Mayor Wu Still Wants Action, But Biz Groups Say Pause And Analyze Data
STATE HOUSE, BOSTON, DEC. 5, 2024…..Business groups that in October backed a controversial Boston tax proposal on Thursday called for lawmakers to pause any action in light of new data about the city’s property values.
Throwing the time-sensitive measure into its most imperiled position, a quartet of organizations that crafted a compromise plan with Mayor Michelle Wu decided they instead think Beacon Hill should slow the process down.
The Boston Municipal Research Bureau, Greater Boston Chamber of Commerce, NAIOP and the Massachusetts Taxpayers Foundation said property tax valuations certified by the state Department of Revenue on Wednesday “materially differ from the data provided by the City in discussions in October.”
“Based on these revised figures, we support pausing consideration of Boston’s home rule petition that would shift property taxes onto commercial property owners to allow time to analyze the impact of the new information,” the groups said in a joint statement a few hours after a senator from Boston delayed any action on the bill until at least next week.
Wu’s office now forecasts the average residential property tax bill would rise 10.5 percent annually without action on the bill and 5.2 percent annually under the maximum possible shift outlined in her home rule petition.
“This increase would be in line with the increases in the past five years and would also ensure stability for the commercial real estate industry during this challenging time,” the business groups said.
Many commercial property taxes are set to drop regardless of the home rule petition, but the Senate’s decision could affect the measure of how much. Wu said a hypothetical $5 million commercial property whose valuation dropped 7 percent “would see a 4.5% tax decrease with no legislation and a 1.0% decrease with the maximum allowable shift under the legislation.”
When the home rule petition came up in the Senate earlier on Thursday, Sen. Nick Collins, a South Boston Democrat, used a parliamentary maneuver to delay any action on it until the chamber meets on Monday.
It was the same playbook Collins rolled out on Monday, Dec. 2, when he tabled the bill and argued that senators should not act until after the Department of Revenue certified Boston’s property valuations so they could have a clearer sense of the tax implications at play.
DOR completed that work Wednesday, and Wu on Thursday provided senators with the updated estimates. The new forecast for residential impacts without action is a decrease from previous estimates, which suggested a “potential worst-case scenario” of a 14 percent annual increase for the average single-family home.
Wu contended that the updated projections do not warrant retreating from her plan to temporarily shift more burden onto commercial properties.
“Without this legislation, the share of Boston’s tax levy borne by residential taxpayers would jump from 40% to 44% — the biggest single year increase since 2007,” Wu wrote in a three-page letter to senators Thursday. “Moreover, as housing costs have risen across the region and the city over the last several years, it is even greater of a threat for Boston residents to bear what would be the second-highest tax increase over the last decade if forced to pay the 10.5% jump without legislation. Rental listing prices have increased nearly 25% between 2019-2023 in Boston, and home sale prices have increased by 13%.”
Collins, however, said on the Senate floor that City Hall’s estimates about the impact of inaction “have been far off the mark.”
“We are still analyzing the data certified by DOR, and as more is coming in, we believe that it is fair and prudent to allow the time to digest that data and speak to our constituents, stakeholders and colleagues to determine if this home rule is necessary,” he said.
Speaking with reporters after the session, Collins said the projected residential property tax increase without the shift would be “in line with the last few years.” (Wu said the average property tax bill for a single-family home grew 9 percent annually over the last five years.)
“We’re talking about a range of impacts, and what are we trying to accomplish?” he said. “Are we trying to stave off the sky is falling, which was the [message at the] start of that debate in the spring, and now we realize the sky is not falling.”
Democrat Sen. Su Moran, who co-chairs the Revenue Committee that reviewed the petition, said the call for a pause from business groups that previously agreed to a compromise version “speaks volumes to the cautionary path we have taken in the Senate.”
“One of the concerns is that the compromise, the three-year period compromise, was really not realistic,” she said in an interview, referring to the three-year period for the proposed property-tax shift. “I liken the parallel to: tolls never seem to go away, even though the roads seem to have the projects done. There was concern this would be something that would just continue at higher levels, and that that would dampen the efforts by the governor and really everyone in the state to foster competitiveness and small businesses and our commercial constituency in Massachusetts.”
