Under the current system, this year the Hub will collect about $1.5 billion in property taxes. That's a critical source of income, and not just because the home and business owners who supply it are, in a sense, compensating for tax-exempt, land-hoarding entities like the commonwealth (i.e., the State House) and colleges (i.e., all of them), which occupy more than 50 percent of city parcels (value-wise). Unlike Chicago (and most other major metropolises) — which receives a slice of its state sales- and income-tax takes, and has authority to create supplementary levies — Boston has little flexibility in where it finds new revenue.
In an extensive 2007 study comparing Boston's legal powers with those of five other metro areas — including New York City, which collects tax on about 70 percent of its property — Harvard Law School professors Gerald Frug and David Barron found that "the City of Boston lacks the power that other major American cities enjoy to shape its own future." The report, cleverly titled Boston Bound, confirmed what wonks and budget analysts already knew: that home-rule restrictions had Boston by the short and curlies.
"If things don't change, they'll have to keep laying off people every year," says tax-reform advocate/gadfly Steve Wintermeier. A managing principal of Fenway Financial Advisors and Back Bay resident who senses legislative inaction on these matters, Wintermeier has taken it upon himself to sound alarms about the city's property-tax addiction and potential vulnerability — he fears that property values will continue to drop, a prospect that could result in Boston needing to collect more levies than it's legally entitled to. "Of course there's a lot of crystal ball in this," says Wintermeier, "but it's so dangerous, and nobody's really talking about it."
'A PRICE TO PAY'
At $12.79 per $1000 of assessed value, Boston's current residential property-tax rate is up 7.6 percent from 2010. Before exemptions — which are available for seniors, resident occupants, and select others — the owner of a $300,000 single-family home will be levied for nearly $4000 this year. That number is still average by Massachusetts standards, but has nonetheless steadily increased despite dips in the housing market — a trend that is bound to continue as residential owners are increasingly handed more burden (at the discretion of the city assessor). Since Boston is forced to rely so heavily on property levies, it's faced with the catch-22 of leaning on (and pissing off) residents, business owners, or both. Renters also get screwed, as landlords tend to pass the buck in this fifth-most-expensive leasing market nationwide.
"There can be a price to pay in making business-property owners pay more than their share of the value," says Sam Tyler of the Boston Municipal Research Bureau (BMRB). A nonprofit watchdog group that examines city finances, the BMRB is considered a leading voice of reason on Boston tax matters. Tyler continues: "When you have a much tighter economic situation, and global competition, every dollar is important. If I take a $10 million building in Boston, and calculate the tax for that, and then take the same building to the suburbs, I may be paying a lot less."
>> CHART: Beantown counters: Boston's addiction to property taxes <<