New Boston Tea Party: MFA’s Malcolm Rogers vs. "Payment in Lieu of Taxes"

Malcolm Rogers, director, Boston Museum of Fine Arts

There's a misleading, mistaken assumption in Judith Dobrzynski's Real Clear Arts blog yesterday that needs to be corrected.

In her most recent post, Judith decries the Association of Art Museum Directors' failure to issue an immediate, forceful statement opposing Boston's planned increase in "payments in lieu of taxes" (PILOT) that the city government asks Boston's major nonprofits to pay.

Dobrzynski writes:

The Mayor of Boston, Thomas Menino, is sharply raising the fee many nonprofits, including museums, must pay [emphasis added] to the city in lieu of taxes.

There is, in fact, no requirement for nonprofits to make these payments. Every article and every city report that's been written about PILOT (including the Art Newspaper piece Dobrzynski cites, written by Malcolm Rogers, director of the Boston Museum of Fine Arts) clearly states that these payments are "voluntary." They are not, as Judith suggests, directly analogous to Pennsylvania's widely lambasted, never enacted proposed 8% sales tax on admissions to performances, museums and zoos. Boston's PILOT is not (as the PA sales tax would have been) a compulsory levy: If Malcolm doesn't want to pay, he doesn't have to (although, as discussed below, there could be consequences).

The Boston Globe's Michael Rezendes last April reported these details about the city's ramped up PILOT program:

For the first time, Boston's major tax-exempt institutions---its premier hospitals, universities, and cultural centers---are being asked to make regular voluntary payments to the city based on the value of their property [emphasis added] to help offset the rising cost of city services and cuts in state financial aid.

Although many of the city's nonprofit organizations have been making so-called Payments In Lieu of Taxes for decades, this marks a major change to a system that feels to some organizations uncomfortably close to tax bills. Boston officials recently mailed letters to leaders at 40 major nonprofits asking them to pay up to 25 percent of what they would owe if their property were not tax-exempt....

it is designed to gradually increase annual financial payments to the city by the major tax-exempt organizations from the $15 million they paid this year to $48 million over a five-year ramp-up period.

Each of the nonprofits targeted by the PILOT program could get a reduction of up to 50 percent of its recommended property-based payment, as a credit for community benefits offered by the institution, according to the Final Report of the Mayor's PILOT Task Force.

Although AAMD has not yet publicly weighed in on this controversy, Ford Bell, president of the American Association of Museums, has stepped up to the plate and taken a swing. He is quoted by Erica Cooke of the Art Newspaper:

To say, "Now we are going to tax them, but we're not going to call it a tax" is very disingenuous.

Cooke observes that "to say 'no' would risk the good working relationship that many of these not-for-profits have with the city of Boston."

Maybe so. And maybe AAMD, fearing the slippery slope of a tax-that's-not-called-a-tax, should take a stand against the insidious erosion of museums' tax-exempt status.

But Rogers has already risked his "good working relationship" with the city by taking his beef to the press. Perhaps a more effective strategy would be spearheading a frank but cordial discussion between city officials (including Mayor Menino) and the entire group of affected institutions---cultural, educational, and others---seeking consensus, not confrontation.

The city has a stake in a robust nonprofit sector; the nonprofits have a stake in a financially viable city. Better that they open the lines of communication to work together for mutual benefit, rather than wrestle in public.

"In devising this plan, the task force never sought the input of any of the city's cultural institutions," Rogers wrote in the Art Newspaper. Indeed, no representatives of cultural nonprofits were included on the Mayor's PILOT Task Force that recommended the controversial changes.

It's time, belatedly, to correct this serious oversight. After all, wasn't the Boston Tea Party all about "taxation without representation"?

Wait a minute! Malcolm's a native Brit. Is this poetic justice, Revolutionary War Division?