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October 01, 2012

Payments in Lieu of Taxes Do Little to Help Cities, Study Finds

A new report indicates that voluntary payments from nonprofit organizations have done little to improve fiscally strapped local governments' budget pictures, says Reuters.

Such payments in lieu of taxes accounted for 0.13 percent of general revenue in 218 jurisdictions that have collected them since 2000, according to the report released Friday by the Lincoln Institute of Land Policy.

While the payments can provide useful funds and strengthen institutions' ties with their hometowns, they "will never be a panacea for cash-strapped governments," the organization said. "They simply do not generate enough revenue."

Several, mostly northeastern cities, notably Boston, Pittsburgh, and Providence, R.I., have launched high-profile efforts to draw more money from universities and hospitals as the downturn has sapped their budgets.

Proponents say the payments help governments cover the cost of providing police, sanitation, and other services to institutions that don't pay property taxes, but nonprofit groups often argue that they already provide significant economic benefits through employment and community programs.