Boston Mayor Michelle Wu on Monday passionately defended her plan to temporarily increase the city's commercial property tax rate, arguing that healthy growth in Boston means a thriving local economy.
“In the short term, this is a necessary legislative mechanism,” the Democratic mayor said during an appearance on WBUR's “Radio Boston.” “In the long term, it's about attracting more businesses to Boston, [provide] More housing opportunities.
Wu's plan, which must be approved by the Boston City Council and the state Legislature and signed by Democratic Gov. Marla Healey, has faced pushback from commercial property owners, some of whom say they feel like second-class citizens.
And some City Council members are cautiously skeptical of the plan, fearing it will hurt small business owners and exacerbate an already tough economic situation in downtown Boston, The Boston Globe reported last week.
Wu's office launched the initiative in response to continued vacant commercial positions in the wake of the pandemic as workers in and around the city continue to pursue hybrid work schedules.
Wu reiterated the city's argument to WBUR on Monday that a “temporary” increase is needed to avoid increasing homeowners' property taxes as officials try to meet balanced budget requirements.
“This is a temporary increase in commercial taxes to make sure that everyone's taxes are as close as possible,” Wu told WBUR on Monday.
Wu's request for a so-called “petition for autonomy” is similar to one made by former Mayor Thomas Menino in 2004 to offset the blow from the collapse of the dot-com bubble, the Globe reported last week.
The need for tax revenue within the city is huge and real.
A report released in February by the Boston Policy Institute warned that vacant office space is on track to cost the city more than $1 billion over the next five years.
Boston receives more than one-third of its total tax revenue from commercial property taxes, “by far” the most of any major U.S. city.
As a result, “Boston will be especially vulnerable to declines in property values,” the analysts said, leaving the city “with few options to replace lost tax revenue.”
And because state law prohibits cities from imposing local sales or income taxes, “residential property taxes would have to increase by 25 to 30 percent to fully offset the decline in commercial real estate,” the analysts wrote in the report.
Speaking on WBUR on Monday, Wu touted Boston's cultural, technological and cultural amenities as reasons for companies to come to and stay in the state's largest city.
Wu dismissed the notion that Boston is in competition with surrounding suburbs, which have available office space but don't have to worry about getting in and out of the city.
“We need to work together as a region. Boston hasn't lost,” he said. [out] “To Newton and Cambridge,” she said, “we're one neighborhood. If they thrive, we thrive. We're one metropolitan area.”