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Students and towns urge option to tax college endowments; universities warn of harm to programs
Summary
Public testimony split on HB 7147, which would allow municipalities to tax private college endowments. Supporters from Middletown said Wesleyan's large endowment and landholdings justify an option to tax; university representatives warned an endowment tax would undermine scholarship programs and local investments.
House Bill 7147, which would authorize municipalities to impose a tax on endowment funds of private institutions of higher education, drew sharply divided testimony.
Residents and municipal advocates from Middletown described the fiscal imbalance they say occurs when a large tax‑exempt institution occupies substantial land and requires local police, fire and road services while making limited direct payments to the town. A witness representing the Middletown Democratic Town Committee said Wesleyan University’s endowment (reported at roughly $1.57 billion) and extensive property holdings produce a material revenue gap for the city that pilot payments do not fully close.
Student witnesses and local residents urged the committee to give towns the option to levy an endowment tax or to use the bill as leverage to win greater local payments from institutions. Supporters argued an endowment levy could be targeted and locally decided and cited other NESCAC peer institutions that provide greater municipal support.
University representatives opposed the legislation. Witnesses from Fairfield University outlined the university’s investments in local workforce and education programs (Fairfield Bellarmine, community partnerships) and said the proposed tax would jeopardize long‑term philanthropic investments and scholarship funding. Fairfield’s representative noted the university already contributes directly to municipal services (police, fire, public safety details) when needed and argued an endowment tax would undermine mission investments such as programs for first‑generation students.
Legislators and municipal leaders discussed alternatives including targeted payments in lieu of taxes, expanded voluntary commitments by institutions, or state‑level policy options. Committee members requested additional fiscal analyses comparing projected municipal revenue from an endowment tax to effects on university budgets, scholarships and programmatic commitments before moving forward.
