Taxes will be top of mind for the Boston City Council on Monday, when it plans to hash out the mayor’s latest home rule petition, as part of her yearlong push to shift more of the city’s tax burden onto businesses to provide relief to homeowners.
The City Council will hold a joint tax classification hearing of the Government Operations and Ways and Means committees, which are respectively chaired by Councilors Gabriela Coletta and Brian Worrell.
The 2 p.m. hearing will be the first time the Council takes up Mayor Michelle Wu’s “expanded” home rule petition, “An Act Relative to Residential Tax Relief in the City of Boston,” since its filing by Wu earlier this month. The forum will also include debate over three Council-led tax-oriented proposals.
The mayor’s new filing came a month after she was dealt a bruising defeat in the state Senate, which killed her last tax shift bill. Opposing senators argued that late valuation certifications revealed that residential property tax spikes would not be as dire as the city had been projecting.
Other criticism centered around the negative impact the legislation may have on a struggling commercial sector, which is grappling with post-pandemic changes in work patterns that have led to empty office space and decreased property values.
The mayor, however, filed her latest legislation shortly after homeowners reported being “shocked” by steep tax increases in their third-quarter January bills.
Wu pointed to the 21% quarterly increase for the average single-family home — buoyed by struggling senior homeowners who cited spikes north of 40% — as proof that the legislation was needed after all.
“Now that the scale of tax increases is documented and clear, this refiled home rule petition proposes to provide immediate relief to residential taxpayers,” Wu posted on social media earlier this month.
“I urge legislators and all stakeholders that held up the passage of our negotiated compromise to look carefully at the serious impact on Boston residents and join us in delivering the balanced relief our community needs,” she added at the time.
The City Council and state House of Representatives have passed two prior versions of the mayor’s tax shift legislation. Both of those measures died in the Senate.
Past criticism — which along with the commercial sector impacts include gripes around the mayor’s refusal to cut a $4.6 billion budget that grew by 8% — ramped up again upon the mayor’s renewed legislative push.
“As the Senate declared last year, Boston’s struggling commercial real estate industry should not be held responsible for budgetary shortfalls while grappling with declining building values and daunting vacancy rates,” Greg Vasil, CEO of Greater Boston Real Estate Board, said in a statement earlier this month.
“We continue to urge the City of Boston to explore alternatives to new taxes, such as budget cuts, to meet their financial goals,” he said. “New taxes have been, and continue to be, the wrong approach.”
The mayor’s expanded home rule petition, while her third try, is the first to include a back-up plan. The city is hedging its bets by asking to issue rebates to homeowners, drawn from budgetary surplus funds, should the Legislature not approve the new requested tax rates by March.
The legislation would lower the residential tax rate approved by the City Council in December, from $11.58 to $11.03 per $1,000 of value, and increase the commercial tax rate set by the body, from $25.96 to $26.92 per $1,000 of value.
The rates would change through the mayor’s legislative request, which is for state lawmakers to grant the city the authority to shift more of its tax burden from the residential to commercial sector beyond what is allowed by state law.
The maximum tax shift would be hiked from 175% to 181.5% this year, and decrease to 180% and 178% in the second and third years, per the mayor’s petition.
The City Council voted 12-1 to approve a prior version of the mayor’s tax shift bill last fall, and would need to green light this version, which includes small business relief and expanded senior homeowner exemptions. If approved, the petition would move onto the state Legislature for consideration.
Monday’s hearing will also see councilors hashing out three related Council-led proposals that seek to increase the residential tax exemption from 35% to 40%, shed light on varying home valuation spikes and their impact on property tax hikes, and adopt a “good landlord abatement” for landlords who give rental breaks to tenants.