Boston’s construction slowdown is hitting the city’s budget
Boston's construction slowdown is projected to result in just $40 million in additional tax revenue from new development, the smallest sum since 2016. The city's budget relies heavily on property tax revenue, which accounts for nearly three-quarters of Boston's operating revenue.
Boston's construction industry has slowed significantly, with only one tower crane active in the first quarter. The Wu administration's budget for the coming fiscal year projects $40 million in additional tax revenue from new development, the smallest sum since 2016. High interest rates and construction costs have stalled new development, with many Boston developers turning to communities outside city limits. The slowdown is concerning as property taxes account for nearly three-quarters of Boston's operating revenue. The city's overall real estate value rose to $228.6 billion last year, but the 1 percent increase was the smallest annual gain since 2011. The $40 million forecast for new growth and $37.2 million in building permit revenue are just projections and may be low estimates.
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