeless shelters to churches, group homes, community service agencies, schools, colleges and hospitals, nonprofits are private providers of essential public services. Far from acting as a drain on the public treasury, nonprofits relieve taxpayers of a tremendous burden and do so with the creative energy and efficiency of the private sector. They pay millions each year in taxes and user fees to Baltimore both directly, through energy and communications taxes and levies such as the parking tax, and indirectly through property taxes on their leased space and the local income taxes paid by their employees.

Nonprofit groups and institutions make critical contributions to the city's economy that include: creating 33 percent of all private employment; drawing tourists and visitors; providing the academic and research infrastructure to support economic development; and supporting merchants and businesses throughout the city with billions in payroll and related spending on goods and services.

Unlike for-profit businesses — run for the benefit of private, often out-of-town owners or investors — the assets and property of charities, schools and other nonprofit institutions are essentially held in trust for the public and represent invaluable, permanent investments in Baltimore's future.

There is a common but false public impression that tax-exempt nonprofits represent one-third of the city's tax base. In fact, the value of all church and nonprofit exempt properties, including hospitals and colleges, is less than just the value of untaxed state-owned property in Baltimore, and city-owned exempt property exceeds the amount owned by the state. All religious and nonprofit property amounts to less than one-third of exempt property, not one-third of the assessable base.

With hundreds of members in Baltimore City, the Maryland Association of Nonprofit Organizations understands that the city government is under extreme financial pressures. But nonprofit service providers and institutions must exist in the same economy. Foundation, corporate, government and other support has been seriously reduced by the recession, while the need and demand for services has grown. Many organizations have already lost funding, cut costs, furloughed or reduced staff and even cut into services.

Efforts to solve a city deficit by drawing off even more of their resources would simply cut further into nonprofits' ability to support people and communities in need.

Janice Frey-Angel (jfrey-angel@melwood.org) is president/CEO of Melwood and vice-president and public policy committee chair for the Maryland Association of Nonprofit Organizations. Darryl A. Jones Sr. (djones@mdnonprofit.org) is CEO of the Maryland Association of Nonprofit Organizations.

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