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Big nonprofits should pay their fair share to help meet St. Paul’s needs

MinnPost photo by Peter Callaghan
The city of St. Paul has set up a task force to examine the issue of nonprofits not paying property taxes, but the process has been flawed and exclusionary from the start.

As Mayor Chris Coleman and other civic leaders in St. Paul have correctly said, our city’s colleges, hospitals, and major nonprofits are vital and vibrant parts of St. Paul’s DNA. They make our city a better place to live. However, these institutions also contribute to an unnecessary budget crisis by not paying for the infrastructure in our city.

There is currently a $32 million hole in St. Paul’s budget for street maintenance, which it is scrambling to fill. St. Paul Public Schools (SPPS) are in a similar place. In March, SPPS announced a $23 million budget deficit – an event that has become an annual tradition. Each year we come up with a short-term bandage that gets us through to the next year, but continual budget cuts are taking their toll. We need our large nonprofit institutions to be good neighbors and pay their fair share.

Flawed, exclusionary process

The city of St. Paul has set up a task force to examine the issue of nonprofits not paying property taxes, but the process has been flawed and exclusionary from the start. The Citizen’s League claims to be a neutral arbiter, bringing together all major stakeholders. But the task force is not representative of the residents of St. Paul. Most striking is the lack of diversity on the committee. The board is made up of – to put it bluntly – nearly all white people. St. Paul is a city that celebrates its diversity, but you would not know that looking at the people on this committee.

Kirinda Anderson
Kirinda Anderson

The task force, whose charge it is to figure out how to fund essential city services, should represent the people who live in St. Paul. Almost half the members of the task force are from the very institutions that are not paying property taxes; most of the remainder are local business leaders. There is no doubt that these individuals have unique and valuable perspectives to offer, but let’s consider who is not on the task force. Public school teachers who have classes of 35 students are not represented on the committee. Neither are parents, whose kids may not have a nurse in their school because our district cannot afford it. Nor do our students, who are facing cuts to art and music programs, have a voice in this process. In fact, the opportunity for people who work in or are served by our public schools to have any input on the taskforce’s decisions seems to be rather limited.

Private colleges and hospitals

Nick Faber
Nick Faber

The organizations we believe should be paying their fair share are not neighborhood churches or soup kitchens. Private colleges and hospitals in St. Paul are very wealthy. Macalester College is sitting on an endowment of $750 million, while the University of St. Thomas has $120 million invested in hedge funds. In practice, there is little difference between these nonprofits, with their vast assets and lavishly paid executives, and the large corporations whose executives make up their boards of directors. For instance, in 2015 the CEO of Health Partners, which operates Regions Hospital, received $2.2 million in compensation. The CEO of Allina Health, which operates United Hospital, received $1.8 million in compensation, while its former CEO received $3.3 million that same year. They can afford to pay for the city services their institutions use.

St. Paul’s infrastructure needs investment, and we believe that our public schools are part of the DNA that makes our city great. With additional resources, we can make sure our schools provide the education that St. Paul kids deserve. SPPS could expand restorative practices to more schools, disrupting the school to prison pipeline; reduce class sizes; and continue to invest in proven efforts to build relationships between families and educators, such as Parent Teacher Home Visits.

We expect our large nonprofits to care about our city and their neighbors. This is a chance for them to prove they are invested in St. Paul’s future.

Nick Faber is president of the Saint Paul Federation of Teachers, and Kirinda Anderson is a parent of students at Wellstone Elementary School in St. Paul.

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Comments (10)

  1. Submitted by Emory David Dively on 07/10/2017 - 09:34 am.

    They do pay user fees

    My understanding in St. Paul, is that NPOs are exempt from property taxes, but not from User Fees. My understanding is that these User Fees are essentially the replacement for property taxes (and are only applicable to orgs that are exempt from property taxes) to fund roads, emergency response services, etc. I’d be interested in learning if the fee is smaller or if there is a nuance that I am missing.

