Divisions Over Shifting Tax Burden Reflected By 8-4 Tally

Mayor Michelle Wu's controversial pursuit of a special law to shift the city's property tax burden beyond allowable limits won approval from the City Council on June 5.

The council voted 8-4 in support of a home rule petition that would give the city authority to temporarily shift a greater share of the tax burden onto commercial property owners instead of residential owners, an idea that drew opposition from influential business groups.

Councillor Gabriela Coletta Zapata, who led a committee’s review of the topic, urged her colleagues to move on the matter.

"This allows us the ability generally and the flexibility with specific guardrails to move swiftly if we need to protect Bostonians," Coletta Zapata said. "Otherwise, we're going to be back here having the same discussion on an even more expedited timeline, and next time, with potentially hundreds of calls from residents wondering why the council did not act to keep their property tax bills as low as possible."

"The longer we wait, the longer the delay, the less time there is for our colleagues at the State House to take this up before their formal sessions end on July 31," she added.

Councillors John Fitzgerald, Ed Flynn, Erin Murphy and Brian Worrell voted against Wu's proposal, and Councillor Julia Mejia voted present.
The proposal needs approval from the Legislature and Gov. Maura Healey before it can take effect.

House Ways and Means Committee Chair Aaron Michlewitz, who represents Boston's North End, has avoided taking a stance on the topic.
The home rule petition could still emerge after the July 31 end of formal sessions, but the route could be more tricky in August and beyond. Once the Legislature shifts into informal-sessions-only mode, any single lawmaker's objection can stall any item's progress.

Opponents, who include the Greater Boston Real Estate Board, argue that allowing the city to increase the share of property taxes owed by commercial owners for a few years will add unnecessary burden as businesses struggle to recover from the COVID-19 pandemic.

"It sends the completely wrong message to businesses, especially at a time when we want to be competitive and we want to be able to provide all the necessary services property taxes provide us," Murphy said. "In fact, if we were Worcester or Providence or even Charlotte, North Carolina, I'd be absolutely thrilled with this proposal. It makes their sales pitch so much easier."

Flynn said he worries about "exacerbating" challenges facing the city's office buildings, especially downtown, where vacancies continue to pop up now that work patterns have been rewired.

He called for private and nonprofit sectors to prioritize a return to in-person work as a way of "bringing foot traffic back to Boston so that it continues to be a valuable and desirable place to do business."

Greater Boston Real Estate Board CEO Greg Vasil said his group would urge Beacon Hill to "reject this deeply flawed policy and focus on reforms that do not punish any one industry."

Wu filed the home rule petition in April, after a report warned that declining commercial property values fueled by remote work and high interest rates could create a massive property tax shortfall.

State law allows cities and towns to tax commercial and residential property at separate rates, with the maximum commercial rate up to 175 percent of what a single, unified rate would have been. The mayor's proposal would allow the city to increase the maximum commercial shift as high as 200 percent if business property values drop significantly, then reduce it a bit each year until it returns to 175 percent in the fifth year.

Her team has said homeowners are likely to face higher property taxes if commercial values drop, but that by temporarily shifting the balance, the impact would be spread out over multiple years instead of hitting all at once.

Wu administration officials argued that it's better to approve the policy now so they can respond if and when commercial property values drop, rather than try to start the legislative process once residents face an imminent spike in their tax bills.

Councillor Sharon Durkan, who supported the home rule petition, read her colleagues an email she received from a resident who in January complained of a 13 percent property tax increase and questioned whether they could afford to remain in Boston.

"I don't see how we can possibly not consider our role here in sending this up to the State House for this session," Durkan said. "If we don't, we are going to get a lot more emails like that and we're going to have a lot more people that cannot afford to live in the city, cannot afford to stay in their homes."