MAYOR MICHELLE WU, citing foreboding property tax trends heading into January, is renewing her call for Beacon Hill to approve a temporary shift in the city’s tax rate to ease the hit facing Boston homeowners. But it’s unclear whether the state Senate, which has given the plan a cold shoulder since it was first proposed almost two years ago, is any more favorably disposed toward it today than before.  

Boston continues to struggle with the aftereffects of the pandemic, which reshaped in-person work patterns and sent commercial property values falling as office vacancy rates rose. That has put added upward pressure on residential taxes in a housing market that continues to see home values rising.  

In letters to the city council and business leaders on Wednesday, Wu warned that residential property taxes are poised for a second double-digit year-over-year increase in a row, with officials projecting a 13 percent rise next year. For homeowners, the pressure of these continued hikes is “unsustainable,” Wu said.

The Boston City Council has three times voted to send a Wu-sponsored home rule petition to the State House that would let the city adjust its tax rates to relieve the burden on residential property owners by nudging up the tax rate paid by commercial property owners.  

But it has stalled on Beacon Hill as lawmakers say they are reluctant to burden already struggling commercial property owners with higher tax bills. A coalition of business leaders involved in shaping a more moderate version of the home rule’s language has also taken a step back. 

Commercial property owners in Boston are taxed at a higher rate than residential taxpayers, but Massachusetts communities are limited by state law to setting the commercial rate at no more than 175 percent of what the overall rate would be if all property were taxed at the same rate. 

Wu originally proposed boosting that to 200 percent and then gradually ratcheting it down over five years. But she reached a compromise last year with business leaders on a plan that would allow the commercial rate to go higher for three years, setting the maximum commercial rate at 181.5 percent for the first year, 180 percent the second year, and 178 percent the final year before returning to 175 percent in the fourth year. 

The measure also includes some additional tax relief for seniors and small businesses.  

With tax bills due to be sent out a few weeks from now, Wu said at a press briefing on Tuesday that getting the home rule passed is “an urgent matter.”  

The Legislature started its year-end break before Thanksgiving, however, and is not scheduled to return to formal sessions until January. 

Each year, the city assessing department updates the values of the city’s parcels and determines what the tax levy needs to be to support the city budget, roughly 70 percent of which is dependent on property tax revenue.   

In fall 2024, the picture looked grim for homeowners, with the Wu administration projecting that residents’ taxes could increase by 33 percent without state action allowing Boston to shift the burden. 

Business groups initially got behind the compromise proposal, which would have limited annual increases for residential property owners to 9 percent by increasing the tax burden of commercial property owners. 

Though the House signed off on the plan last year, the final expected residential property tax increase of 10.5 percent was far less than the worst-case scenario under Boston’s projections. The coalition of business leaders then got cold feet, and the home rule died without a vote in the Senate, where Sen. Nick Collins, of Boston, emerged as the measure’s most vocal opponent.   

Without naming Collins, the mayor on Tuesday noted the path to approval “was blocked by a single state senator.”  

According to the city assessing department, residential property values climbed 3 percent and commercial values dropped by 5 percent last year, which led to an actual 10.4 percent tax increase for the average single-family homeowner, or $575 year-over-year. For all residential property types – including multi-family homes and larger apartment buildings where the increased cost may get passed on to renters – Wu said, it was a 14.9 percent annual tax increase. 

This year, Boston assessing officials expect the trend to continue. Based on numbers that are “as close to final as they will be before the ultimate, final step” of Department of Revenue certification, Wu told reporters that 2025 residential valuations look like they will rise 2 percent and commercial valuations will drop by 6 percent.  

If the numbers hold, she said, the average single-family homeowner will now be facing a tax increase of 13 percent, or roughly $780, next year. By contrast, the average Class A office building will have a 4.4 percent decrease in its tax bill. 

Wu said Tuesday that she still finds the compromise number to be “too high and unsustainable year after year.” But that’s where the compromise with business leaders landed, she said, under the multi-year proposal. “Ultimately, not only were we at the 9 percent — we were beyond it,” she said of last year’s residential tax increase, “and this year, we are even further beyond it. So I continue to call for passage – immediate passage – of our home rule petition.” 

If the final certified numbers show a still-foundering commercial sector and booming residential market, Tamara Small, CEO NAIOP Massachusetts, which represents the commercial real estate industry, says it continues to be the wrong time to shift more of the tax burden on commercial owners.  

“We have been saying for quite some time that the commercial sector is very much struggling,” she told CommonWealth Beacon. “And if, as a result of this, we have seen reduced property valuations, NAIOP does not believe that the solution is to further punish a sector that is struggling by increasing its tax burden.” 

While urging quick action on the home rule, Wu did not point to any indication of a breakthrough that would have the Senate ready to get on board.  

Asked if Senate leadership has requested any stipulations to get the bill moving, and whether she has spoken recently with Collins, Wu said she or her team have reached out to members of the Boston delegation and Senate leadership but “have not received any specific requests of what needs to happen.”