The $37 commercial tax rate

February 17, 2010
By

The effort to reduce the commercial tax rate for owners of properties worth $1 million or less, as suggested by Aldermen Mike Marchese and Joe McGonagle is a good idea in a perfect world.

But the world is not perfect – and Everett’s fiscal and tax situation is tied to the same sad facts of economic life affecting nearly every city and town in Massachusetts.

Everett needs more revenue not less. The state has cut back on aid to the cities and towns while at the same time paying basic bills for the cities and towns have gone up.

Everything about running the cities and towns is heading upward.

Heading in the opposite direction are the values of our homes and of our commercial properties – although home prices have suffered far greater losses in their value than commercial properties.

According to Mayor Carlo DeMaria, the tax rate is the tax rate. There is not much wiggle room when it comes to reducing the tax rate today.

Why?

The $37 commercial tax rate is not about voodoo economics nor is it some kind of Ponzie scheme, the mayor said.

The tax rate today, he insists, is about the dramatic shift in assessments and values – and he is right.

The $37 commercial tax rate is not the doing of the present administration.

It is the product of the past decade when city spending expanded dramatically at a time when values were soaring and tax revenues were soaring with them.

Now there has been a perfect storm sending home values plunging, home assessments have gone lower, while commercial assessments have remained higher while commercial values have dropped and city spending remains at a level that cannot be supported in the years to come.

Part of the problem is that so many of Everett’s commercial properties remain high priced when resold

“Unless we find more revenue, the tax rate is going to remain the same,” the mayor said.

His hands are tied.

Health insurance for city employees alone will add $1 million to the next budget.

Pension requirements will cost more than that.

Added costs for running the police and fire departments coupled with a loss in tax revenue of $2.9 million from the power plant are the types of costs that could come to cripple the delivery of services in a city like Everett.

Then there are the schools, which take so large a portion of the taxes that are raised.

It is endless, really.

Yet the mayor says he will have a meeting with those interested in evaluating the efficacy of the Marchese-McGonagle proposal to lower the commercial assessments on about 449 properties by 10%. That meeting will be held at city hall on February 24.

Bottom line – the mayor has inherited a very high commercial tax rate at a time when revenues are declining, property values are dropping, and when unemployment is high with no expansion of the local business marketplace in the pipeline.

Everett needs to watch what it spends and to watch more closely what will be collected by the treasury during this time of recession.

There is presently no way out.

When growth returns, there will be a way out.