Politics

City Council passes Wu’s tax proposal for third time

The plan would shift the property tax burden onto commercial real estate, away from homeowners. It now heads to the State House, where two previous versions died last year.

Boston City Hall. David L. Ryan/Boston Globe Staff, File

February 13, 2025

4 minutes to read

Boston City Council passed a new version of Mayor Michelle Wu’s property tax proposal Wednesday after hours of intense back-and-forth debate around multiple failed amendments to the home rule petition.

The proposal, which again seeks to shift more of the city’s tax burden onto commercial real estate in order to provide savings for residential homeowners, now heads to the State House. Two previous versions of the plan died in the Senate last year after being approved by City Council and House lawmakers.

In the end, the measure received 12 votes in favor and one against. Councilor Ed Flynn was the sole “no” vote.

“We spent four hours arguing this out,” Councilor Liz Breadon said before the final vote. “We’re almost back where we started.”

Boston is heavily reliant on property taxes. When the pandemic caused residential property values to increase and commercial property values to decrease, homeowners stood to see a large tax spike to make up the difference. Wu spent much of 2024 looking to get ahead of this, with the hope of softening the blow for homeowners receiving their fiscal 2025 third-quarter tax bills.

But many worried about the potential for the plan to further imperil Boston’s businesses and devalue commercial properties. When new property valuations released towards the end of last year showed tax increases would not be as steep as previously thought, negotiations broke down. A single senator, Democrat Nick Collins of Boston, then accused the Wu administration of stoking a “campaign of fear and manipulation” before blocking a vote on the last proposal during informal sessions last month.

Now, as her bid for reelection gets going and homeowners voice their displeasure with higher tax bills, Wu is trying again. She hopes to adjust the final quarterly property tax bill that will be sent to residents in April. This would require lawmakers to pass the proposal by March.

In the event that the administration’s request to shift the property tax burden is again rejected, the new proposal would give Boston the ability to issue tax rebates to those that received this year’s residential exemption.

In the end, City Council approved one amendment to the proposal. It gives councilors oversight of the rebates and also ensures that the city only issues rebates when its rainy day fund can remain above a certain level. That amendment was included in a report submitted by Councilor Gabriela Coletta Zapata, who chairs the Committee on Government Operations. Coletta Zapata recommended that the proposal pass with that amendment.

Coletta Zapata spoke about the need for including rebates in the proposal as a backup plan.

“These are folks that… my office has been hearing from, saying ‘I am a senior on a fixed income, I am struggling right now as it is to make ends meet, and I need relief. I need relief fast,’” she said. “In my opinion, the rebate idea, while a blunt tool, is necessary.”

Over the hours that followed, Flynn put forward two amendments. One would have provided tax exemptions to “essential” city workers and another would have provided exemptions to residents that are 55 or older and have owned a home for at least 20 years in the city.

Wu’s proposal would appropriate up to $15 million a year to support small businesses and increase the exemption for small businesses on personal property to $30,000. Councilor Julia Mejia proposed an amendment that would have increased that exemption to $50,000.

Councilor Erin Murphy proposed an amendment that would have increased the residential exemption from 35% to 40%.

All four of the amendments from Flynn, Mejia, and Murphy ultimately failed in separate votes.

Before the final vote on the proposal itself, Flynn voiced frustration that other options were not properly considered.

“We didn’t compromise at all. We did not entertain any of the alternative proposals,” he said.

Flynn, who was also the only “no” vote on a previous version of the proposal that passed last year, said that the Wu administration should instead be thinking about budget cuts as a way forward. Wu recommended an 8% budget increase for fiscal 2025, and rejected the idea of cutting spending when it was suggested by The Boston Municipal Research Bureau, a fiscal watchdog organization, last year. Flynn said he recently tried to ask the administration what their preliminary budget increase estimates are for the next fiscal year, but did not get an answer.

“We have to address spending in this city. We just can’t continue spending money nonstop on every single program. At some point, the money runs out. We have to be fiscally responsible and fiscally disciplined,” he said.

Despite the ultimate approval of the proposal this week, Breadon said there is still much work to be done. She advocated for a look at the city’s revenue sources, saying that 53% of property in Boston is tax exempt.

“We have a lot of other entities that really put so much pressure on our real estate taxes to pay for the city’s services,” she said. “We need to continue this work. I think we’re only at the end of the beginning.”

In separate BlueSky posts Thursday, Wu thanked councilors who voted for the proposal and vowed not to let up as the fight moves to Beacon Hill.

Thank you for your leadership, Madam Chair @gigi4district1.bsky.social & Madam President @ruthzee.bsky.social! Grateful to all the Councilors who are standing with residents for balanced tax relief to keep families & seniors in their homes.
— Michelle Wu 吳弭 (@wutrain.bsky.social) 2025-02-13T12:43:24.950Z