Boston City Council passes Wu’s revised property tax proposal

The proposal the council approved on Wednesday Council member Ed Flynn cast the lone “no” voteis a result Wu’s agreement with various business and financial watchdog groups last week. There were these organizations opposed the original legislation for monthsarguing that it will Bad for Boston’s real estate and small business communities jeopardize the city’s future financial stability. Their Violent opposition delayed the lawand it ended up with this has been languishing in the state Senate for months..

Time is running out for the city to get the proposal across the finish line. With the approval of the Council, this it now goes to the state Assembly, where lawmakers and the governor must sign it into law and send it back to the City Council before the end of November so the city can finalize the home exemption and tax rates in a timely manner and prepare and send out property tax bills in early January.

More than 70 percent of the city’s $4.6 billion budget is funded by property taxes, Two-thirds come from commercial real estate. But this way City center office buildings have fallen in value as a result of post-pandemic remote working policiesfaced by homeowners Expectations for a big increase in property taxes To keep the budget balanced as required by law.

Another option could be: Officials said the city would cut hundreds of millions of dollars from the budget while also not collecting the full amount of property taxes it is entitled to each year under state law, which is capped at 2.5 percent annual increases. Administration officials argued that the alternative was “fiscally irresponsible” and “unfeasible,” saying the cap had not kept pace with inflation and that the city never chose not to collect the full amount.

compromise version of the offer It limits the scope and timeline of Wu’s original measure, which proposed a three-year opt-in period to raise business tax rates to 200 percent, currently capped at 175 percent of the residential rate, over a five-year period. The agreement limits the city from enforcing the measure in 2025; increases commercial tax rates to 181.5 percent of residential rates, then drops to 180 percent in fiscal 2026, 178 percent in fiscal 2027, and then 175 percent in fiscal 2028. The proposal also includes additional support for small businesses.

But some council members on Wednesday acknowledged the measure does not address the real problem; The issue is the potential for commercial property values ​​to continue falling in the coming years, hurting residential property tax rates or the city’s profits.

Marty Walz, interim president The Boston Municipal Bureau of Investigation, a business-backed financial watchdog, was one of the groups that negotiated the deal with Wu and his administration.He made that point in his testimony at a council hearing on the proposal on Tuesday.

“The home rule petition is not a solution to Boston’s complex public finance and economic development challenges,” Walz said, recommending that the council still vote to pass the measure. “The new market dynamic for commercial real estate is not a temporary or cyclical change, which means the city and all of us must grapple with the long-term budget impacts through responsible approaches to budgeting.”

Before Wednesday’s vote, Councilman John FitzGerald emphasized that the proposal only delays the inevitable and that property taxes will likely continue to rise when the law expires in three years. Residents who cannot afford these high bills may still face having their homes price reduced.

“It is very important to emphasize that the 28 per cent increase that residents are also concerned about this year is spread over three years,” Councilor John FitzGerald said before voting in favor of the proposal. “People’s fears are still looming, and as we allow those fears to emerge, we are potentially causing irreparable damage to our business.”

“Let’s not pretend that we have overcome a major hurdle after this vote, because there are certainly still hurdles in the future. . . and that’s why we need to start preparing for it right now,” he said.

Niki Griswold can be reached at [email protected]. follow him @nikigriswold.