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In a 7-4 vote on Tuesday night, the Worcester City Council raised the property tax rate on businesses while it lowered the rate for residential properties, going against the business community's call to move toward a single-tax rate as other Central Massachusetts communities have done.
However, due to the rising property values in the city, both Worcester residential and commercial landowners will see an increase on their bills.
Starting on Jan. 1, the business tax rate will rise to $35.16 per $1,000 in assessed value, up from $34.90. The residential rate will lower from $18.00 to $17.00.
Because of the rate increase and the increase in property values, the Worcester Assessor’s Office, commercial and industrial property owners will see their annual real estate tax bill rise by 5%, or $1,660, based on an average commercial property assessed at $978,340.
The split tax rate was a disappointment to the Worcester Regional Chamber of Commerce, which has advocated for the city to move to a single-tax rate. The chamber argues a single-tax rate will make the city more attractive to business, which will raise the overall property valuation in the city and generate more tax revenue without the need to raise business or residential tax rates.
In the four years leading up to 2015, the City Council had followed the chamber's plan to gradually narrow the gap toward a single-tax rate, but the last five years have seen an expansion of that gulf.
In November, the Fitchburg City Council did away with its dual rate, and Clinton started a plan to move toward a single-tax rate.
In Worcester, the councilors who supported the split rate said while they support businesses, they want to ease the burden on homeowners.
Supporting the new tax rates were Councilors-at-Large Morris Bergman, Khrystian King, Konstantina Lukes, Gary Rosen, District 1 Councilor Sean Rose, District 2 Councilor Candy Mero-Carlson, and District 3 Councilor George Russell.
Opposed were Mayor and Councilor-at-Large Joseph Petty, Councilor-at-Large Councilors Kathleen Toomey, District 4 Councilor Sarai Rivera, and District 5 Councilor Matthew Wally
For residential property owners, because single-family home valuations rose by 10%, three-family dwellings by 12% and apartment buildings by 15%, they will see a 5% increase in their annual real estate tax bills, even with the cut to the tax rate.
The Assessor’s Office said the increased assessment on the residential side will cost homeowners about $154 annually based on the average home value of $248,697.
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Worcester Business Journal provides the top coverage of news, trends, data, politics and personalities of the Central Mass business community. Get the news and information you need from the award-winning writers at WBJ. Don’t miss out - subscribe today.
Worcester Business Journal presents a special commemorative edition celebrating the 300th anniversary of the city of Worcester. This landmark publication covers the city and region’s rich history of growth and innovation.
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