  2. Submitted by Walker Angell on 07/10/2017 - 10:37 am.

    Or what if the people making decisions to use the infrastructure paid?

    https://streets.mn/2017/07/05/trump-infra-plan-needs-a-better-funding-source/

    What if people who work or attend classes at Macalester chose to ride a bicycle to work instead of driving a car that requires 17 times as much space to drive and park as a bicycle? Or if students at Wellstone Elementary and other schools throughout St Paul had safe protected bikeways to ride to school on instead of buses and parent’s cars?

    How many people in St Paul live within 2 or 5 miles of their job and could easily ride a comfortable upright Dutch city bike to work?

  3. Submitted by Michael Hess on 07/10/2017 - 02:35 pm.

    I question this

    “The task force, whose charge it is to figure out how to fund essential city services, should represent the people who live in St. Paul”.

    Really? The task force has been tasked with constructing a funding model that accommodates the high rate of non-taxable nonprofits in St. Paul. You need finance expertise, government experience, the nonprofits at the table….. you may end at a voluntary payment model. I don’t know that a panel with students schoolteachers and parents could close the deal as emotionally satisfying as that may be.

    As I look at their website they have a public meeting 2 days from now including public comment and reporting. Seems like that’s a good way for the broader community to voice their thoughts and concerns.

  4. Submitted by Bob Petersen on 07/10/2017 - 02:57 pm.

    More of the Same

    This is just more of the ‘injustice’ that some organizations have to do something because they have money and that the government is better off having more money than anyone else.
    If there are issues with St. Paul and the St Paul School District having deficits, then take it up with those that are in charge of their budgets to fix them properly. Don’t make it a problem of others just because they have some money when it is others who have caused the problems in the first place.

    • Submitted by Sarah Bosch on 07/10/2017 - 07:50 pm.

      Not the same. Non-profits have profis.

      Bob, have you considered that the groups with money named in the article have money because they have non-profit status. They do not pay taxes in the same way. They do not pay property taxes.
      They are using the privlidged of non-profit status to make extra money.
      Non-profits are there to serve communities not to make extra money.

  5. Submitted by George Carlson on 07/10/2017 - 09:52 pm.

    IS THIS NORM COLEMAN’S FAULT?

    I do a lot of road bicycling. The roads in St. Paul are beyond horrible. I live in Minneapolis and I do everything I can to avoid having to ride anywhere in St. Paul.

    It wasn’t always this way. 15 to 20 years ago, St. Paul roads were compatible with the roads in Minneapolis and in the suburbs. But when Norm Colman was St. Paul Mayor, he bragged about not raising property taxes for years in a row. I’ve lived in Minneapolis for 27 years and in the suburbs years before that. In Minneapolis, we had our taxes raised every year. And our roads are much better than St. Paul’s.

    Could neglecting roadwork years ago have come back to roost? I think so.

  6. Submitted by Sean Kershaw on 07/11/2017 - 09:29 am.

    To learn more about the facts of this project…

    To learn more about the actual facts of the project, I encourage people to check out the Citizens League’s project page to see the information that has been presented so far, to learn about the committee members and the charge to the committee, and to see the schedule for upcoming meetings.

    https://citizensleague.org/what-we-do/policy/pilotsilot-project/

    I also encourage people to attend the meeting at Wilder Foundation on Wednesday morning the 12th at 8:00, or to contact me with any questions. (Contact info for me is on the project page.)

    Thanks –
    Sean Kershaw
    Executive Director

  7. Submitted by Kenneth Kjer on 07/11/2017 - 04:08 pm.

    Pay Your Fair Share

    This article hit the nail right on the head. Large non profits who rake in millions to billions in profits should pay taxes just like everybody else. United Health has a profit of over 2 billion each year and there executives are some of the highest paid in the country including for profit companies. I am all for it. Make them pay there fair share.

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