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MIT Contributes Its Fair Share

The Cambridge City Council has recently discussed plans to get more money from MIT and Harvard to pay for the city budget and ease an impending rise in property taxes. MIT and Harvard, as educational, non-profit institutions, do not pay property taxes on their extensive land holdings. Councillor Kenneth Reeves asserted that universities “are not sharing in the burden of taxation.” Ultimately, it’s up to MIT to assess its impact on the city and to make its case against taxation, but from The Tech’s perspective, the numbers indicate Cambridge is already deeply indebted to MIT and Harvard, and that it should rethink its spending priorities before reaching for more money.

The Cambridge Council notes that 51 percent of land in Cambridge is not taxable, and much of that is owned by MIT or Harvard. However, Cambridge’s primary expense is education; it comprises one third of the city’s budget. The land owned by MIT and Harvard houses residents who almost never make use of Cambridge schools, and hence for the purposes of education funding, the city can be thought of as about half its geographical size, with a corresponding tax base. The nontaxable land is not relevant.

MIT and Harvard do, however, draw upon other city services, such as street maintenance, whatever policing the MIT Police forces do not undertake, and the doubtlessly positive externalities created by the publicly funded Cambridge Peace Commission and local Cable TV station. Do the universities pay sufficiently for such goods, or are we getting a free ride? Well, beyond the fee arrangements made directly between the universities and the city, where the universities pony up an annual chunk of cash (nearly $3 million last year) for city officials, the universities contribute rather substantially otherwise. Examining a list of the top 25 employers in Cambridge (available on the Cambridge City Web site), one notices that Harvard and MIT are the number one and two employers in Cambridge, respectively. (In third? Cambridge City Government.) Throughout the rest of the list, you’ll notice a plethora of biotech and startup companies whose existence can be directly attributed to work related to the universities. Not on the list but cumulatively significant are the numerous small businesses and restaurants patronized by the students and associates of each of these universities. The universities are directly or indirectly responsible for much of the employment in the city of Cambridge, and hence are providing the source of most of the tax dollars that fund city budgets.

In addition to drawing thousands of students who continually import money from parents and loans to spend in the local economy, employing much of the city, drawing substantial tourism, and paying annually increasing multimillion dollar tribute to the city, the universities have other helpful programs. MIT sponsors collaborative projects with Cambridge Public Schools in which MIT students teach local kids science, SAT preparation, and basic tutoring at little or no cost.

Nationwide, there is a crisis over municipal budgets. The Nov. 29 Boston Courant reports that property taxes may double throughout Boston in five years, and notes that Chicago, Dallas, and New York face the same problem. In tough economic times, regular people tend to spend a bit less money, since they don’t have as much. But in a letter accompanying the 2005 budget, City Manager Robert Healey notes that despite economic downturn, the city’s “enviably strong financial condition has left us better prepared to deal with slowed local revenue growth.” The Cambridge 2005 Budget increases expenditures 4.8 percent over the previous year, to $362 million for the city’s 95,000 residents.

There are a lot of demands on MIT’s budget these days. Everyone who pays for health care, from janitors to graduate students, has been complaining about the rising cost of health insurance, and asking the university to shoulder more of the cost. A new dorm is in the whisperings-in-the-halls phase. Fraternities are asking for ongoing financial support, as they face troubles precipitated by a ban on freshmen living in their houses.

Harvard, however, has lots of money, and may be a more natural ally of the Cambridge political ethos. Maybe they can pay for everything; it probably doesn’t hurt to ask, as the City Council well knows. But in the face of a national realization that nearly all government budgets are high enough that they demand new debt, taxes, or spending cuts, the City of Cambridge shouldn’t be granted a free pass by using Harvard and MIT as ATMs.