By Greg Ryan
Half a percentage point. After months of finger-pointing and public acrimony, that’s all that’s in the way of a compromise between Boston Mayor Michelle Wu and the business community on a property tax hike.
But as close as the two sides are to striking a bargain, there’s still plenty of frustration going around, and business leaders say a deal is not assured.
Four business-backed groups, including the Greater Boston Chamber of Commerce, sent a letter to State House leaders on Friday to say that for this fiscal year, they would accept a 181.5% shift of what commercial landlords’ share would be under a uniform property tax rate, up from the current 175%.
The proposal that got the House’s OK this summer — against those groups’ wishes — would put the shift at 190%.
Wu and her team, meanwhile, shared new draft legislation over the weekend that puts the shift at 182%, according to a copy of the home-rule petition reviewed by the Business Journal.
That half a percentage point amounts to about $20 a year for the median homeowner, according to Tufts University’s Center for State Policy Analysis. But business leaders told the Business Journal on Sunday they are unwilling to go to 182%. They say their proposal limits the tax hike for the average single-family owner to about 9%, in line with the city average over the past five years, something they say the administration has held up as its goal.
Asked whether the offer by business groups achieves Wu’s goals, a spokesperson for the mayor said only that the administration is “glad to see these groups express support for stabilizing taxes and protecting the residents they rely on as their workforce, customer base and community.” She added that City Hall will continue to engage with lawmakers about next steps. The mayor hosted town halls last week pushing residents to reach out to state senators.
‘Our final offer’
It’s the state Legislature that needs to pass a tax shift in Boston the next month or so to make it reality. But Senate leadership empowered the Chamber and three other groups — the Boston Municipal Research Bureau, NAIOP Massachusetts and the Massachusetts Taxpayers Foundation — to negotiate with the city directly, so there’s been a lot riding on the discussions between the two sides.
Chamber CEO Jim Rooney said that with its latest proposal, the business community is dropping ideas it’s pushed all year — including reduced city spending — that were meant to limit the additional tax burden that commercial landlords would take on to help residents. The offer enables Wu to avoid budget cuts while at the same time putting the residential increase at a level the administration had indicated is acceptable, according to Rooney.
“It’s like buying a car, or buying a home. We represented that as our final offer, the person says, ‘I’ll draw up the paperwork,’ and the paperwork comes back and the numbers are different,” Rooney said of the new home-rule petition. “That’s what we feel like is happening.”
While the difference between a 181.5% and a 182% ceiling may cost many homeowners mere dollars, it would mean significantly more than that for many office landlords struggling with empty buildings and a brutal financing environment.
“Going to 182% is very unwise,” NAIOP Massachusetts CEO Tamara Small said.
In the letter offering up the shift of 181.5%, the business leaders took the city to task for failing to anticipate what its budgetary spending would mean for commercial and residential taxpayers. They warned that the tax shift does not solve the fall in commercial property values now underway, and that the city will need to practice “fiscal discipline” in future years.
For her part, Wu in recent weeks has maintained that the city is taking other steps to address that issue, including tax incentives to convert empty offices into apartments and a program offering grants to retailers to help them lease empty storefronts. Since Wu first proposed the tax shift in the spring, she has agreed to come down from the initial 200% she sought and to reduce the length of the shift from five to three years, among other changes.
“We’ll see where it goes on Monday or Tuesday,” Rooney said of the discussions. “We’ve said that’s our final offer. … the conversations have been tense and fragile, and I think this deal is fragile, too.”