Council Updates, Property Taxes, Paving, and More

Two policy orders I sponsored at this week’s meeting passed unanimously
I was happy to work with Councillors Toner, Wilson, Zusy, and Vice Mayor McGovern on these. One asked for the city to coordinate with state agency and property owner and the community to address the unacceptable situation at Alewife/Russell Field with unhoused population, needles strewn about and unhealthy conditions. The other asked the city to better utilize the West Cambridge Russell Youth and Community Center and open it up for use during the day by community members, especially seniors, who cannot access it now.

The solar protection policy order was sent to Committee for further discussion. More on this issue as the meetings are scheduled and we have more information on options.

Property Tax Rate Hearing
On Monday night the City Council held the annual hearing to set the property tax rate for residential and commercial property (meeting materials). These budget discussions were a bit more challenging than in recent years due to expansive development in Kendall Square and Cambridge Crossing. This new development has really allowed Cambridge to expand programming and services in a number of different ways. This year the operating budget growth was kept to less than 4%, and will be about that going forward. That is necessary for fiscally responsible budgeting. And, that rate of growth is about half of our recent operating budget growth. The only option for us to lower the commercial taxes would be to shift more taxes onto residential – which is not something I support. Despite the increase, our rate for commercial taxes is still lower than surrounding communities.

These are hard facts that cannot be ignored – which is why I consistently remind all of us in the city that financially challenging times are here, and we need to prepare. And they are likely to get worse, given the ongoing federal government funding change, the assault and financial impact on our largest employers and sector: higher education. I will continue to be open and transparent – we will need to work much smarter to keep our City operations at the same incredible level.

The 4% budget growth for FY26 resulted in an 8% overall tax levy increase. Although the City’s budget is set in late spring / early summer, the property tax rate is not officially set until October to give time for assessed values to be calculated. It’s in some ways a convoluted process, but as Finance chair, I have been working in recent years to try to close that feedback gap and ensure that the conversations we have in the spring are understood so that the tax rate setting results in October are not a surprise. I have done that, in part, by asking City staff to model out budget growth projections as well as what that means in terms of our tax levy and average property tax bills. You can see some of that modelling in the meeting materials for the April 16 meeting I held on medium- and long-term budget planning. In that meeting and in the lead up to it, after a lot of challenging conversations, and working  with City staff, the budget we passed, as noted, was less than 4% budget growth in FY26. It can be difficult to translate the tax levy increase into real dollars for every example; however, below are two tables, one that shows an example of some typical residential property tax bills for FY26, and the second showing an example of some typical commercial tax bills for FY26.

The biggest headline from the meeting was a 22% increase in the tax rate for commercial properties. This is a scary headline, especially for small businesses who could see the tax rate affect their rent costs. What the chart below shows is that although the tax rate increased 22% ($11.52 to $14.07), the real percent change in tax bills will differ greatly among property classes due to lower assessed values in a number of areas. A typical example of retail and restaurants below shows an 11% increase in real dollars on their tax bill, while a hotel might see a 25% increase. Although assessed values reflect a number of different property tax categories (office, lab, retail, hotel), state law limits that we set the same commercial tax rate for all commercial properties. So a rate increase hits properties like hotels (that saw a moderate increase in assessed values) higher than it hits office space (that primarily saw a decrease in assessed values). So it’s important to understand that the tax rate is not necessarily always reflective of the individual tax bills, which is why I asked City staff to produce the below chart for commercial property types (which they typically have only done for residential property types). The fact is, if the value of a commercial property stayed the same, the bill would go up 22%. If the value went down, the bill would go up by less than 22%. The conversation will continue on October 20.