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House advances Wu’s property tax proposal; Senate to debate it after Thanksgiving
The clock is ticking for the Wu administration to get Senate approval on the plan, which it says is needed to prevent homeowners from seeing a large tax increase.
For the better part of a year, Boston Mayor Michelle Wu has been attempting to enact a contentious plan to temporarily increase commercial property tax rates, which she says is necessary to prevent residential property owners from seeing huge spikes in their taxes next year. Wu notched a victory Monday in this effort, when the state House of Representatives advanced the latest version of the proposal.
Now it will head to the Senate, where a previous version of the plan stalled earlier this year. Senate President Karen Spilka said in a statement that she intends to bring it to the floor on Monday, Dec. 2, to give senators and members of the Wu administration time to “continue conversations.”
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Approval in the House came after Rep. David DeCoste of Norwell twice blocked the effort last week. DeCoste, a Republican, told The Boston Globe last week that he was concerned about how the plan would impact the wider economy of the region. Rep. Rob Consalvo of Boston reportedly spoke with DeCoste over the weekend about the topic. Consalvo, a former member of Boston City Council, sponsored the measure in the House. DeCoste was not present Monday.
“I’m grateful to Speaker Mariano, Chair Michlewitz, House and Senate Joint Committee Chairs Cusack and Moran, bill sponsor Representative Consalvo, and all the legislators and community members who have been engaged in partnership and due diligence on this critical home rule petition,” Wu said in a statement. “We look forward to continuing our work and conversations with the Senate to advance this consensus measure as soon as possible to protect Boston residents from a potential devastating tax spike.”
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More than 70% of Boston’s budget is funded by property taxes. When the COVID-19 pandemic caused higher office vacancy rates, commercial property values fell. At the same time, residential real estate values rose. As such, residential property owners will have to pay more to make up the difference.
Residential property taxes would still increase with or without the plan’s final approval. Wu, who is planning to run for reelection next year, says it is necessary to soften the blow for residential property owners. Her administration has estimated that they could be looking at a 28% increase in their tax bills in January, and a potential 14% increase in property taxes year over year without the plan’s approval.
Critics of the plan, including many in the commercial real estate industry and other business leaders, have said that it would unnecessarily hurt local businesses and cause more devaluation of commercial properties.
“While Mayor Wu’s home rule petition appears likely to soon pass on Beacon Hill, it is critical that the city partner with state and real estate industry leaders in the years ahead to craft policy solutions that do not risk placing a disproportionate tax burden on the city’s commercial real estate sector, which continues to grapple with high vacancy rates and trends like remote work. We may be compelled to revisit this issue again next year if commercial values continue to decline,” Greg Vasil, CEO of the Greater Boston Real Estate Board, said in a statement.
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Wu introduced the plan in April, won City Council approval in June, and struck a compromise with House leaders to advance it to the Senate later in the summer. It failed to gain traction in that chamber.
Wu hashed out another compromise with business leaders and fiscal watchdog groups who had previously opposed the measure last month. City Council approved the new version of the proposal despite Councilor Ed Flynn temporarily blocking the measure. Flynn, a former City Council president, is a potential mayoral candidate himself.
Despite those wins, time is still running out for the city to gain the support of the Senate.
Gov. Maura Healey would also have to sign off if it advances out of that chamber. Wu has previously said that the measure needed final approval from Healey before the end of November in order to give City Council and state officials enough time to set property tax rates before bills are set out in January.
The proposal’s prospects in the Senate appear murky. During informal sessions, any single lawmaker can delay a bill’s passage.
“I’ve heard a lot of concerns. A lot of people have reached out. Actually, surprisingly, some of my constituents who have business interests in Boston. You know, Boston’s a little bit unique in that it’s not your typical home rule petition. It affects a lot of people,” Sen. Ryan Fattman told State House News Service.
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Some of the most vocal supports of the measure have been seniors. Members of local advocacy group Massachusetts Senior Action Council have attended various hearings and meetings to tell officials that urgent action is needed to keep them from being taxed out of their homes in Boston. The group, which includes hundreds of seniors living on fixed incomes, is now urging members of the public to contact their senators and push for the plan’s approval.
“The delays in passage of the Bill have added to the stress and anxiety of thousands of homeowners in Boston. We remain hopeful that relief is coming, and urge the Senate to pass the Bill quickly to protect seniors and other at risk homeowners,” the group said in a statement. “The impending tax spike will cause significant harm for many senior homeowners living on fixed income who have invested in their communities for decades. Many seniors fear that the sharp increase in taxes may be more than they can afford, placing them at risk of losing their home and /or causing them to cut back on other important needs such as heat and food budgets.”
The Massachusetts Fiscal Alliance blasted House lawmakers for allowing the plan to be advanced.
“This vote represents a betrayal of taxpayers, businesses, and anyone who values a vibrant and competitive economy in Boston. Instead of standing up for the hard-working entrepreneurs and small business owners who are the backbone of our capital city, House leadership allowed this reckless bill to sail through,” spokesperson Paul Diego Craney said in a statement.
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