WORCESTER – Fresh off the Thanksgiving holiday, the Worcester City Council will hold its tax classification hearing for the Fiscal Year 2018. This is an annual contentious topic as two local organizations have differing opinions on the matter.  

The City Council will look to clarify the differences on Tuesday night.

Tax Classification Hearing Set for Tuesday's Council Meeting 1

Accurate Worcester Assistance on Real Estate [AWARE] is in favor of continuing the long standing dual tax rate that produces a lower residential tax rate.  Whereas, the Worcester Regional Research Bureau [WRRB] and Worcester Regional Chamber of Commerce are in favor of a single tax rate, which equally distributes the tax burden to both residents and commercial.

“There are many reasons why Worcester has a dual tax rate and looking back at the previous year, Worcester had the second highest residential tax rate amongst all of the larger gateway cities.” AWARE President Joan Crowell said in a statement.  “Even in small doses, reverting to a single tax rate would be a killer.”

We compete against surrounding communities like Shrewsbury and Auburn more than we compete against Boston and the Gateway Cities. A thoughtful, predictable tax rate will ensure that Worcester will become only more competitive for both residents and jobs,” Timothy J. McGourthy, Executive Director of the WRRB, said in an e-mail on Monday, Nov. 27.

The issue of comparing Worcester to Auburn has been a widely debated issue not just between the WRRB, Chamber of Commerce and AWARE, but more so since the City Council filed an order from the Economic Development Committee asking for such a comparison to be done.

“Auburn is a fine town, but it is wrong for the WRBB and the Chamber to promote Auburn’s goal of a single tax rate at the expense of the Worcester taxpayers,”  Crowell said in release on Nov. 22.

The dual tax rate proposed by City Manager Edward M. Augustus is $18.75 per $1,000 of assessed value for residential and $34.53 per $1,000 for commercial.  The residential rate would see a decrease from $19.22 this year, the commercial rate would see in increase from $32.93.

The proposed single tax rate for both residential and commercial would be $23.02 per $1,000.

In a report released in May,  the WRRB said, “The Bureau identified a single tax rate as a municipality’s best tool to limit extreme tax rate shifts and mitigate the impact of tax rates on economic opportunity.”

The WRBB has published two reports in regards to the tax classification.  The first one in November 2016 titled ‘Tax Classification: Passing the Buck’ and another in May “A Research Bureau Policy Alternative: Tax Rates.’

“Our findings reaffirmed our position that tax rates, and year-over-year tax rate changes, have an economic impact,” McGourthy said.  Under the current property tax system, the single tax rate is the best alternative for buffering property owners from significant tax rate fluctuations and supporting the growth of property values.”

AWARE contends that the proposed single tax of $23.02 per thousand would increase the median residential tax levy by $928 and the median commercial tax levy would decrease by $2,919.

The city has also seen an increase in taxable property by 4.06% for 2018 equalling $12.764 billion.  However, in the last five years, the tax-exempt property has doubled to $5.691 billion, a fact that AWARE has said would also help alleviate the tax burdens.

The WRRB states that setting tax rates is not a fact based policy decision and that using a single tax rate allows the City Council measure progress in a more efficient manner and allow individual Councilors to come up with their own tax proposals.

“For more than three decades, the Worcester City Council has approved tax rates without a data-driven review of conditions or implications,” the WRRB’s Alternative Tax report stated.

Tuesday’s meeting will start at 7:00 PM and will be held in the Esther Howland Chamber in Worcester’s City Hall.

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