(Bloomberg) -- Boston Mayor Michelle Wu’s plan to temporarily increase commercial property taxes has stalled again after new data indicated the impact from slumping office building values on the city’s tax system won’t be as stark as initially estimated.
The city is particularly vulnerable to the nationwide decline in office demand because of its heavy reliance on property tax revenue. Wu had proposed a workaround that would preserve Boston’s budget without burdening homeowners with the brunt of the revenue shortfall from commercial levies. State Senator Nick Collins, a South Boston Democrat, for the second time this week used a procedural maneuver to delay action on Wu’s proposal, citing a need to review the latest tax assessment data.
Wu now says the average single-family homeowner will see a 21% increase in their tax bill in January relative to their last quarterly statement, or an annual increase of 10.5% compared to fiscal 2024. That’s a smaller increase than initially estimated. Should the mayor’s tax adjustment proposal pass, the annual increase in residential property tax bills would drop to about 5%.
While the measure has cleared the state House of Representatives twice, it has stalled in the Massachusetts Senate.
Business coalitions that had backed a compromise that limited the extent of the commercial tax increases and shortened their duration are now calling for a delay. The property valuations certified by the Department of Revenue “materially differ” from the data that supported the deal announced in October, according to a statement from the Boston Municipal Research Bureau, the Greater Boston Chamber of Commerce, the Massachusetts Taxpayers Foundation and the commercial real estate development association NAIOP.
“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 business groups said. The annual increase in homeowner tax bills absent the mayor’s proposed adjustments would be in line with those of the past five years, they said.
Corporate leaders have said higher property taxes would deepen the pain for the commercial real estate market. Opponents of the bill have also said fiscal constraint needs to be a part of the city’s approach to offset the impact of declining office building values.
The Senate meets again on Monday and could reconsider the tax proposal then. The measure also needs approval from Massachusetts Governor Maura Healey.
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