Cambridge OKs Tax Increase

In an almost unanimous vote the Cambridge City Council passed a proposal for a moderate residential property tax increase of 5.69 percent, which is expected to net a total of approximately $280 million for the 2011 fiscal year, at yesterday’s council meeting.

“It’s amazing, looking at how much less we paid compared to [other cities] around us, and compared to the services we get in the city,” City Councilor Leland Cheung said in the meeting.

The moderate level of the tax increase was made possible by an increase in non-property tax revenues, such as Parking Fund and sales taxes on meals in local restaurants.

The property tax increase comes in the context of a significant reduction—$1.3 million—in the two major State Aid categories, school aid and general aid, that can be used at the municipality’s discretion. Since FY2009, the state has cut funding to the city by $9.3 million in those two aid categories.

The tax rate increase contained in the proposal is 0.4 percent lower than the one the City Council projected this May.

“I think this is something everyone in the city can be proud of,” Cheung added, referring to the relatively small tax increase.

Echoing Cheung, Councilor Marjorie C. Decker said, “There is no community surrounding us that can come close to what we do here at Cambridge.”

The proposal states that over half of Cambridge residential property owners will see a reduction, no change, or increase of less than $100 in their property tax bill.  Another 32 percent of residents will see their residential tax bills increase by between $100 and $250 this fiscal year.

In addition to the proposed tax increase, the Council made a number of other minor tax adjustments.

The Council voted to classify properties into five categories “for the purpose of allocating property tax,” according to the City Manager Robert W. Healy in a letter addressed to the Council. The process of tax classification allows the city to tax commercial taxpayers at a higher rate than residential taxpayers, according to the document submitted by Healy.

With the proposed changes, residential properties can enjoy “a deduction of up to 30 percent of the average residential parcel value before the tax rate is applied.”

All of the proposed tax changes are subject to approval by the Massachusetts Department of Revenue later this month before they can come into effect.

—Staff Writer Sirui Li can be reached at sli@college.harvard.edu.