Nonprofits Angered Over Prospect of Fees

In a departure from long-standing practice, some states and local governments with budget shortfalls and a newfound aversion to taxes or debt are looking to nonprofits as a potential source of revenue, the Wall Street Journal reports.

In Houston, where some flood-prone roads are in such disrepair that signs have been erected warning drivers to turn around, taxpayers voted in November to impose "drainage fees" on property owners in order to raise $125 million a year toward the cost of improving roads and storm-water systems. The big news, however, is that traditionally tax exempt churches, schools, and nonprofits have not been exempted from the fee. "Everyone who contributes to drainage issues has to share in the cost of correcting those issues," said Mayor Annise Parker. Indeed, similar fees have been adopted by other cities, including Richmond, Virginia, Lafayette, Indiana, and Verona, Wisconsin.

That the vote in Houston to impose the fee was close is of little consolation for organizations and institutions that have been assessed fees that in some cases exceed $3 million. Local government leaders have held their ground, however. "This is different from paying for other utilities," said Houston councilman C.O. Bradford. "If they stop paying their bills, we can turn off their water or electricity. But we can't stop the rain from falling out of the sky."

Ianthe Jeanne Dugan. "Strapped Cities Hit Nonprofits With Fees." Wall Street Journal 12/27/2010.