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Property taxes leap as state aid falls

Massachusetts residents experienced the largest two-year increase in property taxes in a dozen years as cities and towns struggled to make up for a slowdown in state aid between 2001 and 2003, according to a study released yesterday by the Massachusetts Taxpayers Foundation.

Per-capita property taxes climbed an average of 3 percent a year in fiscal 2002 and 2003, which translates into an increase of $73 for every man, woman, and child in the Commonwealth.

In another sign of the financial stress on cities and towns, voters are increasingly deciding to override the state's limit on property taxes under Proposition 2 1/2. The report says residents in 39 communities voted to override the annual property tax limit in 2003, approving a total of $48 million in new revenue. That amount is twice as much as what was adopted in 2002 and more than six times the average between 1994 and 2000.

"Clearly the cuts from the fiscal crisis have had a direct impact in producing higher property taxes," said Michael J. Widmer, president of the taxpayers foundation.

But officials in Governor Mitt Romney's administration disputed the numbers in the report, arguing that once new construction and annual increases in property values are factored in, property tax increases have been minimal. Romney took office in January, the middle of the fiscal 2003 budget year.

"We think it's alarmist, and we hope it's not intended to stampede the Legislature into adopting the tax increase the Massachusetts Taxpayers Foundation has been calling for," said Eric Fehrnstrom, the governor's communications director. "The impression has been created that cities and towns are starved for local revenues, but this report paints quite a different story: Local revenue growth has been fairly robust."

State aid to cities and towns actually increased slightly between fiscal years 2001 and 2002, but it wasn't enough for many cities and towns to cover cost increases in areas such as health care. In fiscal year 2003, aid decreased by about 3 percent, the first decline in more than a decade.

The property tax trend is likely to accelerate, the business-backed research group says, because Romney and the Legislature declined to raise income taxes and made even deeper cuts in state aid in the current fiscal year, 2004, which isn't covered in the report. Romney said yesterday he probably won't propose further cuts in aid to cities and towns in fiscal year 2005, but he has vowed to veto any income tax hike.

"My hope is that we will be able to preserve the same level of funding from '04 to '05," Romney said in an interview.

Many local officials say Beacon Hill's approach is particularly painful for poorer communities reliant on state help. Compared with income taxes, property taxes place a disproportionate burden on lower-income residents, retirees on fixed incomes, and the unemployed. "There's no question that what is happening at the state level is a shifting of the burden onto the backs of people who are less able to afford to pay for services," said Fall River Mayor Ed Lambert, whose city's property taxes went up 11 percent between 2002 and 2003, according to the study. "For the governor to raise his hands and say he doesn't support increasing taxes on the backs of working people totally ignores what has to happen at the city level and the town level."

Despite the property tax hikes, total local revenues in 2003 went up just 2.3 percent, the smallest increase in a decade and less than half of the 6 percent increases that were typical during the 1990s, according to the study. Because health care and other fixed costs are growing much more rapidly, cities and towns have had to cut programs, eliminate services, and lay off workers.

Even with Fall River's property tax increases, Lambert said, he had to trim his roughly 1,000-person nonschool work force by 160, laying off 61 police officers and firefighters.

"All of this is happening in the context of thousands of people being laid off, larger class sizes, fewer police officers and firefighters, and the stopping of routine maintenance on buildings," said Geoff Beckwith of the Massachusetts Municipal Association, which lobbies for cities and towns on Beacon Hill. " So we have both an increase in the local property tax burden and a reduction overall in the full range of local services that are provided."

But Fehrnstrom rejected the idea that property tax increases are less desirable than income tax hikes -- especially in the case of Proposition 2 1/2 overrides when local residents vote to tax themselves. "We think residents of a city or town are the best judges of whether or not their community is being well-run," Fehrnstrom said.

Barbara Anderson of Citizens for Limited Taxation described the property tax as "a mean little tax" because it places a heavier burden on people who are on fixed incomes or are unemployed. But she blamed profligate government spending during the boom of the 1990s for the fiscal problems now facing cities and towns, and said it's time for them to tighten their belts. "There's only one chance for reform, ever, in government, and that's when times are tight," Anderson said.

Scott S. Greenberger can be reached at

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