Melrose: Second Smallest Commercial Tax Base in Region

Massachusetts lawmakers face a looming deadline to pass a state budget, with the fiscal year ending this Saturday, and while city and local officials watch to see the final local aid numbers for fiscal 2013, it's property taxes that fund the biggest chunk of most municipal budgets.

And when it comes to the property tax base, in terms of percentage of total property value, Melrose has one of the smallest commercial tax bases in the region.

According to data from the state Division of Local Services, commercial, industrial and personal property makes up 5.9 percent of Melrose's overall property tax base.

The only community in the region with a smaller commercial tax base is Winchester at 5.40. Other communities in single-digits are Arlington (6 percent), Winthrop (7 percent), Lynnfield (8.10 percent) and Reading (9.90) percent.

Melrose's immediate neighbors include Wakefield (15.60 percent), Stoneham (11.60 percent), Malden (14.60 percent) and Saugus (21.10 percent).

There's little surprise when it comes to cities with the largest commercial tax bases: Cambridge (38.6 percent), Everett (35.5 percent), Boston (35 percent) and Woburn (30 percent).

Proposition 2 1/2, the state statute that went into effect in 1982, limits how much revenue cities and towns can raise from local property taxes each year, requiring voters to approve debt exclusions or overrides to raise more than allowed under the law.

Some communities also have the option of using a split tax rate and taxing commercial, industrial and personal property at a higher rate than residential property. The state uses a formula that takes into account factors such as the percentage of commercial and residential property in the city, and then determines how much more than city can tax commercial properties than residential properties.

Local legislators do this by selecting a "residential factor" that, in turn, determines how much of the tax burden can be shifted onto commercial properties. For instance, a "shift" of 1.50 means that commercial, industrial and personal property are taxed 50 percent more than residential properties.

Last November, the when they effectively set the tax rate by selecting a "shift" of 1.48, meaning that commercial properties would be taxed 48 percent more than residential properties this year.

The chart below shows the total value of all residential properties by community; the total value of all commercial, industrial and personal property by community; and their corresponding percentages of the community's total property value. The last column shows by what factor each community shifted the tax burden onto commercial properties, if allowed by the state.

Figures in the chart are from fiscal year 2012 and taken the Massachusetts Division of Local Services.

CIP as % of Total Value