Editorial: A Step In The Right Direction
The city council's annual setting of commercial and residential tax rates? Welcome to the Worcester business community's Groundhog Day moment.
Just like in the movie, every year prominent business leaders in their blue suits dutifully march into the Worcester City Council chambers and give testimony to the inherent unfairness of the widening gap in Worcester’s dual commercial and residential tax rates.
And while they may be thanked for their testimony, every year the city council follows their appeal with a vote for the lowest allowed residential tax rate, and by default, the highest possible raise in the commercial tax rate. At least, that’s the way it’s always been. Until now.
By a narrow vote of 6 to 5, the council has for the first time in eight years voted to not approve the highest increase in taxes for commercial property owners. Yippee. The numbers don’t add up to much — the commercial rate grows from $33.28 in 2010 to $34.65 while the residential rate increases from $15.15 in 2010 to $16.06 in 2011. But the vote does count in a symbolic way — it’s a move back in the direction of sanity and fairness. At the same time, it’s a one-time annual adjustment that must be followed by a lot more action, and ultimately a long term commitment to pushing the rates closer together to make any real difference over time.
Finding Momentum
How did the deeply ingrained habit of sticking it to the commercial taxpayers year after year change so abruptly?
Much of the credit must go to the Mayor’s Task Force on Job Growth and Business Retention.
Assembled in April 2010 by newly elected Mayor Joseph O’Brien, the 36-member group produced a set of recommendations in four major categories, one of which was labeled “Promoting a Fair and Equitable Taxation System.”
The final report was published in August of this year, and argued that the city substantially address the large gap between commercial and residential property rates.
While the report did not endorse a specific model for that evening of the rates, the report charted a three-year fix to equalizing the rates, and a three-year fix to get the gap between the two rates closed by 50 percent.
In the single tax rate projection, the rate would become about $19, and in the scenario where the commercial/residential gap is narrowed to 50 percent, the two rates project to be about $17 for residential and about $26 for commercial. Either plan, executed over the next three or four years would make a substantial difference in the story Worcester is able to tell current and future commercial property holders.
Stopping the historic slide and actually increasing Worcester’s commercial base over time can lead to a lot less pressure on residential rates, and an easing of the tax burden across both groups.
But without committed action to move the two rates substantially closer, this latest city council vote will prove meaningless.
The reality over the border
Based on the numbers, Worcester is not well positioned to attract businesses. Neighboring towns have lower commercial tax rates, including in Shrewsbury ($10.31), Grafton ($12.43), Holden ($14.80), West Boylston ($15.17) and Leicester ($11.73).
Auburn is the only neighboring community with a spilt tax rate ($14.34 for residential and $24.06 for commercial). By all scorecards, Worcester’s current commercial rate of $34.65 is awfully high.
So while we applaud the Worcester City Council for its recent vote, the gap between residential and commercial rates remains debilitating high.
Our leaders must commit to a course of action to narrow the gap and follow through with that plan.
Without true leadership and foresight in this area, Worcester will never make the gains necessary in attracting business. And if we continue to lose businesses to lower-cost communities we will never truly capitalize on the city’s many assets.
WBJ Web Partners
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