Boston Mayor Michelle Wu’s plan to temporarily shift more of the city’s property tax burden onto commercial property owners to cushion the blow of anticipated tax increases on residents appears on path to passage in both City Hall and the State House, but a Tuesday hearing made it clear the issue will linger in an election year.

For months, Wu and his allies have been warning that Boston residents could face a sudden and dramatic increase in the amount they owe for property taxes due to a decline in commercial property values ​​largely fueled by changing office dynamics in the wake of COVID-19. Since the spring, she has sought state approval to increase the share of city taxes that would come from commercial property owners to ease residents’ suffering, but she has encountered resistance or to the opposition of some business groups and city councilors.

“If the city were a human body, the question would be ‘should we tax the head or the heart’, right? And that’s a tough question with both sides of these things. We should not put pressure on them either, because they are vital. But at the same time, we have to share the burden,” Councilor John FitzGerald said during Tuesday’s hearing of the City Council’s Government Operations Committee.

Tuesday’s session was at least the fifth public hearing on the mayor’s idea, his supporters said, but it was the first on the latest version of the home rule petition. Wu’s first proposal authorized the municipal council (8-4 in June) and in the House of Representatives (132-24 in July), but Senate President Karen Spilka I never talked about it and instead urged Wu to continue negotiations with four Boston-based business groups.

These talks resulted in a breakthrough last week and Wu filed a new autonomy petition reflecting the compromise, which must now start from scratch.

“It didn’t have to be this complicated and pitting residents against business or public disagreements with the state and business,” said Councilman Ed Flynn, who voted against Wu’s initial proposal. during the hearing at town hall. “We should have listened to budget watchdog groups and experts compromise months ago. »

Flynn, a South Boston Democrat who has been seen as a possible challenger to Wu in next year’s municipal elections, said the most important issue was the 8 percent spending growth in the city’s latest budget. city ​​and the absence of a hiring freeze.

“However, the long-term issue in my view… is that we need to explore our tax structure and our revenue,” he said. “In my opinion, the city of Boston faces long-term fiscal problems.”

Flynn focused during his questions to city officials on the $171 million price tag for transportation in Boston Public Schools and what an increase to $180 million next year would mean for the budget. He pushed Finance Director Ashley Groffenberger on what the percentage growth could be in the city’s next budget.

Groffenberger said it’s too early to say what the city’s budget might look like for next year and said the city has no plans to freeze hiring. When Flynn asked her why a hiring freeze wasn’t being considered, she said it was because “we don’t have a revenue problem in the city.”

Flynn asked: “Do we have a spending problem?

Groffenberger replied: “No. Our expenses and income match.

Flynn disagreed: “We have a spending problem in the city. »

Boston Municipal Research Bureau Acting President Marty Walz, who represented the four business groups that were part of the compromise talks at Tuesday’s hearing, urged councilors to support the mayor’s proposal, but agreed that there is much work left for the city council and administration to do to ensure the stability of the city’s economy.

“The self-government petition is not a solution to Boston’s complex public finance and economic development challenges. The new dynamics of the commercial real estate market are not a temporary or cyclical change, which means that the city – all of us – must address the long-term budgetary implications through responsible budgeting approaches,” he said. -she declared. “Additionally, it is essential that the city works with the business community to encourage economic growth and development, thereby ensuring Boston’s future financial health and vitality.”

For Councilwoman Julia Mejia, the debate around Wu’s tax shift proposal presents an opportunity to address some of the changes that are conspiring to force out longtime residents of the city.

“What I’ve heard a lot in our public testimony is people who bought their homes in the ’70s and ’80s, when no one wanted to live in Boston. All of a sudden everyone wants to live here and all of a sudden everyone’s trying to get kicked out, right? That’s kind of how we all experience this conversation. It might not be, but that’s how people who grew up here feel,” she said. “I think there’s something to be said for what this moment is because our property values ​​— you have people building condos next to us, and those condos are $800,000. We only bought our houses for $50,000. How can we deal with it? And I think even though it’s not part of this conversation, I think it gives us an opportunity to explore this even further.

Councilwoman Gabriela Coletta Zapata, who chairs the committee, said at the end of the hearing that it was “likely that I will put this issue to a vote tomorrow” when the full city council meets. A vote by the full council could send the proposal back to Beacon Hill.

“At the end of the day, to me, we’re held to a certain timeline and if we don’t do something now, we’re not helping anyone. And this is an opportunity to provide that soft landing for people who are economically vulnerable, people who are housing rich and cash poor. And I consider that my grandmother, if she were still here, would be in that category,” Zapata said. “And that will have real implications if we don’t do it, if we don’t move forward.”

Fiscal transfer plan, version two

State law allows cities and towns to tax residential and commercial real estate at different rates and to increase the commercial rate up to 175 percent of what a single, unified rate would have been.

Wu’s latest local autonomy petition would allow the city to expand to a maximum change of 181.5% in FY 2025, 180% in FY 2026 and 178%. in fiscal year 2027, and it would be limited to that three-year period. It also aims to give the City Council the authority to provide up to $15 million a year in aid to small businesses during this time.

The petition would also give the City Council the option to increase the property tax exemption threshold for small businesses from $10,000 to $30,000, a move that Wu’s office said would mean relief for 2 183 additional companies (4,718 total).

The mayor had initially proposed increasing the maximum commercial share to 200 percent, then gradually reducing it to 175 percent over five years. To gain support from the House of Representatives, she then pledged to limit the maximum transition to 190 percent and shorten the reduction period to three years.

Wu’s office, which forecast for the beginning of the month a nearly $500 increase in property taxes for the average homeowner without action, said the next steps must be implemented quickly to avoid impacts on Bostonians.

“In order to apply this mechanism to the upcoming January 2025 tax bills, the legislation must be finalized by November, so we request rapid action to meet these tight deadlines for Council and State approvals,” Wu wrote in his post. submission of a letter to advisors.

(Copyright (c) 2024 State House News Service.