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What Boston's property tax shift compromise would mean for homeowners and businesses
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It’s National Boston Cream Pie Day, the day we celebrate a pie that’s actually cake (like the opposite of a cheesecake). Experts feel strongly about it. “It is not a pie at all,” Susan Wilson, the historian at the pie/cake’s birthplace, the Omni Parker House, told WBUR’s Fausto Menard. “It is a cake. Always has been a cake. Always will be a cake.”
You can read more about the Boston cream pie’s history in our Field Guide primer on the city’s culinary landscape. Now, to the news:
We have a deal: Boston Mayor Michelle Wu and local business leaders have agreed to a compromise on her plan to shift more of the city’s property tax burden onto businesses. The deal, intended to avoid both dramatic tax hikes on homeowners or painful budget cuts, would allow the city to temporarily raise its commercial property tax rate beyond state limits — though it’s less than Wu’s original proposal and includes a few new protections for small businesses. Here’s what to know:
- How it started: State law allows cities and towns to set different property tax rates for residents and businesses. But it limits how much higher the tax can be for businesses: up to 175% of what the rate would be if residents and businesses had the same rate. (Because of that limit, Wu said a projected decline in office values could force the city to raise property tax rates on residents to make up for lost tax revenue — or resort to service cuts and layoffs.)
- How it’s going: Wu’s original plan would have increased that limit to 200%, before bringing it back to 175% over five years. After negotiations with the House, she agreed to 190% with a three-year ramp down. Now, the new deal with business leaders lets the city go up to 181.5%. It also sets aside $45 million to offset tax hikes on small businesses and raises the personal property tax exemption threshold for small businesses from $10,000 to $30,000.
- What’s next: Wu has to file a new home rule petition that needs approval from the Boston City Council, both chambers of the State House and Gov. Maura Healey. Most importantly, the deal has already gotten a thumbs up from Senate President Karen Spilka, whose chamber blocked Wu’s first proposal.
- What does all this mean for homeowners? Under the new deal, Wu’s office says the average Boston homeowner, with a $838,000 home, would see last year’s $5,500 property tax bill rise by $491, spread across the coming January and April property tax bills. (The city previously said the average hike would have been $768 with the current 175% tax limit, compared to a $273 hike if it was upped to Wu’s preferred 190%.)
- What about businesses? With overall commercial property values expected to fall 7%, a $5 million commercial property would still see their nominal tax bill drop — from $126,350 last year to $122,304 this year.
- The big picture: Business leaders think this could have just been the first chapter of a debate over generating tax revenue in an era of hybrid work and slumping office building values. Greg Vasil, the CEO of the Greater Boston Real Estate Board, told WBUR’s Amy Sokolow that he thinks “we’re in uncharted territory.” Jim Rooney, the president of the Greater Boston Chamber of Commerce, supports the new plan. But he told WBUR’s John Bender the city should still slow its spending. “Otherwise we’re back at this same conversation,” he said.
In memoriam: State House members are mourning the death of a colleague this week. State Rep. Susan Williams Gifford, a Wareham Republican, died of cancer Tuesday at the age of 64. Gifford served as the House minority whip and had been on Beacon Hill since 2003.
Off shore: The company Vineyard Wind will remove more blades from existing turbines at its offshore wind farm off the Massachusetts coast, after one broke and fell off this past summer. The blades’ manufacturer, GE Vernova, wouldn’t release a specific number of blades to be removed. Vineyard Wind says it will also strengthen some blades out of an “abundance of caution” after recent quality checks.
P.S.— This week’s episode of The Common takes an up-close look at Vineyard Wind. Literally! After chartering a boat with a group of journalists last month to visit the offshore turbines, WBUR’s Miriam Wasser joined Darryl C. Murphy to talk about what she saw.
