Boston’s Tax Rates Set for FY19

Property tax value increased by $10.6B or 6.9%

Substantial new growth in FY19 enabled Boston’s property tax levy to increase by $133.4M or 6%, far greater than the Proposition 2½ levy limit of 2.5%.  New growth, primarily from new development, totaled $78.7M, the largest new growth amount ever, based on the market activity in 2017.  The City should devote more of the significant new growth levy to non-operational expenses and long-term liabilities in anticipation of the eventual slowdown in the economy when new growth will be less strong.

Boston’s Taxable Value

Figures in Billions

FY18 FY19 Increase % % of
FY19
Total
CIP* $54.0 $56.9 $2.8 5.3% 34.6%
R $99.9 $107.6 $7.7 7.8% 65.4%
Total $153.9 $164.5 $10.6 6.9% 100%
Boston’s Tax Levy
Figures in Millions
  FY18 FY19 Increase % % of FY19
Total
CIP * $1,361.8 $1,422.1 $60.3 4.4% 60.5%
R $854.7 $927.8 $73.1 8.6% 39.5%
Total $2,216.5 $2,349.9 $133.4 6.0% 100%
*CIP = Commercial, Industrial, Personal  R = Residential

Robust Growth in Values
Boston’s total taxable value in FY19 jumped to $164.5B, an increase of $10.6B or 6.9%, the same percentage as last year. Residential property values grew at a faster pace of 7.8% compared with business growth of 5.3%.  Value growth is due to a combination of the appreciation of the base value, added value from new construction and change in property tax status.  New growth in Boston lately has been predominately residential. The valuation date for FY19 was January 1, 2018, which captured the market activity of 2017.

Levy Growth

Figures in Millions

FY18 FY19 Increase % of
FY19
Total
2½ % Levy Growth $52.2 $55.5 $3.3 41.3%
New Growth $77.6 $78.7 $1.2 58.7%
Total $129.8 $134.2 $4.4 100%

Levy at Legal Limit
The City’s property tax levy in FY19 totals $2.3B, an increase of $133.4M or 6%.  The $2.3B tax levy is at its maximum legal limit except by a Proposition 2½ override vote. The standard 2.5% increase in the base levy totals $55.5M, and new growth contributed $78.7M or 58.7% of the total, the largest new growth amount ever.

Tax Rates Move Slightly
The business and residential tax rates reflect the increase in value, the shift due to classification and the need to keep the base tax levy at or below 2.5% of the total base taxable value.  The FY19 residential tax rate of $10.54 increased 0.6%, while the business rate of $25.00 decreased by -0.8%.  The residential rate increase reflects the much greater growth of residential value and legislative change that allowed approximately 750 first-time residential exemption applicants to apply for a reduction in their property taxes after January 1st and before  July 1st  rather than wait until the following January.

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