B
oston Mayor Michelle Wu's plan to reduce an outsize property tax increase on homeowners by temporarily boosting rates on commercial landlords has stalled in the Legislature, with business groups and skeptical state senators pushing back. The proposal aims to offset a decline in commercial real estate values, which have eroded the value of office buildings and other business properties. Recent data from JLL show a slight improvement, but the decline threatens Boston's operating budget, which relies heavily on commercial real estate taxes.

    Wu has refused to modify her bill, despite opposition from lawmakers who think City Hall should share the financial pain by reducing spending or tapping reserves. The mayor argues that such moves would be "very financially irresponsible," and instead proposes cutting the city's $4.64 billion budget by $265 million, which would force a layoff of 2,200 city employees.

    Business leaders say they're not asking for the entire $265 million reduction, but rather a package of changes to soften the blow on commercial landlords while still providing relief for homeowners. "We need to piece a solution together," said James Rooney, CEO of the Greater Boston Chamber of Commerce. Marty Walz, interim president of the Boston Municipal Research Bureau, added that a 1 or 2 percent trim in spending is easily manageable without crippling the city.

    Wu has proposed several concessions, including scaling back the timeframe for the proposal and setting aside $45 million to mitigate the impact on small businesses. However, senators are leery of her executive order approach, which they see as separate from the home rule petition. Business leaders say the concessions made by the mayor were not significant.

    New data show that commercial assessments will drop an average of 7 percent in January, while residential assessments will increase 4 percent. Without Wu's plan, residential tax bills would increase an average of 14 percent compared to last year, and 5 percent if her plan is approved. The impact on commercial properties would vary, but a typical building valued at $5 million would see its tax bill fall 6.7 percent under the new assessments.

    As a possible compromise, the city could kick in enough money to split the difference between the two outcomes, leaving an increase of less than $250 on the average residential tax bill between January and June.