Boston Residents Face 28% Tax Hike as Office Values Slump

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Possible Deadline

The proposal likely needs to pass by late November to avoid the spike in residential rates, Wu said.

While she said she’s open to other tweaks to the tax adjustment, she rebuffed suggestions by business leaders that Boston instead trim its budget or refrain from raising overall property levies by the full amount allowed annually under state law, calling those options “financially irresponsible.”

Boston would need to cut about $265 million in spending to make up for the drop in commercial property values, comparable to the fire department’s budget or the equivalent of more than 2,000 jobs citywide, Nicholas Ariniello, commissioner of the assessing department, said in the presentation.

Separately on Wednesday, the Greater Boston Chamber of Commerce hosted a forum highlighting risks to the competitiveness of Massachusetts as a whole in the face of efforts by research and technology rivals – including North Carolina, Texas, Florida and California – to pull talent and capital out of the commonwealth.

State Competitiveness

Jim Rooney, who heads the chamber, said he recently led a tour of North Carolina’s Research Triangle, which includes Raleigh, and discovered the rallying call was how that hub “can become the new Boston in biotech.”

The state’s labor force today remains smaller than its pre-pandemic peak, in part due to a doubling in the out-migration of those age 26 to 35, according to the Massachusetts Taxpayers Foundation (MTF), a near-century-old association that last month released its first annual competitiveness report on the state.

High housing costs and poor transportation infrastructure are key disadvantages for the state, said Doug Howgate, the MTF president. While there’s no quick fix, he urged state policymakers to use the tax code and regulations to incentivize towns and cities to green-light more housing.

“Tax policy moves the needle,” Jane Steinmetz, managing principal at the Boston office of accounting firm EY, said at the forum. “In six months, you can send a different message to the business community.”

Healey on Taxes

Howgate also called on the state to take a holistic approach in using proceeds from a new 4% surtax on taxable incomes over $1 million approved via a ballot initiative in 2022, using the funds for education and transportation in ways that maximize competitiveness.

Governor Maura Healey said in an August interview with Bloomberg that “I’ll be honest about what’s happened” with that surtax, amid claims that it could lead to departures of high net worth individuals.

“I need to make this place as competitive as possible,” she said, highlighting that the revenues have helped to fund initiatives including free community college.

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