(I can't say I'm familiar with the ins and outs of this issue, but it sounds like it's worthy of further discussion. - promoted by David)
Boston Mayor Tom Menino has just rushed through the legislature his bill (H 3119) purporting to give homeowners property tax relief, but blocking the Governor's relief proposal. It will soon be before the Governor for signature. Hopefully, he will try to get it amended to include the relief he has proposed.
Backstory: To fill the property tax levy every year, residents must pay whatever commercial property owners don't pay. So if commercial taxes fall, the amount of the shortfall shifts to homeowners and renters.
The recent recession sharply reduced commercial property assessments, especially on office towers. To prevent an impending 40% jump in residential taxes, a law was passed in 2004 to raise the existing cap on the commercial tax rate, which was 175% of the basic rate, to 200%, to increase the commercial tax yield. Although officials wanted a permanent raise (because that's what would be fair!), the business interests forced a "deal" - a temporary raise -- rolling their tax cap back down to 175% by 2008, thus raising residential taxes each year.
In fact, residential taxes have risen by 78% since 2003, while most commercial properties will be paying less in 2008, after inflation, than they did seven years ago, and the commercial tax rate is the lowest since 1991.
This summer, to give residents some additional temporary relief from the falling commercial tax rate, the Governor filed legislation to freeze the commercial tax rate at its current level, 183%, for two more years, instead of letting it continue to roll back to 175% next year as slated by the 2004 law.
Instead of working with the Governor to help the residents, Menino is working with the big-business interests to block the Governor's two-year relief legislation, which would save Boston residents an estimated $70 to $90 million, 8% a year, in taxes. |
| Menino filed House 3119 to repeal the 2004 law. This bill, backed by the Municipal Research Bureau (a powerful corporate lobby, not a "city watchdog" as commonly believed), drops the tax cap back to 175% for 2008. This would have happened under the 2004 law even without the repeal -- but the repeal requires the drop and keeps it down, precluding Patrick's two-year freeze. The Bureau's director, Sam Tyler, has admitted in the press: "The urgency of passing the [Mayor's] legislation ?is that there are the bills pending that would keep it up at 183%." Yes, it is urgent -- for the big businesses, who don't want pay more, at 183%, to give residents relief.
Menino's bill would help residents in one way: it would repeal two harmful "dirty tricks" slipped into the 2004 law by business interests behind closed doors, after the original "deal" was set. The first trick drops the commercial tax rate down to 170% in 2009 - lower than the pre-existing 175% -- permanently shifting more of the city's tax burden from businesses to residents. The second, and far more devastating to residents, permanently prevents the mandatory residential portion of the tax burden from ever going back down from its highest level, no matter how low housing prices go or how high commercial values go. This portion used to be 30% of the total levy; it is already up at 42%.
This second provision was worded very ambiguously, so the meaning has just become evident as several municipalities were prevented from lowering their residential taxes despite rising commercial assessments. Many officials are angry that business interests used the residential relief law to take advantage of residents - who are already exploited by the lopsided tax system.
With the dirty tricks exposed, the businesses are willing to repeal them -- if they can also block Patrick's residential relief by repealing the rest of the 2004 law. That's the new "deal."
Menino didn't need to block Patrick's two-year tax relief to repeal the dirty tricks. He could easily have written his bill to accomplish both. But the business lobby is strong, while residents don't understand enough to fight back. So the Mayor knows he can safely save the business interests millions of dollars at residents' expense by blocking the Governor's relief, while boasting of his heroic repeal of the dirty tricks - which were never in the "deal," should never have been enacted in the first place, and should have been reversed immediately, back in 2004.
House 3119 is on its way to the Governor for signature. I believe it could still be amended if people call and demand that the dirty tricks be repealed AND the 183% two-year commercial tax freeze be added.
Then, we should demand tax system reform so that all property owners pay their fair share.
Residents shouldn't have to carry the tax load for everyone else. |
