'Very Troubling': Peabody Mayor Requests Tax Adjustment Amid Dire Financial Forecasts

PEABODY, MA — The Peabody City Council approved Mayor Ted Bettencourt's request to alter the shift of property tax burden from residential to commercial businesses in the city, as well as his rescinded request to use $2 million in surplus "free cash" funds to mitigate tax increases, as Bettencourt warned of dire long-term financial forecasts for cities and towns across the state.

Bettencourt said health insurance premium increases of 15 to 20 percent for municipal employees, along with stagnant state aid that is not keeping up with costs, will put "extreme pressure on our budgets and increase the burden on our taxpayers" in future years.

Because of that, he said, he retooled forecast requests for next year from June that called for a 1.75 ratio shift in the tax burden to business and the use of $2 million in so-called "free cash" — previous surpluses — to mitigate tax increases for this year. He said an 11.7 percent increase in commercial and industrial valuations, which he said is the most in the city in decades, allows for the shift that will raise the median single-family home tax bill $415 for 2026, compared to forecasts of a rise of $497.

The Peabody City Council approved the recommendations by a 10-1 vote.

Bettencourt said lowering the commercial tax shift from 1.75 to 1.7 this year will give the city the flexibility it may need to reinstate the 1.75 shift to mitigate tax increases in future years, while refraining from using the $2 million in free cash was in response to City Council feedback about wanting to maintain strong reserves amid uncertain future years.

Using the $2 million in free cash would have saved the median single-family homeowner about $60 for the year, according to the administration.

Bettencourt said the cautious course comes as "we are not getting the net increase in state aid that we've gotten in years past. The number in real dollars that cities and towns are getting in state aid is not meeting the needs that we have.

"It's deeply troubling."

Compounding those troubles are year-over-year increases in health insurance premiums that were 15 percent last year and could be as much as 20 percent this year. He said those increases alone force an increase in the average tax bill of nearly $300 for the average homeowner.

"This is going to cause a looming budget upheaval, not only in Peabody, but to cities and towns across Massachusetts and across America," he said. "These increases are not sustainable."

Peabody Area Chamber of Commerce President Deanne Healey said that while she appreciates the modest lowering in the tax burden shift from a factor of 1.75 to 1.7, that is also not sustainable for many business property owners who pass tax increases along to small businesses.

"At a time when we're really trying to invest in revitalizing downtown and supporting small businesses," Healey said, "a higher commercial tax rate can actually undermine those efforts.

"It makes it harder to attract and retain businesses, which are essential to a thriving economy."

(Scott Souza is a Patch field editor covering Beverly, Danvers, Marblehead, Peabody, Salem and Swampscott. He can be reached at Scott.Souza@Patch.com. X/Twitter: @Scott_Souza.)