Boston Mayor Michelle Wu and business groups have resolved their standoff and reached an agreement on her proposed property tax shift.
Mr. Wu is seeking to shift a large portion of the property tax burden to commercial real estate in order to alleviate the soaring taxes paid by residents. But business groups balked at the move, saying the sector was still experiencing post-pandemic pain and real estate values were falling due to increased remote working.
Business groups last week withdrew their calls to cut City Hall spending and agreed to the idea of changing property taxes. Wu first proposed the shift in April, but revised his proposal to reduce the size of the shift and shorten the five-year period to three years.
Under the deal announced Wednesday, interim tax changes are to end after three years. The largest shift would be 181.5 percent in 2025, followed by 180 percent in 2026 and 178 percent in 2027.
An earlier version of the tax shift passed the City Council and, after additional negotiations, the House. But Wu’s proposal was blocked in the Senate, where Senate President Karen Spilka said the final proposal would need approval from the business community.
Through the weekend, the difference between the two was 0.5 percentage points. Jim Rooney, CEO of the Greater Boston Chamber of Commerce, said 181.5 percent was the business group’s “final” proposal.
The agreement reached Wednesday also allows city officials to appropriate up to $15 million annually to cushion the potential blow to small businesses from the transition. The personal property tax exemption for small businesses will also increase from $10,000 to $30,000.
The deal would require a new home rule petition to get through the City Council and Beacon Hill. Approval of the new bill is taking time because the tax rate was approved by the city council in November and the bill must be paid to taxpayers by January.
Leaders of business groups involved in the negotiations included Jim Rooney, CEO of the Greater Boston Chamber of Commerce. Tamara Small of NAIOP, Massachusetts; Marty Walz, Interim Chairman of the Boston Bureau of Investigation. Doug Howgate, president of the Massachusetts Taxpayers Foundation;
