Faced with budget gaps, and the need for investment in our community, public sector leadership in Muncie should be looking to PILOT fees from religious institutions, universities, medical centers, fitness facilities, and other tax-exempt nonprofits for help with community investment.
Payments in lieu of taxes (PILOTs) are voluntary payments that tax-exempt nonprofits make to local governments to offset property taxes. PILOTs help to fund the municipal services the nonprofit consumes, including police and fire protection, snow plowing, waste management, roads and public works.
Depending on who you ask in Muncie, the percentage of land owned by non-profits has grown to over 50% of existing property. That is extraordinarily high for a community, and contributes to the high tax rates for other citizens and businesses located throughout Muncie. It’s time to share the cost of operating our local government.
The initial response from citizens and non-profit management is they provide valuable services which saves community dollars. In some cases, this is true, and they should be protected.
However, why are fitness facilities like the YMCA tax exempt? Congress was very specific with their tax exemption policies, and there is no reason we should subsidize health club memberships for those citizens who can afford the dues. There is a small percentage, usually less than 10%, which is charity and could remain exempt. The rest of their business is buying fitness equipment and charging members to use that equipment – it is not a function of charity.
Our medical centers provide valuable services to our community by serving the indigent population, but they operate just like a for profit business, and administrative salaries are more than competitive. They are also a large consumer of government services and their employees use public roads.
In a recent neighbor association meeting, many citizens expressed that their specific neighborhoods have been ignored. Parks and roads have received little attention for decades. Abandoned buildings litter our landscape and need removed, but money is a scarce so improvements are slow. Crime has escalated in all areas of the community. Limited funding to the police department prevents increasing the number of patrol cars out on the streets. Criminals are aware that their negative behavior is likely not to be captured by MPD.
Yet, while this is occurring, our large regional medical center has expanded.
Nobody can argue with the growth of Ball State University and its meaning to this community, but their investment literally ends at their borders. Many of their on-campus building expansions have added food and recreation services which compete directly with local businesses. During the expansion, we’ve also seen our Village area decline. While most campuses add to the downtown culture, Ball State has been reluctant to leave campus. Imagine the possibilities if Worthen Arena would have been placed in downtown Muncie versus the north side of campus.
There are some great ideas to move this community forward, but we lack the funding to make it happen. We’d like to see a committee formed between municipal and non-profit leaders, since both sectors serve the public and have an interest in an economically and fiscally healthy community. This should be done in an open and transparent manner for the general public to witness.
There are many models to choose from – according to a survey by the Lincoln Institute, they found that PILOT programs have been used in 117 municipalities and 18 states since 2000.