The commerce affiliation that represents the 351 cities and cities in Massachusetts unveiled an formidable and expensive want record for Beacon Hill Thursday, that includes a sizeable and symbolic request to extend unrestricted native support by $351 million.
The Massachusetts Municipal Affiliation additionally desires to overtake the parameters of Proposition 2 ½, allow better shifts in industrial and residential property tax charges, and entry a menu of local-option taxes included in Gov. Maura Healey’s Municipal Empowerment Act laws.
“Reinvesting in flexible state aid is no longer prudent policy — it’s an urgent necessity,” a brand new MMA report says.
The suggestions comply with the MMA’s October “Perfect Storm” report that examined pressures that inflation, spending calls for and sluggish state support are having on municipalities, that are restricted in how a lot property tax income they will generate to fund native providers. That report discovered inflation-adjusted spending on operations in cities and cities grew by simply 0.6% yearly between 2010 and 2022, and steered the constraints of Prop 2 ½, which supporters see as a key test on property tax payments, “may be too restrictive.”
Below the 1980 voter legislation, municipalities can not enhance their levy by greater than 2.5% of the utmost allowable restrict from the prior yr. Three out of 4 municipalities are at or between 95% and 99% of their levy restrict, or the quantity of income they will generate earlier than resorting to override campaigns, the October report discovered. Override votes are the mechanism at the moment in place to facilitate bigger property tax will increase.
State finances writers plan to dive into fiscal 2027 income talks subsequent week, and the MMA suggestions will shade finances debate, together with the request for a $351 million enhance for Unrestricted Basic Authorities Support (UGGA). That interprets right into a 26.5% enhance above fiscal 2026 ranges, in line with the brand new report.
Finances cuts inflicted in the course of the Nice Recession created a “long-term structural hole in the municipal revenue base,” the MMA says.
In fiscal 2007, the share of UGGA ($1.3 billion) relative to complete native taxes ($11.32 billion) was 11.5%, in line with the report. In fiscal 2024, the ratio of UGGA ($1.27 billion) to taxes ($23.59 billion) was 5.4%. Over that point span, the ratio has averaged 6.78%, and MMA desires the state to revive funding to that concentrate on.
Whereas reaching that benchmark would require a funding infusion of roughly $356 million, MMA settled on the extra symbolic quantity of $351 million. The funding enhance would “restore a measure of balance to a state-local fiscal partnership that has drifted out of alignment for more than a decade,” the report says.
“Working together, we can reverse the trends that have put municipalities in an untenable position and ensure the high-quality, essential local government services that make our communities great places to live and work,” mentioned Gardner Mayor Michael Nicholson, who’s president of the Massachusetts Mayors’ Affiliation.
MMA additionally provided suggestions to change Prop 2 ½, together with enabling voters to approve overrides that will be phased in over a number of years with a view to mitigate “abrupt tax shocks while giving local governments breathing room.” By means of voter referendum, MMA says municipalities must also be allowed to extend their 2.5% levy restrict to a “specific economic indicator,” such because the Client Value Index, or to an area metric.
“Cities, suburbs, and rural communities face very different challenges for balancing budgets and living within Proposition 2½,” Northfield City Administrator Andrea Llamas mentioned. “Overrides are a non-starter for most communities, and state law prohibits communities from using many local revenue-generation strategies. The MMA plan offers a needed degree of flexibility.”
Throughout a radio interview in October, Boston Mayor Michelle Wu mentioned Prop 2 ½ ought to be repealed, contending that “cities already have a very, very tight belt cinched around.” Healey doesn’t assist repealing the voter legislation, in line with spokesperson Karissa Hand.
Wu’s newest battle on Beacon Hill revolves across the deadlock on her residence rule petition to briefly shift extra of the town’s property tax burden onto industrial property house owners. With out legislative intervention, which seems unlikely, the common single-family house owner will see a 13% property tax enhance in January.
The MMA report broadly wades into the property classification debate with a trio of suggestions.
It suggests giving municipalities better flexibility for reclassifying property based mostly on use and the income generated. Cities and cities ought to equally have extra flexibility over fee shifts, authorizing them to “provide larger shifts between Commercial‐Industrial‐Personal (CIP) rates and residential rates in a given year,” the MMA says. Increasing local-option exemptions for “targeted populations” may additionally provide aid for susceptible residents, equivalent to seniors and veterans, in line with the report.
The Senate on Thursday may revive laws that will set up a “tax shock prevention credit” for when residential property taxes skyrocket by greater than 10% within the third quarter. Municipalities would resolve which eligible teams, together with adults ages 65 and older, can obtain the help.
— Alison Kuznitz / State Home Information Service
Alison Kuznitz is a reporter for State Home Information Service and State Affairs Professional Massachusetts. Attain her at [email protected].