Longtime opponents of the measure criticized the Wu administration Thursday, arguing that the new data suggest officials have not been forthcoming about the city’s financial outlook. Small Property Owners Association Vice President Amir Shahsavari accused City Hall of “playing politics, ahead of an election year, to the detriment of Boston and the rest of Massachusetts.”
It’s unclear whether top Senate Democrats will continue to tee the bill up for advancement.
As for Collins, he declined to say if he would move to delay the bill again if given the opportunity.
Senators can typically lay a matter on the table up to three times before branch leaders declare such motions dilatory and try to force votes on legislation. There is no limit on the number of times that senators can employ another move — objecting to taking up a matter from the Orders of the Day — meaning that the bill could be delayed indefinitely during informal sessions that are scheduled to continue until Dec. 31.
“I do know there’s one more opportunity to put it on the table. I hope all the parties involved have good conversations over the weekend, and that there’s good communication moving forward,” Moran said. “It’s not just knocking on the window with a sponge.”
Collins suggested there might not be a need to rush. Boston Assessing Commissioner Nicholas Arniello said this week the “drop-dead date” for legislative action could be as soon as Monday because the City Council needs to take its own related vote on Wednesday.
“We’re in informal session. We’ll be here on New Year’s Eve. In terms of the council ending their session on Wednesday for the year, I think this is an important issue, whether they call for a special session to pass new legislation or they deal with this issue next week,” Collins said. “I think there’s plenty of time.”
The council’s schedule calls for meeting again on Wednesday, Dec. 11 and then ending the “legislative year,” though councilors could opt to schedule additional special meetings.
The Boston Globe and WBUR reported this week that Collins had received thousands of dollars from real estate and hospitality industry leaders in recent weeks before delaying the bill affecting commercial property taxes. Asked Thursday if those contributions affected his decision, Collins replied, “Not at all.”
When the bill first emerged Monday, Moran quoted concerns from business groups who opposed an earlier draft but stopped short of calling on her colleagues to support or reject the proposal.
She declined to say Thursday if she would have voted yes or no had Collins not delayed consideration, arguing that the outlook has changed considerably in the past few days.
“It’s really tough to make that call because I know so much more information than I did at that time,” Moran said. “My truth is very different right now. Generally speaking, great deference is given to home rules, but based upon various conversations and looking at the bill and the way it morphed and the second bill came, it really was clear that it was a bigger issue than your run-of-the-mill home rule.”
The delay is the latest speedbump for a proposal that’s already had a winding, months-long journey to the Senate floor, in the process revealing tensions between Wu and top Senate Democrats.
For months, Wu and her deputies have been warning that a decline in commercial property values — driven largely by post-pandemic work patterns — would trigger a massive, all-at-once spike in residential property taxes without action.
The mayor has been pushing for state permission to temporarily shift a greater burden of the city’s property tax burden onto commercial owners to spread out the increase on residents.
The House in July approved an earlier version of the proposal, but the Senate never took it up. Wu and Senate President Karen Spilka publicly sparred over the inaction before meeting in late September alongside Boston senators and some business groups.
Wu and the quartet of groups — who have since called for a pause — announced a compromise on Oct. 23 that sanded down and shortened the original measure, which won approval from the City Council and the House.
“In doing so, we have now testified at two separate State House hearings before the joint committee, hosted town halls across the city, shared information publicly as it has been finalized, and reached out to each Senator multiple times to ask for feedback and concerns, briefing as many colleagues as have been willing to meet,” Wu wrote in her letter to senators. “We have taken every action and run to every goalpost requested by Senate leadership and Senators to reach consensus and share new information as the valuation process moved forward along standard annual timelines.”
Moran said Thursday she believes Wu and her deputies could have done more to bring senators into the loop earlier in the process.
“I was contacted by the mayor as I had hearings coming, but I think this letter that came today was really the first time that every member of the Senate was contacted on this bill,” Moran said. “That’s a little bit unusual.”
