State aid won't help Boston's property taxes
Jan 23, 2007 17:58 | Show Me the Money!
Although some
municipalities may get relief from increased state
aid, Boston's residential property taxes have not
been driven up by state aid cuts and won't be reduced
by increased aid. Our property tax levy is set by
simply increasing the previous year's levy as allowed
by Propostion 2 1/2, a maximum of 2.5% annually (plus
new growth). We always tax to the max. More state
aid, lottery money, local-option taxes -- none of
these would have any effect on property taxes; they'd
just provide additional money for the City to spend.
Similarly, increasing services cannot further raise our property taxes -- although the Mayor likes to threaten higher taxes to silence citizens' demands -- and slashing services will not decrease our taxes.
Boston's growing residential tax burden is driven by several factors:
1) The assessment method for large commercial properties doesn't capture their full and fair market value as required by law, steadily running at about 50% of market value, while housing assessments have risen from 70-80% to 92%-95% of market value.
2) The tax formula protects commercial owners by putting a ceiling on the their overall tax burden (at most, 70% of the levy), but puts residents at risk by setting only a floor on their tax burden (at least, 30% of the levy).
This system forces residents' tax rates up to pay any shortfall in commercial taxes that result when commercial assessments decrease. But resident don't enjoy the same benefit if housing assessments fall; commercial owners are protected by their ceiling, and once that's reached, residential rates are raised to yield the remaining portion of the levy.
3) Over half the city's land is tax-exempt. The value of exempt institutions' property totals about $12 billion, almost half of that of the taxable commercial property sector, and institutional expansion is escalating, taking taxable land off the tax rolls (but leaving the previous value in the levy). They pay only $10 million a year instead of the $90 million they should pay in PILOT, using the rule-of-thumb of 25% of normal taxes.
4) The City gives huge tax breaks to developers based on false "blight" certifications by the Boston Redevelopment Authority, costing us perhaps $100 million in lost taxes annually. These breaks last for decades, long past any possible justification for assisting development, and are even transferred to new buyers, to no purpose at all.
5) The City doesn't tax the BRA's vast property empire, worth, I estimate, over $2 billion ($60 million in taxes lost).
As to Mayor Thomas Menino's quest for local-options taxes: a meals tax might generate $16 million a year; if he thinks we need more money, he could gain far more by ceasing to give away, at no charge, hundreds of millions of dolllars worth of City property to the BRA (e.g., City Hall Plaza, worth $400 million), and take back what he's given.
Similarly, increasing services cannot further raise our property taxes -- although the Mayor likes to threaten higher taxes to silence citizens' demands -- and slashing services will not decrease our taxes.
Boston's growing residential tax burden is driven by several factors:
1) The assessment method for large commercial properties doesn't capture their full and fair market value as required by law, steadily running at about 50% of market value, while housing assessments have risen from 70-80% to 92%-95% of market value.
2) The tax formula protects commercial owners by putting a ceiling on the their overall tax burden (at most, 70% of the levy), but puts residents at risk by setting only a floor on their tax burden (at least, 30% of the levy).
This system forces residents' tax rates up to pay any shortfall in commercial taxes that result when commercial assessments decrease. But resident don't enjoy the same benefit if housing assessments fall; commercial owners are protected by their ceiling, and once that's reached, residential rates are raised to yield the remaining portion of the levy.
3) Over half the city's land is tax-exempt. The value of exempt institutions' property totals about $12 billion, almost half of that of the taxable commercial property sector, and institutional expansion is escalating, taking taxable land off the tax rolls (but leaving the previous value in the levy). They pay only $10 million a year instead of the $90 million they should pay in PILOT, using the rule-of-thumb of 25% of normal taxes.
4) The City gives huge tax breaks to developers based on false "blight" certifications by the Boston Redevelopment Authority, costing us perhaps $100 million in lost taxes annually. These breaks last for decades, long past any possible justification for assisting development, and are even transferred to new buyers, to no purpose at all.
5) The City doesn't tax the BRA's vast property empire, worth, I estimate, over $2 billion ($60 million in taxes lost).
As to Mayor Thomas Menino's quest for local-options taxes: a meals tax might generate $16 million a year; if he thinks we need more money, he could gain far more by ceasing to give away, at no charge, hundreds of millions of dolllars worth of City property to the BRA (e.g., City Hall Plaza, worth $400 million), and take back what he's given.
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