It is the time of year, just as it has been for more than 30 years, when the Worcester City Council sets the property tax rates for the current fiscal year.
The city chose in 1984 to adopt a dual tax rate for property taxes. This allows the city to tax residential property at a rate different than commercial and industrial property.
The residential rate is $20.07 per $1,000 of assessed value; the current commercial rate, $35.17.
Residential property makes up 71 percent of the overall tax base but yields just 61 percent of the tax levy. Commercial and industrial property, which is 29 percent of the overall tax base, pays 39 percent of the city’s overall property taxes.
Business leaders argue that the shifting of tax burden from residential to commercial and industrial properties has made the city less competitive in attracting business. They argue the city should strive to return to a single tax rate.
Meanwhile, residential taxpayers, who have seen the tax rate increase from $12.10 in 2007 to $20.07 in 2015, say ever-increasing taxes make the city less affordable.
At last night’s meeting the Worcester Regional Chamber of Commerce recommended a residential rate of $21.23 and commercial rate of $32.45.
The final vote on tax rates was postponed until next week. Councilor Frederick C. Rushton held the item under privilege after four options, including those for both the Chamber’s proposal and AWARE’s, failed to garner the minimum six votes needed for adoption.
Under AWARE’s plan, commercial and industrial property would generate $110.1 million. Under the Chamber’s proposal, the same property would generate $105 million.
The difference of $5.1 million is a significant amount of money. However, to put it in perspective, it represents just 1.8 percent of the city’s property taxes and less than 1 percent of the municipal budget.
Returning to a single rate, which for the current fiscal year would be $24.46, is impractical in the short term. However, we see the Chamber’s recommendation as a positive move in that direction.
We believe a single tax rate serves the best long-term interests of the city.
Dual tax rates create a dynamic in which the interests of residential property owners conflict with those of commercial and industrial properties. Establishing a single tax rate aligns those interests.
Moreover, the focus on dual tax rates detracts from what would otherwise be a substantive debate over the size, scope and priorities of government. To this point, about the only thing upon which the sides can agree is that property taxes in Worcester are too high. Indeed, the total amount of property taxes levied in Worcester has increased to $274.8 million this year from $181.7 million in 2007, and both residential and commercial property tax rates are among the highest in Central Mass.
A single rate would allow everyone to focus on what can be done to reduce property taxes, by growing the tax base, cutting municipal services or working to garner additional state aid.