Even with its $227 million contribution to the Rhode Island economy during the 1998-99 school year, the issue of Brown University’s tax-exempt status brings a mixed reaction from Thayer Street businesspeople. The May 23 release of a Brown University study outlining the school’s contributions to the Ocean State began another chapter in the debate between Brown — whose income and property are not subject to taxation — and local small business owners.
“Certainly they [Brown] are most of my business,” said Ann Dusseault, owner of Pie in the Sky Jewelry and Gifts. “The students as well as faculty are my major customers.”
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Should Brown be tax exempt?
“It seems unfair, but I’m not aware of the actual numbers,” Dusseault said. “I don’t think universities should be tax exempt because they do make profits, but nobody wants to bite the hand that feeds.”
“I think Brown contributes a lot of know-how to the city,” said Mario Persia, owner of Persia’s Haircutting Salon.
The business, open for 26 years, is located inside a Brown-owned building, but Persia still must pay city taxes.
Persia estimated that anywhere between 25 and 30 percent of his business can be attributed to Brown, and said he believes the institution should retain its tax-exempt status.
“Look at the money the university brings into the state,” he said. “Look at graduation weekend alone.”
Kenneth R. Dulgarian is a Thayer Street landlord and business owner whose properties include the Avon Cinema and College Hill Bookstore.
“It’s obvious that Brown has a significant impact on the East Side,” he said, citing the area’s cultural diversity and academic base as examples of the college’s influence.
Dulgarian mentioned past Providence visits by historian Arthur Schlesinger and King Hussein of Jordan, which he credits to Brown’s presence as an intellectual center.
“That’s because of Brown,” he said. “We’re lucky they’re here.”
In addition, having the students – with their disposable income – in the neighborhood only serves to benefit businesses not just locally but statewide, Dulgarian said.
BROWN STUDENTS contribute mightily to local economy.
“The students definitely add to the academic base,” he said.
The question of tax exemption is less clear-cut.
“It’s a very difficult question,” Dulgarian said, stressing the necessity of examining the whole picture.
“It’s not just universities, it’s churches, hospitalsI think that it requires tax-exempt institutions to do a little soul-searching,” he said. “What is good for the city will be good for them [the tax-exempt] in the long run.”
However, Dulgarian said, examining possible modifications with respect to tax issues in no way implies the need for a complete transformation.
“Sometimes it’s good to change from the old broom to the new broom, but the new broom doesn’t necessarily mean radical change,” he said.
The study measured Brown’s economic impact on Rhode Island as $400 million in 1998 – 1.4 percent of the gross state product. Salaries and wages account for more than half of that figure — $220 million.
“Clearly, Brown makes a significant economic contribution to our city and our state. But for every statistic we can quote, there are scores of intangible aspects to this relationship that are equally impressive,” said Laura Freid, executive vice president of public affairs and University relations. “The cultural, intellectual and social life of our city and state is enhanced by Brown’s many exhibits, performances and public lectures, and our community life is bolstered by the extraordinary volunteer service performed by our students.”
Examples detailed in Partners for the 21st Century: Brown University’s Economic Contributions to Providence and Rhode Island include:
In 1998-99, 68 percent of the university’s total spending, or $227 million, was concentrated within the state.
Brown purchased more than $65 million in goods and services from Rhode Island companies in 1998. Included in that were $30.4 million in goods and services provided by Providence companies – about 21 percent of all University purchasing – and an additional $35.4 million in purchases from vendors elsewhere in the state, or 25 percent of Brown’s total purchasing.
During the last five years, Brown has spent an average $29 million per year on the construction of new facilities and renovation of existing buildings. Construction spending is expected to increase to an average of $40 million per year during the next five years.
Brown students spend nearly $24 million each year, while visitors to the University spend an additional $3 to $4 million on lodging, meals, entertainment and other services.
With research spending totaling $74 million in 1998, Brown was the state’s leading academic research center.
More than 1,700 physicians – more than half of all those practicing in Rhode Island – are members of Brown’s clinical faculty. Brown educated 232 physicians currently practicing in the Ocean State and provides continuing medical education for 3,000 others annually.
Nearly 6,800 Brown alumni call Rhode Island home; 118 are CEOs of Ocean State companies.
