The news: Boston Mayor Michelle Wu returned to the Legislature this month with her plan to reduce residential tax increases by temporarily shifting more of the tax burden to commercial property. Boston homeowners earlier received quarterly tax bills that jumped an average of 30 percent from the previous quarter and nearly 15 percent from the previous year, according to the city. Many individual homeowners are looking at even bigger increases.
Factors beyond Wu’s control contributed to the jump, including rising home values, sinking commercial assessments, and a state Senate that blocked a similar tax relief plan last year. But Wu and the City Council also made policy choices, including adopting a budget that grew at twice the rate of inflation.
Wait, there’s more: Customers of the state’s two biggest utilities, Eversource and National Grid, are paying winter natural gas rates that are 11 to 30 percent higher than a year ago.
The increases had little to do with the cost of natural gas — up about 1.5 percent over the year, according to National Grid. The utilities blamed much or most of the increases on the state-mandated energy efficiency program Mass Save, which is funded by surcharges on utility bills.
The $4 billion Mass Save program, which grew from the Green Communities Act of 2008, has become one of largest of its kind in the country. It’s slated to expand by about $1 billion, or 25 percent.
The rate increases come on top of the fourth-highest natural gas prices in the country, according to the US Energy Department. Natural gas here costs about 40 percent more than the national average.
Rate case: If you want a case study of how policy choices contribute to higher costs, look at your electric bill, which includes a list of surcharges approved by the Legislature to fund energy efficiency, clean energy, and other programs, including Mass Save.
These public policy charges are small, but together they can account for about one-fifth of an electric bill. Massachusetts, meanwhile, has the fourth-highest electric rates in the country, about 80 percent above the national average, according to the Energy Department.
How high are electric rates? High enough to threaten clean energy goals supported by surcharges.
The Globe’s Sabrina Shankman reported that some owners of electric heat pumps — which Mass Save subsidizes — are experiencing buyer’s remorse as cold weather and high rates generate skyrocketing power bills. (Utilities have introduced or plan to introduce lower winter rates for heat-pump owners.)
Speaking of winter bills: The different trajectories of residential and commercial real estate values are the main culprits in Boston residential tax increases. But critics say Wu and the City Council also could have spent less in this year’s budget.
The city budget rose at least 7 percent, compared with inflation of about 3 percent. Shaving a percentage point or two from spending growth would not have made much difference in tax bills, said Marty Walz, interim president of the Boston Municipal Research Bureau, a think tank.
But it might have helped overcome opposition to Wu’s tax plan in the business community and Legislature. “It would show that there is a shared sacrifice, a slowing in the growth of spending,” Walz said.
I raised this issue with Wu. She said there wasn’t a lot of room in this budget after funding contracts negotiated with police, firefighters, and other municipal workers. Discretionary spending, she added, grew less than one-half percent.
She also said she expects the pace of spending to slow in the next fiscal year.
Big picture: We’ll see if Wu can push her tax relief bill through the Legislature.
But as lawmakers consider this and other measures, and city officials build the next budget, they need to consider the big picture. They can’t view taxes, fees, or rate increases in isolation. They need to consider them against all the costs in Massachusetts — not only for the impact on residents but also on the state’s economic competitiveness.
I’m not saying the services and programs funded through taxes and utility bills aren’t worthy. Mass Save, for example, says its initiatives have reduced electricity consumption by some 12 million megawatts and carbon emissions by 3.7 million metric tons. The state estimates the program produces $2.83 in benefits for every $1 invested.
But when the Consumer Price Index says energy in Massachusetts costs 19 percent more than the national average, housing 10 percent more, and food 6 percent more, you need to think hard before adding new costs.
As I’ve written, I moved back to Boston from Texas knowing the costs were higher. I thought — and still think — those extra costs were worth it.
But at some point, they’re not. And migration estimates from the Census suggest that thousands of people reach that conclusion every year.
Rob Gavin can be reached at rob.gavin@globe.com.
