Bill
HB 5617
Allows municipalities to levy a tax on the endowment funds of private colleges/universities located within the municipality, creating a new local revenue source.
HB 5617 — Summary
Overview
HB 5617 is a bill introduced on March 14, 2025, titled “AN ACT AUTHORIZING MUNICIPALITIES TO IMPOSE A TAX ON THE ENDOWMENT FUNDS OF PRIVATE INSTITUTIONS OF HIGHER EDUCATION.” The bill would authorize municipalities to levy a tax on the endowment funds held by private higher education institutions within a municipality. A companion measure is SB 2810.
Purpose and Scope
- Intent: To provide municipalities with a local revenue-generating tool by taxing the endowment assets of private colleges and universities.
- Scope: The bill would apply to private higher education institutions with endowment funds located within the taxing municipality. Specific definitions, thresholds, and administration details would be set in the bill’s text and implementing rules.
Key Provisions (as Available)
- Authorization: Municipalities would have the statutory authority to impose a tax on endowment funds of private higher education institutions.
- Tax Details: The text provided does not include the rate, tax base, exemptions, assessment methodology, collection procedures, or whether penalties or credits would apply. These elements would be defined in the enacted statute or subsequent implementing regulations.
- Administration: It is expected that the bill would specify who administers the tax (municipal tax authority), filing and payment timelines, and compliance requirements, but these details are not included in the information provided.
Who Is Affected
- Primary: Private institutions of higher education that maintain endowment funds within the municipality would be subject to the tax.
- Municipalities: Local governments would gain a new revenue source, subject to the bill’s enactment and any applicable local adoption processes.
- Donors/Endowment Operations: Endowment investment strategies and distributions could be indirectly affected, depending on the tax’s rate and administration (exact effects depend on the final provisions).
Procedural and Timeline Details
- Introduced: March 14, 2025.
- First Reading: April 7, 2025.
- Committee Referrals: Referred to Joint Committee on Planning and Development (and also to State Affairs on April 7, 2025).
- Status: Currently listed as REF. TO JOINT COMM. ON Planning and Development in the provided status; companion SB 2810 exists.
- Next steps: If advanced, the bill would proceed through committee hearings, potential amendments, and floor votes in the chamber(s) of origin, then the other chamber, before any enactment.
Potential Impacts and Considerations
- Municipal Revenue: Potential new revenue stream for municipalities that adopt the tax.
- Endowment and Institutional Impact: Taxation of endowments could influence endowment management, fundraising strategies, and grant distributions at affected institutions.
- Legal/Policy Considerations: The bill would raise questions about municipal taxing authority, potential state preemption, and implications for charitable/nonprofit asset management, which would be clarified in the statute and any case law.
Next Steps
- Monitor committee reports and floor action on HB 5617 and SB 2810 (companion). Final enactment would require approval by the respective legislative chambers and any required gubernatorial action.
Compiled from official sources — confirm details with the bill’s official record.
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