WORCESTER – Arguably the biggest issue that the City Council takes up every year is setting the annual tax rate and it always spurs the annual debate of what the city’s tax rate should be — dual or single.
That debate doesn’t normally start until late summer or early fall. However, with the exits of some businesses over the past several weeks, the debate has come to the forefront earlier than normal.
Primetals Technologies, Ltd. and Allegro Microsystems both announced that they would be relocating outside of Worcester — Primetals to Sutton and Allegro to Manchester, NH and Marlborough.
In September, two downtown Worcester staples — Shack’s Clothes and Elwood Adams Hardware — closed their doors for good stating the sign of the times.
“[Closing] had nothing to do with business and everything to do with tax assessments,” Shack’s Clothes owner Jeffrey Shack told the Worcester Telegram in September 2017.
District 5 City Councilor Matt Wally, who campaigned on changing the tax rate to a more equitable rate, feels a change in the tax rate is in everyone’s best interest.
“With the implementation of tax classification in 1984, the decline of Worcester’s total commercial, industrial, and personal tax value has declined eighteen percent,” Wally said in an email to ThisWeekinWorcester.com on Thursday, April 19. “With a continued decline the residential property owners will continue to pay a larger share of the tax levy. Moving to a single tax rate over the short term is not feasible.”
Wally said that there has been a growing concern among small business owners in his district regarding the high tax rate for business. For small businesses, relocating isn’t always an option or feasible.
“More typical impacts include the inability to reinvest in the growth of their business or inability to make improvements to their properties,” Wally said.
According to District 3 City Councilor George Russell, coming up with a tax rate plan is not easy and very rarely fair to everyone. Russell said that there is truly two ways to give reprieve to businesses and it is not a popular one a City Hall
“You need to either curtail spending and allow credits back to businesses or push a bigger burden on to homeowners,” Russell said in a phone interview.
City Councilor At-Large Gary Rosen agrees and said that implementing some recommendations from the Mayor’s Tax Policy Committee would be beneficial to the city’s tax dilemma.
“The dilemma of the dual tax rates can be eased a bit by the city scrutinizing and controlling all of its spending and by implementing one or more of the recommendations on raising new sources of revenue as outlined in the fine report published by the Mayor’s Task Force,” Rosen said in an email on April 21.
According to the watchdog group Accurate Worcester Assessments on Real Estate (AWARE) Coalition, the City Council has adopted only one of the recommendations made by the committee to increase the revenue stream in the city. The one recommendation is devoting a certain amount of the growth factor to holding down the lowest residential task.
“Sure, our commercial tax rate is not helpful in retaining old and recruiting new businesses. But the residential rate is no bargain either,” Rosen said.
With the exits of Primetals and Allegro, Russell was quick to point out that many other businesses have opened and will be opening over the course of the past several years.
“You hate to see anyone leave,” Russell said. “The city has had growth over the past few years. There is more growth coming.”
The City Council has been devoid of any action when it comes to the wide tax gap. Could this be the year they begin to close that gap?