The Research Bureau released a Special Report today, Boston's Taxable Value Surpasses $100 Billion, that examines the factors contributing to the fiscal 2015 tax rate. Boston's fiscal 2015 taxable values rose to $110.7 billion, a $10.9 billion or 10.9% increase over fiscal 2014, surpassing $100 billion for the first time. Residential value continues to drive growth with a 12.1% increase over fiscal 2014. Business value, which consists of commercial, industrial and personal property (CIP), increased by 8.8%.
Boston's fiscal 2015 net tax levy is $1.83 billion, an $87 million or 5.0% increase over fiscal 2014. The property tax constitutes 67% of Boston's fiscal 2015 operating revenue budget. Since fiscal 2009, the City's net tax levy has increased by $466.6 million or 34.2%, while Boston's net state aid has decreased by $147.6 million or 42.2% during the same period.
Other highlights of the report include:
- Single-family tax bill increase: Boston's average single-family tax bill is $3,520 in fiscal 2015, a $103 or 3.0% increase over the fiscal 2014 average. The Boston average is one of the lowest among several surrounding communities and below the statewide average single-family tax bill of $5,225. Contributing to the City's low single-family tax bill is the 30% residential exemption which represents a tax cut of $1,880 and the application of classification which saves the average single-family home owner $2,122.
- Importance of economic development: New growth of $2.1 billion represents 19.4% of the increase in property value. Proposition 2½ does not allow the City to increase its property tax levy based on its full value increase. Even so, new growth represented $44.5 million in new tax revenue or 50% of the total increase in the tax levy, demonstrating the importance of economic development to continued revenue growth for Boston.
- Higher business tax burden: Boston's application of the classification law in fiscal 2015 benefits residential owners as the City shifts the maximum tax burden on to business property. Residential property represents 65.3% of the City's total taxable value, but will pay 39.3% of the total tax levy. If taxes were determined using a single tax rate with full value, business taxes would decrease by $485.6 million or 42.9% and be shifted to residential property.
- Boston at a competitive disadvantage: At 67% of operating revenues, Boston relies more on the property tax now than it did in 1981, the last full year before the implementation of Proposition 2½, when the property tax represented 61% of all General Fund revenues. Boston's inability to have more control over its own financial operations because of a restrictive home rule structure in Massachusetts puts it at a competitive disadvantage with other major cities in the country.
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