Some nonprofits should ante up to aid Baltimore
By William R. Brody Originally published in The Baltimore Sun
Thursday, June 07, 2001 Baltimore city faces a serious budget problem and needs to fix it. Understood. But the city should approach this problem as a physician approaches a sick patient: First, do no harm. Mayor Martin O'Malley's proposed energy tax on nonprofit organizations would do considerable harm. As a society, we generally exempt nonprofits from taxation so that they can devote their limited resources to the good works they perform for all of us, and especially for those most in need. Reversing that policy now and taxing nonprofits would have a direct impact on their ability to feed the hungry, shelter the homeless, heal the sick, educate the illiterate, train the unemployed and minister to those in spiritual crisis. Such a tax is simply bad public policy. Further, a tax on nonprofits would stifle what is now the fastest-growing sector of the Baltimore economy and a major source of jobs and future economic growth. Still, the mayor does face a serious problem. He has indicated in conversations with leaders of the Johns Hopkins Institutions that the shortfall amounts to $16 million over the next three years. He has said he needs what he has referred to as "bridge" financing to enable him to continue to revitalize the city and restore it to fiscal heath. I believe that Johns Hopkins and the city's other nonprofits can and should respond to the mayor's call for assistance. We have indicated to the mayor repeatedly that, while we oppose taxation of nonprofits on principle, we are willing to work with him on other ways of addressing the problem. The time has come for Johns Hopkins, at least, to bring these discussions into the open and to make a concrete proposal. We propose that the city's nonprofits voluntarily contribute to the city budget a maximum of $4 million in fiscal year 2002, which begins July 1, and $6 million in each of the following two years, minus any windfall revenues that were not anticipated in the mayor's originally proposed budget, such as the recently discovered misdirected state payment to Anne Arundel County. Based on what would have been raised by an 8 percent energy tax on nonprofits, we would expect that all of the Johns Hopkins organizations in Baltimore together would pay about one-third of the total voluntary payment. This payment would be in addition to the more than the $6.3 million in parking taxes, property taxes, license fees, permit and construction fees that the Johns Hopkins Institutions already pay and to the additional property tax we also pay indirectly on leased space in the city. It would also be in addition to the millions of dollars Johns Hopkins contributes to the Baltimore community annually in the form of job training, health care services, support of community programs and other services. We believe that other major nonprofits will and should step forward to support this proposal. They understand that, under Mayor O'Malley's bold and creative leadership, the city has begun to move toward social and economic vitality. Together, we can help Baltimore resolve its short-term budget crisis without enacting a tax that would threaten the health of the city's nonprofit sector for years to come. _____________________________
William R. Brody is president of the Johns Hopkins University.
Copyright © 2001 The Baltimore Sun
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