Mayor’s Office Forecasts Nearly $500 Increase in Property Taxes For Average Homeowner Without Action
STATE HOUSE, BOSTON, OCT. 23, 2024….Boston Mayor Michelle Wu is ready to take a new approach to the city’s property tax dilemma.
With her existing proposal hung up, Wu said Wednesday that she’s hoping to send a fresh proposal to the State House that she believes will “stabilize property taxes and protect homeowners and renters from a dramatic spike.”
The Massachusetts House in July approved a home rule petition from the City of Boston designed to temporarily shift some of the property tax burden to commercial owners to lessen projected tax increases on residents. That plan hasn’t moved in the Senate as the business community has mounted an all-out offensive to prevent its passage, including calls for the city and state to take an alternate approach.
Wu’s office said four Boston-based business groups “reached consensus on a path forward” for a new relief plan. The updated home rule petition that Wu plans to file will scale back the maximum property tax-burden shift and shorten its duration compared to the version the City Council and House already approved.
It also goes a bit further than the changes Wu already agreed to make via executive order after the measure’s passage, part of a deal she struck in July with House Democrats to secure the first draft’s passage.
The major new development could signal a breakthrough on a topic that has divided Beacon Hill, stoked tensions between the mayor and Senate President Karen Spilka, and left Wu — who is up for reelection next year — reaching for solutions to address anxiety over taxes.
“The proposal allows for a modest modification to the current tax system with clear guardrails to prevent too great of a burden from being placed on commercial taxpayers,” the mayor’s office said in an announcement just before noon Wednesday. “This proposal is revenue-neutral and time-limited, stepping down over three years back to the current classification system.”
Wu’s office named Greater Boston Chamber of Commerce CEO Jim Rooney, Boston Municipal Research Bureau Interim President Marty Walz, NAIOP CEO Tamara Small and Massachusetts Taxpayers Foundation Doug Howgate as in agreement on the new plan, and rolled out quotes from all four expressing support for the “compromise.”
“Thank you to Jim, Marty, Doug, and Tamara for your dedicated advocacy and partnership in reaching agreement to protect residents and provide stability,” Wu said in a statement. “Thank you to Senate President Spilka for convening us through your leadership; and to Speaker [Ron] Mariano, [House Ways and Means Committee] Chair [Aaron] Michlewitz, and Representatives, Council President [Ruthzee] Louijeune, Chair [Rebecca] Coletta Zapata, and Boston City Councilors for advancing this proposal and continued support to get it done.”
For months, Wu and her deputies have been warning that Boston residents could face a sudden, dramatic spike in their property taxes because of a decline in commercial property values largely fueled by changing office dynamics in the wake of COVID-19.
State law allows cities and towns to tax residential and commercial real estate at different rates and to push the commercial rate as high as 175 percent of what a single, unified rate would have been.
Wu originally proposed increasing the maximum commercial shift to 200 percent, then gradually reducing it to 175 percent in year five. She later pledged to issue an executive order paring back the maximum shift to 190 percent and shortening the ramp-down to three years, plus seek $15 million per year in appropriations to minimize impacts on small businesses.
The forthcoming home rule petition will cover a three-year period, allowing a maximum shift of 181.5 percent in fiscal 2025, 180 percent in fiscal 2026 and 178 percent in fiscal 2027. It continues to call for allowing up to $15 million per year in small business relief, and also will seek to raise the personal property tax exemption threshold for small businesses from $10,000 to $30,000, Wu’s office said.
“The Boston Municipal Research Bureau believes this is a wise compromise, albeit a short term one that calls upon all of us to focus on additional measures to protect both residential and commercial property owners such as restraining spending increases and incentivizing economic development,” Walz said in a statement provided by Wu’s office.
To take effect, the proposal will again need to clear the City Council and then secure approval on Beacon Hill.
Wu’s office, which earlier this month forecast a nearly $500 increase in property taxes for the average homeowner without action, said the next steps need to happen quickly to prevent impacts on Bostonians.
“Preliminary parcel-level valuations will be available for residents to view in late October 2024. Tax rates must be finalized and approved by the Administration and City Council in November 2024 for the Massachusetts Department of Revenue to certify in December 2024, with bills for the third quarter of the fiscal year mailed out to taxpayers by January 2025,” Wu’s office said.
Speaking with reporters earlier Wednesday morning before Wu’s office announced the deal, Michlewitz said he expects the House will “try to be supportive of moving whatever the final agreement is.”
“We had somewhat of a handshake agreement that she would do an executive order if passed,” he said after an event with business leaders. “We’re open to the discussion of a new home rule petition. There are challenges, procedural challenges, related to that that you have to work your way through, not only on the city side, but obviously at the State House. So it’s not going to happen overnight, but certainly something once we — if there is an agreement that it takes place — we can have some potential quicker progress on it, hopefully.”
Spilka, who for months has opted against bringing the House-approved home rule petition for a Senate vote, issued a statement on Wednesday praising Wu and business leaders for reaching an agreement.
“On these tough issues, I have long believed it is important to bring people together to get the best result,” Spilka said. “I’m very pleased that the stakeholders have agreed on a proposal that helps residents and balances concerns about the impact on Boston’s businesses. This was our goal when we started negotiating months ago, and I appreciate all parties for their commitment to reaching compromise.”
The Boston tax legislation over the summer got famously swept up in sniping between top legislative Democrats over priorities.
[Sam Drysdale contributed reporting.]
