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Schoenberg: Don’t count on endowment tax

Aldermen hoping for a bailout from Evanston’s budget crisis shouldn’t place much hope in a possible tax on university endowments.

That was the message State Sen. Jeff Schoenberg of Evanston delivered at the City Council Rules Committee meeting Monday night.

"This proposed legislation would face a steep uphill climb at the state capitol," Schoenberg said.

He noted that such a proposal would draw opposition not just from Evanston-based Northwestern University, but from colleges all across the state.

"You don’t think the University of Illinois, or Southern Illinois University wouldn’t work actively to oppose this?" Schoenberg asked. "They have an even broader reach in the state than some of the institutions in our own back yard."

Schoenberg also noted that while city officials complain about the amount of tax-exempt land in Evanston, some such land has been returned to the tax rolls recently with the closure of Kendall College and National Louis University campuses in the city.

"I’m not saying to shy away from a fight," Schoenberg added, "But a long and protracted fight will not provide the immediate financial relief that the city’s budget is crying out for."

State Rep. Julie Hamos of Evanston said, "Without knowing what the legislation looks like, it’s a little early to dismiss it. I think we should be open to some more research and draftsmanship and then do a realistic political and policy calculation."

The endowment tax proposal has been advanced by Alderman Elizabeth Tisdahl, 7th Ward, who was absent from Monday’s meeting.

She says such legislation is being considered by lawmakers in Massachusetts, and that if a 2.5 percent tax on endowments exceeding $1 billion were imposed in Illinois, it could generate $162 million annually in revenue just from Northwestern University’s endowment.

The aldermen also discussed a range of other ways to extract money from non-profits, but reached no conclusions about which ones to pursue.

They received a memo from the city’s legal staff asserting that the city is free to condition the grant of zoning variances and special use permits on an organization’s agreement to make payments in lieu of taxes.

They also mentioned impact fees for new developments, which could be applied to both commercial and non-profit projects, as building permit fees are now.

The city years ago shifted water and sewer services from a general tax levy item to a separate service fee paid by users, including non-profits, and Monday some aldermen mentioned the possibility of shifting fire and ambulance service to a similar model.

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