It’s typically a mundane, pro forma step. But for the second consecutive year, the Boston City Council’s vote this week to set the next year’s property tax rates came with heavy sense of political defeat.
At its last meeting of the year Wednesday, the council approved new property tax rates that, come January, will increase taxes on single-family homes by an average of 13 percent year-over-year, the second double-digit increase for residential property owners in as many years. The vote all but marks the end of Mayor Michelle Wu’s latest crusade for state approval of a proposal she said was critical for easing those tax hikes for homeowners.
Several councilors voiced frustration this week that state senators had — for the third time — refused to advance Wu’s legislation, which would have softened the steep tax increases on homeowners by increasing the tax rate for commercial properties.
“If you represent Boston, you need to represent Bostonians, you need to make sure that they have an affordable place to live,” Councilor Sharon Durkan, a close Wu ally, said Wednesday. “For young families and low-income seniors in my district, the lack of action from the Senate, it has a ripple effect. It has a destabilizing effect.”
Councilors voted unanimously Wednesday to set the residential exemption at 35 percent — savings of up to $4,353.74, officials said — and the commercial property tax rate at 175 percent the residential rate. Both are the maximums currently allowed by state law.
That will raise the residential property tax rate in January from $11.58 per $1,000 in value, to $12.40, city officials said Monday — an increase of $780 per year for the average single-family home. The commercial rate will increase from $25.96 per $1,000 in value to $26.96. But because of a drop in commercial property values, many office buildings will actually see their property tax bills go down.
The council votes every year to set tax rates and exemptions for homeowners. Bills are mailed by Jan. 1.
Boston relies on property taxes to fund most of its budget. As commercial property values have fallen in the wake of the pandemic, the city has had to collect more in property taxes from homeowners to make up the difference.
Boston taxes commercial property at 175 percent the residential tax rate, the highest allowed by state law. For nearly two years, Wu has sought Beacon Hill’s permission to temporarily set the tax rate on commercial properties even higher, before stepping down to the current ratio over several years, in order to ease the transition to higher taxes for homeowners.
Last week, Wu announced that, without state action on her proposal, the average single-family home would see a punishing increase in its tax bill. At the same time, because many commercial properties are now worth less, the average high-end office building could expect a 4.4 percent reduction, about $210,000, in its tax bill, Wu said.
Wu said that under her plan, commercial properties would see a smaller decrease in their tax bills, and homeowners would see a smaller increase in theirs. Homeowners already weathered a 10.4 percent on average year-over-year increase this year, after Senate lawmakers declined to advance Wu’s proposal last year.
Wu got her measure through the council and House twice, and negotiated a compromise version of the legislation with business and real estate group leaders who had initially opposed her plan. But those organizations walked back their support, and state Senators killed the bill, after certified property valuation data showed the tax hike homeowners were facing was not as dramatic as city officials had projected earlier in the year. Wu refiled the legislation for a third time early this year, but it’s languished without movement for months.
Ahead of the council’s Wednesday deadline to set tax rates, Wu last week had ramped up her pressure campaign on lawmakers in the upper chamber to advance her proposal. Debate over the measure got increasingly heated as Wu took to social media to rally public support for the measure, at times directly targeting the senators who had blocked the legislation in the past.
But Senate leadership this week indicated they would not approve the measure.
“The city should have engaged with the Senate on these options well before now,” Senate President Karen Spilka said in a statement Monday. She added that “the Senate is deeply committed to making Massachusetts more affordable and there are many ways to provide meaningful relief.”
Instead, senators may pursue other proposals for tax relief, senators indicated this week.
Niki Griswold can be reached at niki.griswold@globe.com. Follow her @nikigriswold.