The Connecticut legislature dropped a proposal to tax Yale University’s $25.6 billion endowment as a bill to tax its property moved forward.
While the endowment bill wasn’t raised for a vote, the state finance, revenue and bonding committee Thursday voted 28 to 22 to impose a tax on certain colleges’s commercial property that generate at least $6,000 in annual revenue. The endowment proposal, aimed at schools with funds of $10 billion or more, would have affected Yale only.
Connecticut faces a $266 million shortfall for fiscal 2016, according to the state Office of Fiscal Analysis, and taxing the endowment’s earnings was seen as a way of helping close the gap.
“The bill doesn’t have the support to move forward,” Adam Joseph, a spokesman for Martin Looney, a Democrat who presides over the Senate and who supported the proposal, said in an interview, adding that Connecticut Governor Dannel Malloy opposed the plan.
While the endowment proposal is “dead for this session,” Joseph said, the property tax bill next heads to the senate, where it could be put to a vote or referred to another committee. The legislative session ends May 4.
State Representative Roland Lemar, a Democrat from New Haven, said the property tax “would allow Yale to be treated the same as other institutions in Connecticut and across the country,” according to the New Haven Register. The bill wouldn’t affect educational buildings or dormitories.
“The legislation is a step backward,” the school said in a statement. “It would diminish Yale’s ability to invest in the community and discourage faculty from launching companies (or staying in New Haven). It is ultimately an attack on nonprofit colleges and universities that are among the best assets in Connecticut.”
Connecticut isn’t the only legislative body interested in college endowments. The U.S. Senate asked 56 of the wealthiest colleges to submit detailed information on the schools’ endowments, including how much they spend on financial aid and on fees. Yale’s endowment is the second wealthiest in U.S. higher education behind Harvard University’s $37.6 billion.
Connecticut’s endowment proposal became controversial, with Florida Governor Rick Scott inviting the institution to move to his state. “We would welcome a world-renowned university like Yale to our state, and I can commit that we will not raise taxes on their endowment,” Scott said in a statement in March.