In the latest news in the battle for arts funding in the US, the city of Boston is now asking their cultural institutions to cough it up in the new year. The Art Newspaper reported yesterday that the Boston Mayor Thomas Menino has greatly increased payments under his Payment in Lieu of Taxes scheme (also known as PILOT) that asks nonprofit organizations, including art museums, which are tax-exempt under law, to make “voluntary” contributions to city services such as the fire and police department.
The Boston Mayor is now requesting that museums and other nonprofits that own property that is worth more than $15 million to pay 25% of what they would have to pay if they were charged the city’s commercial tax. While these payments are technically voluntary, The Art Newspaper notes that, “to say ‘no’ would risk the good working relationship that many of these not-for-profits have with the city of Boston.”
So far the Museum of Fine Art, Boston’s largest and most comprehensive cultural institution, has been the only museum to speak out against the increase in payments. The MFA is getting slapped with a $250,000 PILOT fee, up from the $46,000 to $65,000 the museum usually pays the city per year. The city also plans to quadruple the bill to over $1 million by 2016. Meanwhile, the Institute for Contemporary Art in Boston is now expected to make PILOT payments of $17,000 this year, which will increase to $86,000 by 2016.
In a plea for Boston to find other sources of revenue rather tan tax valuable cultural institutions and programs, the director of the MFA, Malcolm Rogers wrote in The Art Newspaper:
When civic leaders look to cultural organisations as a source of revenue, rather than as an invaluable resource for the communities they serve, it has dire implications nationwide …
While Boston’s nonprofit organizations have complied with PILOT payments for decades, contributing varying amounts to the city, Menino’s new revenue-raising plan treats nonprofits almost like ordinary tax payers by requiring they make regular payments based on property value. Imposing higher PILOT payments is one way Menino hopes to recover the decrease in state aid from Massachusetts, which has fallen from $428 million in 2002 to an estimated $223 million in 2012.
David L. Thompson, vice president of Public Policy at the National Council of Nonprofits, explained to Hyperallergic that the new PILOT initiative is basically, “A tax in everything but name.” He noted that normally PILOT payments are enacted for educational and medical institutions, especially when they offer to buy property that could remove real estate from the city’s tax rolls. What makes Boston’s situation different, Thompson emphasized, was the creation of a PILOT task force whose first rule of business was to lay the burden on cultural institutions as well so as to create a broader funding pool. “The task force has clearly chosen to ignore the economic impact museums have on the city,” Thompson said, referring to the important role museums play in attracting tourism and revenue to the city.
So far the case of museums and PILOT payments appears to be relatively unique to Boston, although Thompson notes that there have been rumblings of proposed PILOT plans in certain areas of New York state, such as the state capital of Albany. However, Danai Pointer, director of external affairs at the NYC Department of Cultural Affairs notes that New York’s nonprofits don’t pay the city and that New York is one of the largest funders of arts and culture in the country.