FINANCIAL MANAGEMENT/New revenue sources
Like so many cities across the nation, Binghamton, N.Y., is facing a number of financial hurdles, many of which — if left unchecked — have the potential to drastically affect its ability to deliver essential services. The city has worked aggressively over the years to reduce expenses and streamline government operations to minimize the size of tax increases. However, increasing costs in key areas and declining revenues are severely limiting its options.
To generate a new form of revenue, the city created a Fair Share Program in 2003. The program asks non-profit and tax-exempt organizations to consider the comprehensive array of basic services they receive from the city and make a financial contribution to sustain their upkeep. The organizations are asked to voluntarily donate 50 percent of what they would pay in taxes if listed on the tax rolls and to budget similar donations for subsequent years.
Currently, more than 42 percent of Binghamton is partially or fully tax-exempt. The city estimates it could collect an additional $2 million in revenue if every non-profit made a 50 percent tax donation. The money would be used to offset possible future tax increases and to maintain the highest levels of police, fire and public works services.
Since the creation of the Fair Share Program, the city has received approximately $20,000 in voluntary donations, and it continues to negotiate with multiple non-profits to encourage their participation. Besides raising money, the program has generated a significant amount of awareness about the city’s financial vulnerability.
For example, each year Binghamton pays stipends to a variety of non-profits to use their property for public events. Many organizations that cannot currently participate in the Fair Share Program have begun to return the stipends as a measure of good faith in acknowledgment of the program and recognition of the financial challenges that the city faces.
Since the implementation of the Fair Share Program, Binghamton also has received dozens of inquiries from local governments across New York, including Rochester, Utica, Rome and Oneida County, that all plan to implement similar initiatives in their communities. Across the country, similar types of programs are gaining momentum. In Philadelphia, 50 major non-profit groups, mainly hospitals and universities, have agreed to pay 40 percent of what their property tax would be if they were not exempted.
In Colorado, voters are deciding if the state should force churches and most non-profit organizations to pay property taxes, which would generate up to $100 million. In Maine, a state commission proposed allowing cities to charge fees to most non-profits.
The time is approaching when many cities, including Binghamton, will have nothing left to cut from their budgets without affecting vital services. The increasing financial pressures are a common thread for communities of all sizes and populations and are one of the primary reasons why the Fair Share Program has spread so quickly. It is critical that non-profits take a serious look at the concept and carefully evaluate how they can participate, because the future vitality of cities across the nation is at stake.
The author is mayor of Binghamton, N.Y.