Governor Charlie Baker pushes for higher property transfer taxes for climate change, but mum on affordable housing

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Massachusetts Governor Charlie Baker urged a packed house Tuesday at the Revenue Committee hearing to consider the merits of his proposal to increase the real estate transfer tax and allocate the funds to fight the climate change.

Among those listening were housing advocates, mayors, Senator Joanne Comerford – a Democrat from Northampton and one of the committee members – and others who support the proposed doubling of the tax and revenue split between the climate resilience and affordable housing. Some had expressed their thoughts in the six months since the governor presented his plan, and most echoed those sentiments later in the hearing.

Asked about using those revenues for housing initiatives, Baker said he was unfamiliar with the idea. A reporter explained the recommendation to double the tax and use part of the revenue to alleviate the housing crisis, to which Baker replied, “I’m really interested in this climate initiative.”

Baker’s plan would raise the state deeds excise tax rate, which is paid when a property is sold, from $2.28 per $500 to $3.42. He predicts the tax hike would raise an additional $137 million — or $1 billion over a decade — that would go to the Global Warming Solutions Trust Fund, a one-time trust that could also allocate funds for some private infrastructure improvements that affect the public.

The plan would provide funding for public and private dam repairs, projects to reduce stormwater runoff, and land use policies that protect the coast, among other initiatives that could help communities prepare for change. climatic.

The bill does not specify whether the funds will be distributed as a grant or a loan. Energy and Environmental Affairs Secretary Kathleen Theoharides, who testified with Baker, said she wanted input from stakeholders on how the funds will be distributed.

The expendable trust, he later told reporters, could be combined with local and federal funds, as well as private donations, to cover the cost of various projects over multiple fiscal years.

“We have already seen the consequences that climate change is having on our state and in our country, and we are beginning to understand the growing cost of these impacts,” the Republican governor said in his testimony. “We are committed to significantly expanding our investment in resilient infrastructure and other adaptation strategies across the Commonwealth.

Lawmakers, government officials and activists did not dispute the proposed tax hike, but questioned why a housing-related tax would not be used to solve the housing crisis. According to a Boston Federal Reserve report released in April, at least 79% of Massachusetts residents were burdened with rent in 2016 and most affordable housing in the state is at risk of becoming unaffordable for “very low-income” renters. .

Comerford and other lawmakers testified in favor of doubling the tax rate for projects that could help boost affordable housing. Somerville Mayor Joseph Curtatone has proposed allowing cities to pass on their own property transfer taxes so they can direct those revenues toward housing solutions.

Boston City Councilwoman Lydia Edwards made similar recommendations in prepared testimony. She said she was neither against property transfer taxes nor against funding for climate resilience, but cautioned against bills that could unintentionally widen the gap between rich and poor residents.

“In hot markets and gentrified communities such as East Boston, the Governor’s proposal as written could exacerbate a perverse market effect: smaller properties, unable to afford resilience upgrades, will lose value while remaining vulnerable even as large properties increase in value and become increasingly unaffordable,” Edwards wrote.

“Real estate transfer fees are not the only solution, but they are necessary,” she added. “They generate real revenue and can be designed to discourage speculation, allow a reasonable profit, finance affordable housing and exempt those who are economically vulnerable or who are first-time buyers entering the market”.

He Peng Mei, 70, from Chinatown, sat for more than three hours while waiting to testify. In his prepared statement, he explained that he and his wife applied for senior housing nearly eight years ago after a leg injury made climbing stairs in their apartment building difficult.

In 2018, seven years later, they won the lottery at One Greenway in Chinatown. He said the affordable rental rate was $1,200 a month, almost all of his income. The couple decided to stay in their building, which offers a shared bathroom and no kitchen.

“I ask lawmakers in our State House to think of low-income people like me when you legislate, and I ask lawmakers to maximize ways to increase funds for low-income housing, so that our communities are stable” , he wrote in his statement.

Members of the Massachusetts Association of Realtors are totally opposed to the tax hike, arguing that the proposal would create additional barriers to homeownership and encourage landlords to pass on higher taxes to their tenants.

“Transfer taxes will increase the price of home ownership and continue to drive up the cost of housing here in Massachusetts,” said Amy Wallick, vice president of J Barrett & Company and member of the Massachusetts Association of Realtors.

She supported an environmental bill proposed by House Speaker Robert DeLeo that was considered by the Telecommunications, Utilities and Energy Committee on Tuesday. DeLeo’s legislation promises to raise more than $1 billion over a decade for renewable energy and climate resilience projects through bond sales.

In interviews with reporters, Baker noted differences related to funding sources, but applauded DeLeo’s efforts to fight climate change.

“It’s good for him to have stepped in and come up with an important program here,” he said. “[In] in some ways it is important. It’s really important, and I’m glad they’re having a hearing on it and having it at the start of the session.

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