According to a recent report by the Boston Policy Institute, declining office building values are expected to result in a significant loss of $1.2 billion to $1.5 billion in commercial property tax revenue for Boston over the next five years.
As commercial property taxes make up more than one-third of the city’s revenue, this loss poses a major challenge for officials who are limited in their options for making up the shortfall. State law prohibits them from implementing sales or income taxes and raising residential taxes could lead to negative consequences such as reduced home values and political backlash.
The report recommends increasing the residential tax rate, although it would need to be raised by 25% – 30% in order fully offset losses from commercial properties. Alternatively, providing additional funding or taxing authority from state level could also help address this issue.
This development is expected have significant impact on Boston’s financial outlook and requires careful consideration of potential solutions moving forward.
