Boston Mayor Michelle Wu described her plan to raise commercial tax rates during an appearance before state legislators as a necessary evil. She said residents could be forced from their homes if it doesn’t get passed and their property taxes spike next year.

Wu and her two top financial officials brushed aside concerns of skeptical members from the state Legislature’s Joint Committee on Revenue during a hearing on Tuesday. The mayor’s office insisted its proposed “emergency legislation” was the only option reasonable for the city to provide short-term relief for taxation for residents.

Business leaders and fiscal watchdogs have repeatedly criticized the plan, claiming that it will cause further harm to businesses already suffering from declining property values and empty downtown office space.

Wu stated, “I did not present this legislation to hurt people. I was here because it would be beneficial.” “I’m here because I have a problem we need to solve in the near future for residents.

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The mayor said, “I wish that there were a different tax system where we could customize each one according to the needs of each business or resident.” “But, we have the tax system we have. This is a tool we know unfortunately works.”

Wu said that a continuing decline in the value of commercial properties will push the burden of taxation onto residents. Property taxes make up almost three quarters of the annual budgetary revenues, and about one-third of those come from the commercial sector.

She said that homeowners would be subject to a tax increase of 33% if the state legislature didn’t approve her proposal. Her plan would allow the city to tax businesses above the limit set by the state for four years.

In the early 1990s, when homeowners faced a tax increase of about 40%, the city proposed and received approval from state for a nearly identical law.

Wu cited feedback from her community that a “33% increase in residential property tax would be devastating” for not only our residents but also for all of our businesses, who depend on our residents as clients, employees and customers.

She said that her proposal would provide the city with the tools it needs to protect residents and their taxpayers, and ensure they remain in their homes.

The mayor said that businesses would still benefit from a decrease in property taxes, but not as much if her plan fails.

Commercial sector has rejected this argument, but has pointed out that the proposal could exacerbate the decline in property values, and cause a disproportionate amount of harm to small businesses. Critics have suggested that landlords may pass their higher taxes on to small businesses by increasing costs, such as rents.

Jessica Muradian, of the Massachusetts Restaurant Association testified in court that small businesses, from East Boston to Mattapan, would “bear the brunt” of tax increases, despite the fact that they already face additional expenses because of inflation, higher rates of interest, and other factors.

Francisco Paulino of the State Legislative Committee said: “To me, it can be a dangerous tool.” He expressed concern about the impact the plan will have on small businesses.

Mark Cusack, the House Chair, made a point of disputing Wu’s testimony about residents facing a tax hike of 33% next year.

Cusack stated that the tax spike in Boston would occur from the second quarter to the third quarter. The actual increase year-over-year would be approximately 16.5%.

Nicholas Ariniello of Boston’s Commissioner of Assessment cited numbers to support the 16.5% hike. According to him, the average single family tax bill in 2024 would be $5,522 if you include the residential exemption, but it will increase to $6 432 if this legislation is not passed.

Legislators from other states also questioned Wu’s administration about why it chose to pursue an option which requires Beacon Hill approval, instead of using the city’s approximately $1 billion in reserves or cutting expenditures. The city budget increased by 8% in this year.

Ashley Groffenberger is the chief financial officer of the city. According to the administration, other options would not be good, given the impact on the city’s AAA bond rating, and the services provided by the city.

Groffenberger stated that “this tool really helps to provide and preserve stability for the City” while noting a reluctance “to drain the city’s reserves fund one time to plug a gap”, and then potentially have to come before the Legislature in a worse situation, with no savings.

“We are here because this is the best tool,” said the mayor.

The joint committee did not make a recommendation at the end of the day. They will decide if the matter is to be brought before the full Legislature.