close
close

Gottagopestcontrol

Trusted News & Timely Insights

Wu’s dispute with the Senate President over a tax law brings nothing
Idaho

Wu’s dispute with the Senate President over a tax law brings nothing

A spokeswoman for Senate President Karen Spilka immediately dismissed the matter: “Blaming the Senate may be politically convenient for the mayor, but it does nothing to improve a policy proposal that has been widely questioned by financial regulators and could cause serious harm to Boston’s economy.”

The statement also said: “The Senate President has received no indication that there is sufficient support among Senators to advance this policy proposal.”

The incident was bad image and bad politics. It ignores the fact that Wu herself has the power to solve her own fiscal problems – if only she would be serious and stop this unseemly blame game.

Wu remained stubborn early in the policy debate, insisting — even after vocal opposition from real estate groups and financial regulators — that the only way to protect homeowners from a significant property tax increase was to let the commercial real estate sector shoulder a larger share of an already sizable burden. (In fiscal year 2024, more than 58 percent of the city’s property tax revenue came from commercial properties, compared with 41 percent from residential properties.)

The commercial real estate market has seen tough times during and after the COVID-19 pandemic, and while there are signs of an upturn, nearly a quarter of the city’s commercial real estate stock is vacant, according to a recent report from property management and investment firm Colliers. Figures like these explain the decline in property valuations.

Longstanding state law gives municipalities limited latitude to impose different tax rates on commercial properties. The city’s motion to remove those limits, filed on June 18, surfaced only in the final days of the House’s official session. When the motion came out of the House the day before the official session ended, House Budget Committee Chairman Aaron Michlewitz had extracted a promise from Wu that she would sign an executive order limiting the scope and impact of the motion—a smaller change to the tax rate that would remain in effect for no more than three years, rather than the five years originally planned. (The city’s motion was filed in a way that the House cannot change, so this was the only way to reach a compromise.)

Spilka, who had been in a war of words with House Speaker Ron Mariano herself, took a look at the proposal and said senators had “neither debated nor discussed nor even seen the bill – the new, complex bill.” She then echoed Mariano’s words from the day before, saying that when a bill “is released the day before the end of the session … it kind of tells you that they’re not really serious about passing the bill in the first place.”

So, yes, Wu does not have a patent on irritability.

But she is the custodian of the city’s finances—hence the 8 percent increase in the city’s budget this year (even though it’s actually only 7 percent, as she argues in her WuTrain blog). The Boston Municipal Research Bureau found that the city’s planned increase in headcount for this fiscal year is 498.

In contrast, the bureau’s interim president, Marty Walz, told lawmakers at a hearing in June that when Mayor Tom Menino came to the Legislature in 2004 and called for the same temporary tax cut Wu was demanding, he had already reduced the number of city employees by more than 1,500 in the previous two years.

And while 2004 was a “traditional economic downturn,” Boston today is “almost certainly in the midst of a structural market shift as a result of the COVID-19 pandemic,” Walz said, adding, “We have to be honest that the world is not going to go back to what it was in 2019. This is not a short-term challenge to Boston’s property tax system.”

At least one councilwoman, Erin Murphy, urged Wu to start working on a “Plan B” if the tax-deferral proposal remains stalled.

In addition to potential budget cuts, the Research Bureau suggested that the city tap into a $1 billion reserve account that could either be used to cover a portion of city expenses or that the city use a “modest portion” of the reserves for targeted tax breaks for the next year or two for homeowners with incomes below a certain level.

All of these ideas are far preferable to trying to shift blame for a budget situation over which the mayor, not the Massachusetts Senate, has the final say.


Editorials reflect the views of the Boston Globe editorial board. Follow us @GlobeOpinion.

LEAVE A RESPONSE

Your email address will not be published. Required fields are marked *