Giorgio: Worcester‘s Tax Rate Battle

Wednesday, December 16, 2015

Paul Giorgio, GoLocalWorcester MINDSETTER™

Last week saw the annual battle over the tax rate in Worcester. This fight pits homeowners against business in a battle that neither can win. The council voted 6 to 5 to give homeowners a break and raised the rate to $20.61 and brought the commercial rate up to $33.98. The current residential rate is $20.07 and the commercial rate is $31.73. Worcester split its tax rate over twenty years ago and the past five years saw an effort by the council to once again merge the two rates together over a number of years.

The wrong battle
We are fighting the wrong battle at the wrong time in Worcester. In order to stabilize the tax rate for homeowners we need to attract more industrial and commercial tax payers to the city. In a nutshell we need more commercial activities. That is happening, but not fast enough for most people.

The Chamber of Commerce’s Tim Murray is afraid that by this vote the Council is sending the wrong message to businesses that may want to locate here. We do send quite a few wrong messages to business. The most egregious one was the anti casino attitude that some councilors expressed last year. A casino world have added millions of dollars to the tax base and created thousands of jobs. It is these very same councilors who decry the lack of jobs that then stymie economic growth at every turn.

You can bet money on the fact that if the Pawtucket Red Sox show any interest in Worcester, the same people who opposed a casino will oppose a stadium. Some of these same people also opposed the construction of the DCU Centre when it was proposed forty years ago.

While everyone recognizes that we need economic growth to stabilize the tax rate, they oppose the very efforts and measures that would help the city with those efforts.

So a short term solution to the tax crisis is to seriously begin to merge the residential and commercial rates. This will bring business into the city and eventually stabilize the tax rate.

Worcester has the highest percent of tax exempt property in the State

However, there is a bigger problem, when it comes to our annual property tax debate. Worcester has the highest percentage of non taxable property among all the major cities in the state. We have a higher percentage of exempt property than Boston. They have about 29 % of their property exempt while Worcester has about 31%. The next highest to Worcester is Fitchburg with 21% exempt from taxes. All other Gateway Cities are below 20%.

The question is why does Worcester have the largest percentage in the state and what can we do about it.

We don’t have more colleges and hospitals than Boston and we are bigger geographically. We are not as economically depressed as Fitchburg, which has more need for social services. We don’t have as large an immigrating population as Lowell and Lawrence.

I know this is not a battle Worcester can fight on its own or win on its own. We need to seriously look at what a nonprofit is in the 21st Century. When the law was passed to exempt non profits from taxes, it was most likely needed. But today Non profits are very large and rich organizations that should pay taxes.

Large businesses should pay taxes like the rest of us

Until very recently, the NBA was a nonprofit. Major League Baseball and the NCAA still are. These are clearly not groups who should be tax exempt.

Think off all the non profits in Worcester who suck up services. The taxpayers pay to plow the streets in front of Colleges, hospitals and social agencies. Tax payers pay for police and fire protection for these very same facilities.

The City of Worcester has been very aggressive with Colleges and hospitals in terms of PILOTS (payment in lieu of taxes). However, we have not been as aggressive as we should be with other agencies.

Mayor Joe Petty has put together a tax policy committee to look at a whole host of options to stabilize Worcester. Taking a look at the nonprofit sector is one of those options.

Business and homeowners need to come together, so that we can share the burden, with those who don’t currently pay their fair share.

Giorgio: Worcester‘s Tax Rate Battle

Related Slideshow: #100 to #1: Business in Worcester That Owe the Most in Delinquent Property Taxes

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