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Hartford — The House of Representatives passed an amended bill Saturday that would require nonprofit colleges and hospitals that purchase taxable property on or after July 1 to pay taxes on that property.
House Speaker Brendan Sharkey, D-Hamden, had initially proposed a bill that would have allowed municipalities to tax nonprofit colleges and hospitals. But the bill was amended to only allow municipalities to tax nonprofits for the property or land they purchased on or after July 1, 2014, and then only if that land or property was subject to property taxes on the Oct. 1, 2013, grand list.
Amended House Bill 5583 passed 94-45 along party lines and will be sent to the Senate for a possible vote.
Currently, the state provides a Payment in Lieu of Taxes to communities that host nonprofit colleges and hospitals but pays them about 32 percent of the amount that could be taxed as opposed to 77 percent, as is required by state law.
Many nonprofits had opposed the earlier bill, coined “reverse PILOT,” saying they wouldn’t be able to provide as many community services if they had to pay property taxes. Proponents of Sharkey’s initial bill said these nonprofits use local government services such as fire and police and therefore should have to pay property taxes.
Cities such as New London, where about half the properties is tax-exempt, would have benefited greatly from Sharkey’s initial bill.
“The critical need for property tax relief is one of the most important issues facing Connecticut’s families,” Sharkey said. “This bill will prevent an increase in property taxes paid by hard-working families, caused by colleges and hospitals removing single family homes and other taxable properties from the tax rolls of our communities. This bill is the necessary first step towards comprehensive tax relief — a conversation that I am confident we will continue next year.”
Several legislators said they were concerned that if the bill passed, it would discourage nonprofits from expanding their industries.
“We may be worried about revenues on our grand list and property taxes,” said state Rep. Dan Carter, R-Bethel. “But I think it could create a real hardship on these institutions and give them something to think about when expanding.”