During Monday night’s city council hearing, councillors voted unanimously in favor of the proposal put forward by City Manager Yi-An Huang to raise property tax rates by 6.9 percent for fiscal year 2027. The new rate is a smaller increase than in previous years, but with net combined property values decreasing for the second year in a row, will only increase the city’s revenue from the levy by four percent.
Commercial properties will be taxed at $16.99 per thousand dollars of value, an increase of 21 percent, while residential property taxes will increase by six percent to $6.95 per thousand dollars of value.
While Cambridge is taxing at 82 percent of its levy capacity and has lower taxes compared to neighboring cities like Boston and Somerville, there will still be some constraints going into plans for fiscal year 2028 – especially on the commercial side of the coin. According to state law, municipalities like Cambridge that have a separate tax rate for commercial and residential properties can’t set one at more than 175 percent of the other. Currently, Cambridge’s commercial rate is at 165 percent of the residential rate, meaning that next year the city could have to consider taxing homeowners more in order to maintain its budget.
As Huang noted, even a small increase in the percentage of value homeowners are taxed can lead to a big increase in tax bills.
“We’re holding many truths all at the same time in Cambridge. We [have] one of the lowest tax rates, both on the residential and commercial side compared to other municipalities,” Huang said during Monday night’s meeting. “We also have some of the highest property values, and so tax bills are pretty high.”
Councillors and city officials expressed some concern about getting close to tax limits laid out by Massachusetts Proposition 2½, a 1980 law that sets limits on how much Bay State municipalities can raise in tax revenue and tax as a percentage of value. Overriding Prop 2½ rules requires putting the question to all registered voters.
“We don’t want to be one of those communities that have to go for an override ballot question every time you want to invest in a library or a school or a park,” said Councillor Marc McGovern. “It is going to be very difficult in the next few years.”
Reactions to the budget during the public comment period were mixed – while some expressed frustration with the increase, others advocated for the city to tax them more in order to fund social programs and increase the Cambridge Public Schools budget.
Notably absent from the conversation were business owners bearing the brunt of the increase. Last year, the 22 percent hike in commercial property taxes between fiscal years 2025 and 2026 was met with ire – but councillors made references to engaging with them earlier this year.
“There’s lots more conversation this year with our businesses,” Mayor Sumbul Siddiqui told city finance staff present at Monday night’s meeting. “And so I thank you all for doing that.”
Siddiqui also highlighted the importance of keeping certain spending categories front of mind in the future, even in a murkier fiscal environment.
“We do talk about how we can help the most vulnerable, and I think figuring out how we keep doing that, even as we have these constraints … is the most important thing we do.”
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