City, Boston business groups reach deal on property tax fix, Wu says

With her existing proposal hung up on Beacon Hill, Boston Mayor Michelle Wu said Wednesday that she’s sending a new proposal to the State House that she believes will “stabilize property taxes and protect homeowners and renters from a dramatic spike.”

The Massachusetts House in July approved a home rule petition from the City of Boston designed to shift some of the property tax burden to commercial owners temporarily to lessen projected tax increases on residents. That plan hasn’t moved in the Senate as the business community has mounted an all-out offensive to prevent its passage, including calls for the city and state to take an alternate approach. 

In making her announcement, Wu’s office said her new plan comes after four Boston-based business groups “have reached consensus on a path forward for the City’s residential tax relief proposal.”

The mayor’s office said the new home rule petition includes the following features:

• A three-year step-down period, compared to five years as originally filed.
• Maximum shift levels not to exceed 181.5$ in FY 25, 180% in FY 26, and 178% in FY 27.
• Authorizing language for the city to appropriate up to $15 million for each of the three years (up to $45 million total) that the shift is in effect to offset potential impacts on small businesses due to the shift.
• Raising the personal property tax exemption threshold for small businesses from $10,000 to $30,000.

The major new development could signal a breakthrough on a topic that has divided Beacon Hill and left Wu, who is up for reelection next year, reaching for solutions to address projected projected property tax increases at a time when businesses and their employees are not filling up city office spaces the way they used to before the COVID-19 pandemic. 

Mayor Michelle Wu wants to keep from having to tax Boston’s residents more to pay for a shortfall in the city’s budget caused by more people working from home, all by temporarily bumping commercial tax rates — but she’ll need the Massachusetts Legislature’s OK,

“The proposal allows for a modest modification to the current tax system with clear guardrails to prevent too great of a burden from being placed on commercial taxpayers,” the mayor’s office said in an announcement just before noon Wednesday. “This proposal is revenue-neutral and time-limited, stepping down over three years back to the current classification system.”

The new plan needs Boston City Council approval and then passage of a new state law to take effect. Due to tax rate-setting pressures, the process of advancing the plan will need to happen relatively quickly to achieve its intended effects.

The Legislature passed a similar measure to help former Boston Mayor Thomas Menino deal with upheaval in city property taxes.