During these same years, the levy has also been positively impacted by taxable new value or “new growth.” New growth can arise from both real and personal property. Thanks to efforts to attract business development to Boston and grow its housing stock, Boston experienced unprecedented new growth property tax revenue in FY17, which is outside of Proposition 2 ½.
Last year, the City saw construction projects in the Seaport District, the Longwood Medical Area and the New Balance headquarters in Brighton Landing enter the tax base. Residential development, which is linked to Mayor Walsh’s housing production goals, accounted for 60% of the new growth. New growth is expected to be approximately $50 million in FY18, which is very high compared to historical levels of new growth seen prior to FY17.
Limiting the total property tax levy
Proposition 2 ½ has been the overwhelming factor affecting the City’s property tax levy since being passed in 1980. Proposition 2 ½ limits the property tax levy in a city or town to no more than 2.5% of the total fair cash value of all taxable real and personal property. It also limits the total property tax levy to no more than a 2.5% increase over the prior year’s total levy with certain provisions for new construction.
Finally, Proposition 2 ½ provides for local overrides of the levy limit and a local option to exclude certain debt from the limit by referendum. The City of Boston has never sought a vote to either override the levy limitations or exclude any debt from the limit. In each year since FY85, the City has increased its levy by the allowable 2.5%. These increases have grown as the levy has grown, beginning in FY85 at $8.4 million and reaching $50 million in FY18.