The following was submitted to Source by the executive committee of the Framingham Business Association.
FRAMINGHAM – Framingham has one of the highest commercial tax rates in the state driving businesses out and forcing residential taxes up. This commercial tax rate is not only for real property but also includes personal property.
The City’s proposal to increase the commercial tax shift further is a short-sighted mistake for both our small businesses and residents and shall inflict further
pressure on small businesses to be profitable and survive.
Calculating individual tax bills is complicated, but the more commercial value we have simply reduces residential taxes. So while shifting residential taxes sounds pro-resident, it continues a downward spiral of commercial values which ratchets up year after year residential taxes. That is why most communities do not have any commercial shift.
Natick for example, which has no commercial shift, has seen a 14 percent increase in its commercial value over the past decade while we saw a one percent decrease.
Natick’s residential tax rate increased 18 percent over this time period while ours increased by 27 percent.
Likewise, Marlborough experienced a two percent increase in commercial value over this time and only a 15 percent increase in their residential tax rate.
It is not complicated: the more commercial value, the lower the residential tax rate, and visa-versa.
The current commercial tax rate for both real property and personal property in Framingham is $35.39 while in Natick it is $13.05.
So, if the city needs more revenue, what’s the solution?
To begin with it’s a very simple formula for success when it comes to running a business or a municipality: maximize revenue and minimize expenses (without compromising the quality of your services and products). Framingham’s strategy of maximizing its revenues by maximizing its commercial property tax rate and all but ignoring prudent expense management and economic development has NOT provided the desired outcome. Instead we have increasing residential taxes and
declining commercial property values, and a notorious anti-business reputation.
As we see it, the Framingham Business Association envisions a two pronged approach to a solution:
1. Manage our Expenses: Framingham’s expenses have increased by 61 percent over the past decade to more than $300 million per year. Framingham has added 477 municipal employees, a 16 percent increase, over the past decade while the number of employees across the state has declined. Other cities and towns have used best practices and technology to reduce their workforce, control their costs and improve services.
2. Expand the Tax Base: Repeatedly increasing the taxes on the same stagnant growth pool of property owners is not a sustainable economic model. The tax base
needs to be expanded by attracting new business, new development, new investors, and new residents to Framingham. In order to do this we should (a) offer tax incentives to new developments and qualified businesses that will have a meaningful positive economic impact on Framingham; (b) facilitate project financing through low rate bond issues and arbitraging the pay rate to bondholders and the interest paid by developers (creating another income stream for the city); and, (c) reduce the commercial tax rate inline with our competitor communities. Increasing the number of people and entities that pay taxes will in the long run reduce the tax rate and the share of taxes each person is paying.
Framingham has for quite some time been a model of inefficiency.
We became a City, in part, because it was time for a more efficient and accountable governance model to evoke positive change. It’s time to get the budget under control. Hold government managers accountable and reward them for their successes. Increase tax revenue not by increasing taxes but by increasing the tax base by attracting new investors with efficient pro-business government, better schools, and a vagrant free downtown.
The local business owners and residents of the Framingham Business Association stand prepared to assist our community leaders in achieving these goals.