November 27, 2018

Worcester considering 1% sales tax increase

Photo/Grant Welker
Worcester City Hall.

Worcester city officials, looking to bring in more tax revenue, are looking to potentially add to the sales tax and push the state for more reimbursement from nonprofits that don't pay property tax.

The City Council's municipal operations subcommittee requested input on Monday from the city administration on the potential initiatives, which would both require state legislative approval.

"We have to do work on our end to understand it, and then seek the value in pursuing it and then meet with the legislation to see if they have the appetite for it," said Councilor Sean Rose, who chairs the subcommittee.

Both potential measures would help Worcester bring in additional revenue. The state sales tax is currently 6.25 percent, with an additional 0.75 percent levied for meals at restaurants. The Legislature voted in 2009 to allow cities and towns to add the local meals tax, and Worcester was among those adopting the higher tax. The meals tax revenue stays with each community, unlike the broader sales tax, which is collected by the state.

The municipal operations subcommittee is considering a push of the Legislature for greater reimbursement for tax-exempt nonprofit entities. Colleges and hospitals, for example, don't pay property taxes on their land unless the land is used for revenue-generating purposes, such rental properties.

Massachusetts has a payment-in-lieu-of-taxes program for certain state-owned properties, including colleges and parks. But cities and towns otherwise might only collect revenue from colleges or hospitals if they reach their own payment-in-lieu-of-taxes agreements.

The subcommittee is requesting a report from the city administration on whether new legislation could force the state to reimburse cities and towns for nonprofits that now don't pay property tax. City Councilor George Russell suggested a meeting with the Worcester legislative delegation to gauge the potential for such a law.

"If they're not on board with this, there's not much point in talking about it, because it's not going to go anywhere in the State House," Russell said.

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