In states such as New York, where local governments and public schools are funded by taxes on real property, exemptions are often highly scrutinized by assessors and taxpayers alike.  However, the exemption provided to nonprofit corporations serving the public welfare, such as colleges and universities, hospitals and churches, always appeared inviolate.  The logic is really quite simple - imposing real property taxes on a nonprofit corporation (particularly one with large land holdings such as a university) would increase its costs and diminish the level of services it could provide, thereby harming the public welfare.  However, in Maine, the Governor is proposing a budget that would allow communities to tax certain larger not-for-profits with valuations greater than $500,000, such as colleges, universities and hospitals.  Specifically, the proposal would permit communities to tax nonprofit organizations at 50 percent of the property tax rate for assessed value above $500,000.  If passed, the proposal would have broad effects.   First, communities would be required to determine the actual fair market value of the real property owned by these nonprofit institutions.  Since these properties have always been exempt, assessors did not always analyze the numbers.  This process alone would likely lead to significant litigation separate and apart from any litigation challenging the legality of the proposal itself.  Second, the proposal could damage relationships between these institutions and their host communities.  For example, many colleges and universities make volunteer "host community" payments to the municipalities in which they are located, and changes such as this would certainly end those.  Finally, the proposal would impact the level of services provided by the nonprofits - to what extent remains unknown, but there would be an impact. No doubt that those states who rely on property taxes, such as New York, and nonprofits everywhere, will be watching this play out in Maine.  Only time will tell the breadth of the fallout.