Boston stuck in tax standoff as crisis looms
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Illustration: Sarah Grillo/Axios
With Boston homeowners facing a dramatic 13% spike in taxes next month, Mayor Michelle Wu is appealing to lawmakers and residents to break a monthslong stalemate over her proposed solution.
Why it matters: The tax hike represents a 34% cumulative increase since 2023 for residential taxpayers.
- Commercial properties — the driving force behind Boston's tax revenue and spending boom of recent decades — will see one of their lowest tax shares in decades due to a 6% value decline.
Wu's solution is a bill that would grant the city temporary authority to exceed state tax limits and shift some of the burden from homeowners to commercial landlords.
- It's currently frozen in the state Senate despite repeatedly clearing the House.
State of play: South Boston Sen. Nick Collins continues blocking the bill's procedural advancement, arguing the plan "jeopardizes the economy" by being too harsh on the business sector.
- Senate President Karen Spilka hasn't committed to action, citing a lack of support in her chamber and from business groups, who withdrew backing after disputing Wu's initial projections.
Wu says cutting the budget to make up for the shortfall is a no-go.
- Holding taxes flat would mean lopping off $232 million from the budget, something Wu says would devastate services and harm the city's AAA bond rating.
The big picture: Long-term, things get worse for Boston.
- The city faces $1.2 billion to $1.5 billion in revenue shortfalls over five years, according to outside estimates.
Threat level: Without legislative intervention by January, the average single-family homeowner faces a $780 increase versus $480 under Wu's capped proposal.
Between the lines: The standoff shines a spotlight on deeper structural problems beyond this year's tax spike.
- Boston depends on property taxes for 75% of its budget.
- Analysts warn commercial property values won't recover to pre-pandemic levels due to permanent remote work shifts.
Without greatly increasing property taxes, experts warn of an "urban doom loop" of budget cuts, service decline and plummeting property values that just make the city's fiscal outlook more dire.
What they're saying: "Boston residents are just going to see their taxes go up, even if Mayor Wu's tax shift proposal was passed, you're still going to see those increases, because commercial values are not going to return to their pre-COVID levels," Greg Maynard of the Boston Policy Institute told Axios.
What's next: The very Wu-friendly City Council has teed up a vote to approve the residential tax hike, but members are also urging Beacon Hill to get going on the burden shift bill.
The bottom line: Wu's efforts to reinvent the commercial spaces at the heart of the budget crisis, like her office-to-residential conversion program, might not be enough to right the ship.
- Critics say her plans are insufficient compared to the scale of downtown revitalization seen in cities like Chicago and San Francisco.