By Andrew Firestone

This year, the City raised $104,589,916 in Real Estate or Personal taxes for the 2012 fiscal budget, an increase of over four million dollars from the previous year. While four million dollars is a good deal of money, it is important to note how this came to be; through Proposition two and a half, a measure approved by voters almost 30 years ago. The City was able to raise their levy by a two and a half percent limit, or the most that they are able to in a fiscal year, and then got the rest through new commercial properties. They cannot exceed this limit in the taxes on properties that already exist.

It is important to note that, if inflation in the economy rises by more than two and a half percent overall, which has been the case more often than not, then the amount of real tax income, or the income calculated by buying power, actually decreases for the same number of properties.

In the case of 2011, inflation has reached around 3.6 percent according to a report in May from the Bureau of Labor. In this case, considering that the Real Estate or Personal taxes for 2011 was around $100.5 million, the new properties in the city ultimately raised the levy so that property taxes did not lose any ground against the inflation of the economy, accounting for around $1.5 million, with increased property taxes coming to around $2.5 million.

Mayor Joseph Curtatone has repeatedly said that the City relies far too heavily upon the residential tax base, as residences make up the vast majority of taxable property in the City. His hopes are that increased development, such as in Union Square and Assembly Square can attract new commercial properties, thus lessening the burden on the residents of the community.