The high commercial tax rate is causing a negative impact to many businesses throughout the city and especially in the downtown area.
Coupled with the downturn in the economy, the commercial tax rate, which now stands at $37 per $1,000 – the second highest in the state – is making the sale of commercial buildings almost impossible and is causing rents to rise, as property owners try to pass on some of the cost of running their properties to tenants in order to pay their taxes.
“We are struggling with the high commercial tax rate,” a business owner told Mayor Carlo DeMaria at last week’s tax summit on the $37 commercial tax rate held Wednesday night at Orsogna Plaza.
More than 100 business owners and city officials who attended the meeting echoed this concern over the tax rate.
A review of commercial tax rates in neighboring communities reveals that Everett’s commercial tax rate is the highest in the area when compared with Revere at $26.84; Malden at $21.38; Boston at 32.68 and Medford at $21.69.
“I don’t mind paying as long as everything is being done to keep it as low as possible,” Dr. Paul Tesone said.
The mayor said that he is looking at the 2011 municipal budget increasing no more than two percent.
However, even a two percent increase will negatively impact property owners looking for some form of tax relief.
Last year the total 2010 budget for the city was $131M with the school department share representing more than $51 million with the vast amount of that money coming from the state funding.
The mayor noted that the recent valuations of commercial property show on average a 15% decrease in valuation.
“Despite the drop in valuations, we won’t see a decline. There will probably be an increase in the tax bill,” Bob Mitchell, a Chamber of Commerce member, told the audience.
The mayor said that no pay raises had been given to any city department heads and that as jobs become vacant those jobs have not been filled. He also noted that he has not laid off any city workers.
Stephen Sachetta, well known local businessman with substantial property holdings in Everett Square, questioned why there had been no layoffs stating, “We have had to do layoffs in our businesses.”
The mayor noted that if he did layoffs then the savings in the first year would be small as the city is self-insured and would have to pay the entire unemployment cost for each employee who had been laid off.
“There are many people in this room who can help the mayor come up with solutions,” Michael DellIsola said.
The mayor said he welcomed all outside help. He noted that presently his office is working with the Chamber of Commerce to look at the 2011 budget and propose new ideas.
This budget will take effect on July 1. He stressed that the fixed dual costs of health insurance and pensions liabilities are crippling the city.
One business owner asked that the interest rate on late payments for city tax bills be reduced from 14%.
Others business owners asked that the tax rate between commercial and residential be more equitable.
The current residential tax rate is $13.51 per thousand and the new taxable valuation of the residential properties for the 2011 budget has increased slightly.
Another business owner noted that the tax rate is forcing businesses to leave the city warning once Broadway is boarded up and plastered with graffiti then the city is going down the tubes.
The mayor conceded that he could base the commercial tax rate at a lower ratio then the present 175%. This ratio is a multiplier based on the residential tax rate.
Alderman Michael Mangan said that he is seeking legislation to have many multi-family buildings become condominiums that would help increase the tax receipts and more homeownership.
“The city’s issues are structural that you inherited,” Chamber member Mitchell said. “However there is a need for a great will to address change,” he added.