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In breakfast budget speech, Wu spreads ‘false information’ about Boston’s financial future
Presenting her FY25 budget plans for Boston at a breakfast Wednesday, Mayor Michelle Wu strongly rejected the idea that declining commercial property values could lead to a fiscal crisis for the city.
“I just want to address some of the information that’s been floating around about, ‘Are we about to have an economic collapse? Is everything doomed? Are we on the edge of a precipice and therefore are we making decisions that are sustainable?’” Wu said.
In February, a report of the Boston Policy Institute predicted that declining commercial property values would lead to a reduction in property tax revenues and a revenue shortfall of more than a billion dollars over the next five years, leading to a decline in the quality of services of the city and potential residents choosing not to live in the city. The report warned of a “fatal cycle” in which this sequence starts over and repeats itself indefinitely, with its effects continuing to worsen.
However, in his presentation to Boston City Council members, Wu said that currently, decreased commercial property tax revenues would simply be offset by an increase in the residential property tax, with total property tax collections of the city remaining stable. She added that Boston’s economic indicators remain promising, with unemployment low, home values rising and pedestrian traffic in the city center increasing.
“To point to some false information that the city may be facing a billion-dollar deficit — that’s simply not true,” Wu said. “The way our tax legislation is structured… what happens when one sector can see its valuations fall is that it simply switches to another sector. There is no choice.”
The Wu administration has signaled, however, that it believes commercial property tax assessments could decline. At the end of March, Wu announced that she was filing a home rule petition seeking permission from the state Legislature to temporarily increase the commercial property tax rate to prevent the decrease in commercial assessments from creating an undue burden on residential property owners.
Currently, the city derives three-quarters of its revenue from property taxes, with two-thirds of that amount coming from businesses and one-third coming from residents.
As soon as Wu’s presentation ended, the Boston Policy Institute emailed a statement calling his report “the ghost of Christmas future” and urging the mayor to “take[e] the questions [it] seriously identified and prepare[e] for each scenario.”
The $4.6 billion operating budget Wu presented to councilors on Wednesday is 8% higher than last year’s, but Wu said that number is misleading. Includes costs generated by the creation of a new urban planning department staffed by former employees of the autonomous Boston Planning and Development Agency. However, Wu said, revenues from the BPDA will simply be transferred to the City Council to cover staffing costs, meaning the move will actually be revenue neutral.
Without this change, Wu said, the FY25 operating budget is about 5% higher than its FY24 counterpart.
The mayor is also proposing a capital plan between years 25 and 29 totaling $4.7 billion.
Wu’s operating budget and capital plan requests include $6.8 million for programs designed to help Boston residents enter the job market; $2 million for a new Home Ownership Opportunity Fund that would remove properties from the speculative market; a $1 million funding increase for affordable housing for individuals experiencing homelessness and addiction; and $1.3 million for 12 new Emergency Medical Technicians.
The mayor also proposes spending $31 million for a new library in Fields Corner; US$54.5 million to repair and renovate urban swimming pools; $65 million for a new community center at Grove Hall; $155 million for the reconstruction of roads and sidewalks designed to increase mobility and safety on city streets; and $1.3 billion for Boston Public Schools facility improvements.