The word “nonprofit” generally is used to describe an organization that works to serve a public purpose, rather than to provide financial benefit to any particular individual, corporation or entity.
Nonprofits are granted an exemption from taxes when they have charitable, religious, educational or other purposes organized around a cause, mission or community need and work to serve the common good.
Here in Androscoggin County, such nonprofits include everything from the YMCA to Good Shepherd Food Bank, to New Beginnings, to Bates College and the two local hospitals.
Gov. Paul LePage’s recent budget proposal to levy property taxes on nonprofits would have a dramatic impact on the ability of tax-exempt nonprofits in Androscoggin County to meet the needs of those they serve.
In order to meet the requirements envisioned in the proposal, as currently described, it is highly likely that Androscoggin County nonprofits would have to curtail services, cut back on employees or their hours, sell property, or some combination of the three.
Our nine-member Non-Profit Coalition consists of: Androscoggin Home Care and Hospice, Bates College, Central Maine Healthcare/Central Maine Medical Center, DFD Russell Medical Centers, Good Shepherd Food Bank, John F. Murphy Homes, St. Mary’s Health System, Tri-County Mental Health Services and the YMCA of Lewiston-Auburn.
Cumulatively, it is estimated the proposed budget will impact the nine members of the coalition by more than $18.3 million. That number is even larger if you add in the other nonprofits in the community and region.
The property tax requirement will be particularly onerous on those nonprofits with large campuses or tracts of land held in trust for the community. Cumulatively, it is estimated this aspect of the budget proposal will impact most members of our coalition by more than $3.6 million.
Replacing the property tax requirement with a “service fee” would be just as harmful to the overall economic health of nonprofits. As with the property tax requirement, a “service fee” approach would also require such organizations to consider changes to services, cuts to employees or their hours, or the sale of property.
A variety of reimbursement changes envisioned as part of the budget add up to equally significant financial challenges for health care providers. Cumulatively, it is estimated that aspect of the proposal would impact most members of the coalition to almost $14.7 million.
Even though we are nonprofits, we are “givers,” not “takers.” We provide meals, medical care, mental health services, arts activities, day care services, scholarships, educational opportunities and athletic services.
We are economic drivers in the community. Between us, our nine organizations:
• Provide paychecks to 7,389 people;
• Generate payrolls of approximately $312.8 million annually;
• Send approximately $19 million annually to the state in the form of payroll taxes.
The $18.3 million impact of this proposal on our nine organizations is roughly equivalent to the salaries of 418 people we employ in this county. If all nonprofits in the community were added to the numbers of these nine, the impact would grow even larger.
According to the most recently available statistics from the state, roughly one in six jobs in Androscoggin County is tied to a nonprofit. Fewer employees in these organizations will necessarily result in fewer services provided to the residents of our county — at the food bank, in the shelters, in the hospitals, and wherever else the impact of those changes is felt.
We appreciate the governor’s interest in improving the overall well-being of residents in Maine. However, we believe that his shift in taxing emphasis is not fair, nor is his reference to nonprofits as “takers.”
Besides the services we “give” to residents of Androscoggin County, we create jobs, provide good paychecks and send payroll taxes to Augusta. We encourage the Legislature to find fair ways to adjust Maine’s tax structure without penalizing those organizations that serve the greater community in so many ways.
Peter Kowalski, CEO, John F. Murphy Homes, writing on behalf of the Androscoggin Non-Profit Coalition: Androscoggin Home Care and Hospice, Bates College, Central Maine Healthcare/Central Maine Medical Center, DFD Russell Health Centers, Good Shepherd Food Bank, St. Mary’s Health System, Tri-County Mental Health Services, and the YMCA of Auburn-Lewiston.
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