The primary focus of Worcester Mayor Joseph O'Brien's Task Force on Job Growth and Business Retention is seeking ways to improve the city's economic viability. Many constructive proposals were recommended and the mayor should get much credit for his vision, and for understanding that economic growth means a strong commercial industrial tax base that creates jobs, along with a stable mix of residential properties and city services.
Unfortunately, much outside attention was given to only one of the task force's many constructive recommendations: promoting the lowest residential tax rate. That was good politics but bad public policy. Now that the municipal election, which will give us a new mayor, is upon us, we find ourselves either for business or for the homeowner. Rather, we should all seek a more moderate commercial, industrial, and residential tax rate that takes into account the state of the city's finances and what's in the best interests of both homeowner and business owner.
In a recent report by The Research Bureau on benchmarking economic development in Worcester, the average single-family real estate tax bill increased about 13% from 2006 to 2010, while city services were reduced. And it's likely that tax bills will continue to increase as a result of reductions in state aid, leaving the city more dependent on property taxes. As the portion of businesses making up the tax base declines, homeowners pick up more of the burden. Worcester's current tax base is made up of 78% residential property and only 22% commercial. The report also indicates that vacant or abandoned commercial and residential properties are increasing, further reducing tax revenue and shifting even more of the burden to taxpayers.
So, it's obvious we must increase our commercial and industrial investment to help bring that more into balance.
Therefore, our goal must be to create a climate that attracts new business and retains existing businesses.
A recent survey conducted by Worcester Citizens for Business indicated that out of 110 businesses surveyed, 40 percent said they're looking at locations outside the city. The number one concern of these businesses is the city's commercial tax rate, one of the highest in the state. The survey also found other areas of frustration, namely the permitting process, which makes it difficult to open or expand a business, and communication on incentive programs. The city manager, with the City Council's support, has already moved to automate and streamline Worcester's permitting process. And Mayor O'Brien has championed the effort for ongoing communication and dialogue with business.
These are positive developments the next mayor must continue. Most of all, we must continue to work together to create jobs and expand our tax base — for everyone's benefit.
Kevin O'Sullivan, a former state representative from Worcester, is president and CEO of Worcester-based Massachusetts Biomedical Initiatives. He also serves on the Mayor's Taskforce on Job Growth and Business Retention and the steering committee of Worcester Citizens for Business.