According to the letter, their plan calls for a temporary increase in the tax rate paid by commercial properties over the next few years, while increasing the average residential tax bill for single-family homes in Boston by 9% year over year.
On Friday afternoon, Mr. Wu’s office released its own proposal, calling for a slightly lower cap on resident tax increases to 8.5%, according to a copy of the draft proposal obtained by the Globe.
“I am pleased that these organizations are voicing their support for stabilizing taxes and protecting our workforce, our customer base, and the residents we rely on as a community,” Wu said in a statement Sunday night. mentioned in. “We will continue to consult with MPs on next steps to ensure we strike the right balance to ensure stability over the next three years.”
“The Senate president understands that Boston business leaders and economic experts have proposed a compromise,” a spokesman for Spilka said in a brief statement Sunday night. She is encouraged by this and hopes that productive dialogue continues and a deal can be reached, as it will be difficult to pass a final bill in the Senate without the full support of the business community. ”
Mariano did not immediately respond to a request for comment Sunday.
It was unclear Sunday whether the two sides would broker a compromise to bridge the gap and greenlight the project on Beacon Hill. But the exchange signaled a possible end to months of political infighting over how to pay the city’s utility bills.
Either way, business leaders warned lawmakers that the property tax deal does not solve the fundamental problems facing the city’s financial future due to declining commercial real estate values. .
“The outcome of this petition does not resolve fundamental structural changes to the City of Boston’s property tax burden. The City will approach future budgets with a clear understanding of the spending implications. “We need to show continued vigilance and fiscal discipline.” Letter signed by James E. Rooney, Chief Executive Officer of the Greater Boston Chamber of Commerce. Doug Howgate, Massachusetts Taxpayers Foundation Chairman; Tamara Small, CEO of real estate organization NAIOP Massachusetts; and Martha M. Walz, interim president of the Boston Bureau of Investigation.
Nearly three-quarters of Boston’s $4 billion-plus annual budget comes from local property taxes, and two-thirds of that revenue comes from commercial real estate. Commercial properties are already taxed more than twice as much as residential properties, and state law limits commercial property tax rates from increasing further.
Wu warned that if nothing is done, resident taxpayers will see their average tax bill for a single-family household increase by 14% as the value of office space plummets. So she asked the state Legislature and Boston City Council for authority to raise commercial rates to avoid raising taxes on residents, despite fierce opposition from business groups.
Last summer, the City Council and state Legislature supported a plan that would limit the average household tax increase to about 5% over the previous year and temporarily increase the tax burden for commercial property owners. But the bill stalled in the state Senate, and by early August Spilka suggested it was invalid.
“While blaming the Senate may be politically expedient for the mayor, it is widely questioned by financial watchdogs and would seriously damage Boston’s economy,” said Sarah Blodgett, a spokeswoman for Spilka. “It does nothing to improve potential policy proposals.” Remarks at that time.
Mr. Wu, Mr. Spilka’s office, and business leaders have been negotiating in recent weeks, and on Friday morning, the business group presented a compromise.
Taxes on commercial real estate in Boston are currently about 175% of what they would have been if the city had adopted a single property tax rate, according to the city.
The group’s new proposal would temporarily raise the ratio to 181.5% next year, then gradually reduce it over the next few years, returning to the current level in fiscal 2028, according to the letter.
Under the same proposal, residential property taxes for the average single-family homeowner would rise by about 9% instead of 14%. The numbers below are consistent with the average growth rate over the past five years.
Meanwhile, Wu’s proposal would raise the tax burden on commercial real estate to 182%, while setting aside up to $15 million for each tax increase to help small and medium-sized businesses cover the higher tax rate.
As a home rule petition, any proposal must first be approved by the Boston City Council, then the state House and Senate, and signed by Gov. Maura Healey.
Regardless of the final details, business leaders reiterated their concerns about the city’s budget in a letter to lawmakers Friday.
They argued that the city should cut spending, tap into reserve funds and provide direct assistance to vulnerable residents, rather than shifting the tax burden further onto commercial property owners.
The letter states that the city should limit budget increases to 3% to 4%, and that the city could “reduce” increases in housing property taxes by practicing “spending restraint” recommended by the business community. You have a choice,” he said.
“Emerging market trends in commercial real estate are not temporary or cyclical changes, and the City must address the long-term budget implications through a responsible approach to budgeting,” the letter states.
Some experts have warned that falling property values for the city’s commercial real estate pose a long-term threat to the city’s budget.
Since the pandemic, the market for office space in the city has plummeted due to the rise of remote work. An estimate earlier this year by the Center for National Policy Analysis at the Boston Institute for Policy Studies at Tufts University predicted that tax revenue from commercial real estate in Boston could decline by up to $1.5 billion over the next few years.
Gregory Maynard, executive director of the policy institute, criticized the proposed temporary tax changes in a statement Sunday afternoon. He said there was little evidence that the disruption caused by falling commercial real estate values could be “smoothed out” by temporary changes.
“The City of Boston should engage in an inclusive, transparent, and data-driven dialogue about the unique budget challenges facing the City, with the goal of educating the public and achieving consensus. “Nothing close to this has happened so far,” Maynard said.
Globe staffers Niki Griswold and Katherine Carlock contributed to this report.
John Hilliard can be reached at john.hilliard@globe.com.
