Putting Prop 2 1/2 on the table

 Gin Dumcius leads his daily Massterlist email today with "In front of business leaders, Wu takes aim at Prop 2 1⁄2" in which he says this: 

Proposition 2 ½ is considered a “bedrock” of budget cycles throughout Massachusetts cities and towns, due to the limit it places on how much property tax revenue they can collect, as one research group put it earlier this year.

But Boston Mayor Michelle Wu yesterday took a few digs at the law, which was implemented in 1982 after voter approval. The law limits cities and towns to raising no more than 2.5 percent of the assessed value of all taxable property taxes, plus new growth, but they can request an override from voters.

Boston, which has a larger commercial sector than most, has never put an override question on the ballot. But in the pandemic’s aftermath, more communities in other parts of the state are seeking property tax votes, after ballot overrides hit a 30-year low in 2018. Proponents of Prop 2 ½, as it’s often called, say it offers taxpayers predictability, and pleases voters sick of high property taxes.

In Boston's most recent budget, longtime vacant jobs were slashed, and salary savings arose out of delaying a police academy class, Wu said in a sit-down with Greater Boston Chamber of Commerce President Jim Rooney. “We are going to continue keeping that belt cinched as tight as we possibly can,” she said. “Prop 2 ½ is the tightest belt of all.”

"Of the 43 years that that law has been in place, inflation has been, on average, 25% higher every year, above two and a half percent growth,” as health care costs have quickly risen, she added.

When MASSterList later asked whether she believed the state should take a look at Prop 2 ½, and whether it no longer works, Wu said, “Yes.” Asked to elaborate, Wu said it’s part of a larger conversation. “Prop 2 ½  was put in place through significant pressure and advocacy from the business community against municipal governments’ advocacy several decades ago,” she said.

Adam Chapdelaine, the executive director of the Mass. Municipal Association, echoed some of Wu’s comments. “Frankly, the mayor’s comments lined up with some research we’ve been doing recently,” he said. (Stay tuned for more on that, he added.)

“I think Prop 2 ½ is in some ways an ingenious law in that it shifted budgets from being expense-driven to being revenue-driven,” he said, before adding, “I wouldn’t put the thumb up or down. I would say, ‘Look at how it’s working and let’s have a conversation on whether it can work in a different way.’”

In Boston, the city budget, which heavily relies on property taxes, remains “very stable,” Wu said, but the conversation about revenue diversification, in order to maintain the expected level of city services, is needed. Diversification measures have been repeatedly blocked at the State House, but “whether or not anyone wants to have the conversation, we are going to have to have it, because this is a strain on municipal budgets all around the Commonwealth, especially now,” she said.

That Prop 2 1/2 puts communities into a hamster wheel where they cannot keep up with inflationary costs is becoming more and more of a common conversation. I have heard it across the state these past two budget seasons. Wu, of course, commands a much larger platform, so this voice will matter as this continues, I suspect, to snowball.