Chamber of Commerce: Wrong time for more taxes via CPA
Earlier this year, a coalition of Worcester residents requested that the City Council approve an order that will allow Worcester voters to determine if the city should adopt the Community Preservation Act by a binding question on the Nov. 8 ballot. At that hearing, the City Council approved the order seven votes to three, allowing the question on the ballot.
Worcester voters will be voting on whether to adopt a 1.5% surcharge with exemptions for the first $100,000 of residential and commercial properties and for low-income households and some seniors who qualify for a low-income exemption. It is argued by proponents that the city could raise approximately $3.6 million annually for historic preservation, outdoor recreation, open space and community housing.
If the CPA is passed, it allows Worcester to join the state’s Community Preservation Trust Fund. Currently there are 189 municipalities in the Commonwealth, or approximately 54% of all communities, who have adopted the CPA. Moreover, of the 26 Gateway cities in Massachusetts, only 13 have adopted the CPA to date. Seven of these communities have opted for a surcharge of 1%, five have a 1.5% surcharge and only one city has a surcharge of 3%. Further, while only half of the State’s Gateway Cities have adopted the CPA, just three of Worcester’s neighbors have implemented it here in Central Massachusetts: Grafton, Shrewsbury and West Boylston. For businesses, this would be an average surcharge on the already eighth-highest commercial tax rate in the commonwealth of $604.58 per year.
To put this into prospective, I go back to last year’s tax classification vote: There was a heated debate over an increase in the yearly property tax payments from both the residential and commercial taxpayers. After testimony from both sides stating that these increases would have a negative impact to the affordability to live and work in Worcester, a final tax line was voted on. In the end, with the new property assessments, the increase to the average residential taxpayer was $105 per year and the average commercial tax increase was $143 per year. We are now talking about adding another $44.45 per year for the average residential taxpayer and $604.58 per year for the average commercial taxpayer if the CPA is passed.
We have a historic amount of dollars available to both residents and businesses through the American Rescue Plan Act on both the city and state level. Through the act, Worcester received $149 million to address many of the same initiatives that the CPA is proposed to address. There is $15 million already allocated for the Affordable Housing Trust Fund. Couple those funds with the inclusionary zoning proposal that the chamber is advocating for, giving a continuous stream of funding going forward, will accomplish many of the things the CPA hopes to do. There is also $10,525,000 for park capital improvements earmarked under the city’s ARPA fund allocations, $12,966,624 in technology upgrade dollars and $10,313,615 that is available to allocate as needed.
Moreover, in 2021 Congress sent over $5.3 billion in ARPA funds to the Commonwealth of Massachusetts to invest in our economic recovery, jobs and sustainability. Last December Gov. Charlie Baker signed a $4 billion American Rescue Plan Act and surplus tax revenue spending bill. The bill deploys $2.55 billion in ARPA money and $1.45 billion in fiscal 2021 surplus state tax revenue while preserving a little more than $2.3 billion in federal ARPA funds for future use. ARPA money must be committed by the end of 2024 and spent by the end of 2026. The bill will allocate $624 million in housing across the commonwealth, will put $414 million into infrastructure upgrades, $389 million into education, $267 million into economic development and $500 million into workforce initiatives.
There is also $25 million to plant trees on public, private, and nonprofit lands to sequester and store carbon, manage stormwater, reduce urban flooding, while insulating homes thereby creating lower energy demand and reducing greenhouse gas emissions.
While the chamber supports affordable housing, more green space and preservation of historic buildings, 2022 is not the right time to add more taxes to the homeowners and businesses. We continue to talk about workforce shortage as a common factor across all industries - is taking money out of the pockets of those who want to hire the right message? A property tax increase is a disincentive to those we look to for employment, sponsorships, and support for many worthy causes in Worcester.
Earlier last week, Baker announced that we again have a surplus in tax revenue collections. The final fiscal 2022 collections of $41.02 billion were up $6.98 billion or 20% over actual collection in fiscal 2021. The Executive Office of Administration and Finance announced that “after accounting for $3 billion in automatic tax refunds require under Chapter 62F, the state will end fiscal year 2022 with a surplus of $1.9 billion.” That is back-to-back years with a surplus of tax revenue, yet we want to tax property owners more?
The Worcester Regional Chamber of Commerce is not opposed to the goals of the CPA. However, we believe that with the inflow of dollars that the city and state are both sitting on, increases to property taxes to our hardworking residents and businesses is not a responsible policy at this time.
Alex Guardiola is vice president of government affairs and public policy for the Worcester Regional Chamber of Commerce
This article originally appeared on Telegram & Gazette: Chamber of Commerce: Wrong time for more taxes via CPA