Lawmakers looking to bring in new revenue turned to Connecticut’s most prestigious university, Yale, in an effort to fill budget gaps largely caused by Connecticut’s unfunded pension liabilities for state employees and teachers.
Proposed legislation would tax university endowments, but there’s a catch: the tax would only apply to universities with an endowment over $10 billion, which means the tax would only fall upon Yale and not any of Connecticut’s other universities.
The proposal prompted Florida Governor Rick Scott to jokingly extend an offer to move Yale to Florida and avoid the potential tax. Scott has been successful in recruiting a number of companies and hedge funds to relocate to Florida where there is no state income tax.
While Yale doesn’t pay property taxes because it is technically a nonprofit, it does make voluntary payments to the City of New Haven which totaled $96 million, according to Yale Associate Vice President Richard Jacob. The university does pay property taxes on its commercial properties
The school is also an economic powerhouse for the region, employing over 4,000 people and attracting businesses and venture capital to the New Haven area.
Gov. Dannel Malloy indicated he would not support the endowment tax, but some lawmakers – and even the union which represented Yale graduate students – supported the idea.