Problem bigger than Norwich’s nonprofit tax gambit

D esperate cities do desperate things, apparently. How else to explain the decision by Norwich Tax Assessor Donna Ralston to deny tax-exempt status to about three dozen organizations in the city that heretofore had avoided property taxes because of their nonprofit status.

Norwich is facing some hard times when it comes to budgets and taxation. A budget now under consideration would push the tax rate past 50 mills in the downtown and surrounding neighborhoods, where property owners face a substantial extra tax to pay for the paid fire service in addition to the regular citywide tax.

Meanwhile, Norwich’s public school system is confronting a projected deficit of $1.5 million or more for the fiscal year that ends June 30, citing in particular a spike in the number of special education students and cuts in state aid to help pay for them. The Board of Education has warned the City Council it cannot operate the schools on the small spending increase proposed by the city manager.

Finding more tax revenue without a corresponding increase in taxes would have to help.

Yet both City Manager John Salomone and Mayor Peter Nystrom said they take a hands-off approach, leaving assessment to the assessor, though Nystrom has previously noted a need to make sure all property owners are treated fairly and only receive the tax exemptions they appropriately deserve.

In an interview with Day Staff Writer Claire Bessette, however, Ralston said the burden taxpayers in the city face did enter into her decision to take a tough line on imposing the assessments. She scrutinized the nonprofit applications with an eye toward boosting the tax base.

“I’m trying to be fair to the people who pay taxes,” Ralston told the reporter.

But she overreached and, in doing so, is acting unfairly toward many of the nonprofits.

Ralston is certainly right to consider some gray areas. Are apartments leased by a nonprofit, but not directly tied to its mission, still exempt if the revenue supports the group’s mission? Perhaps not, as Ralston ruled. Should unused land held by a nonprofit escape taxation? We’d say no and so did the assessor.

However utilizing technicalities — assessing taxes on human service agencies because they failed to file required paperwork in a timely fashion — is a bad move. Also, some of the assessor’s conclusions that agencies do not qualify for exemptions seem highly suspect.

Assessing taxes on Reliance Health, which for 40 years has provided help to people with mental health issues, or Bethsaida Community Inc., which provides housing and support services to homeless women, or United Community and Family Services just seems wrong.

It appears it will take a judge to sort out the matter.

This creative assessing is driven by a problem that goes well beyond Norwich. The state’s cities are the centers for human services, for hospitals, for much of our public housing and government buildings. Densely populated, many with large percentages of people with lower incomes, they need more police fire and other services than their neighbors.

Yet they don’t have the property tax bases to pay for these services, in large measure because the agencies and institutions that serve the regions around the cities are exempt from property taxation.

It is why in large measure that Hartford needs a state bailout and why an ad hoc committee will report to the New London City Council Monday on ideas for finding new revenue sources.

It is a broken system. The burden of providing and paying for services should be expanded regionally. State aid to compensate for taxes lost to nonprofits must be restored. Who qualifies for tax exemptions needs a statewide, not city-by-city review.

We’re having a state election this year. Maybe we’ll hear some ideas.

It is a broken system. The burden of providing and paying for services should be expanded regionally. State aid to compensate for taxes lost to nonprofits must be restored.