PEABODY — The City is preparing to increase residential taxes by an average of $415 during Fiscal Year 2026, following Tuesday evening’s public hearing which addressed the City’s finances and its proposed 2026 tax rate classification.
The City originally projected in June that the residential taxes would be increased by an average of $497 but has opted to take an approach that would leave its $2 million of free cash untouched in the upcoming fiscal year and also lower the projected shifts to taxes.
Mayor Ted Bettencourt explained that he was able to suggest a lower tax increase because “while runaway cost increases continue to be a real hurdle for all of us, we have very encouraging economic news to help ease the burden just a bit.”
The commercial tax rate is 18.85, double that of residential, which is 9.47. This puts the increase in commercial taxes at an average of $820.
The City also proposed a CPI (consumer price index) of 1.7, rather than the 1.75 that was discussed in June.
“This shift gives us the added flexibility we will need to fine-tune the rate in the years ahead, especially as we brace for even more challenging budget cycles,” Bettencourt said.
Bettencourt also informed the Council that there is a projected 15-20% health-insurance increase, which equates to approximately $5 million.
“This is by far the largest increase to health insurance costs in our city’s history,” Bettencourt said.
He noted that the news wasn’t “all bleak,” though.
“While home values keep climbing up another 5.8% this year, it’s our commercial and industrial boom that’s really stealing the spotlight this year with an 11.7% leap from last year,” he said. “This is the first time in decades that Peabody’s commercial and industrial growth has surpassed its residential growth.”
Bettencourt added, “While we’re navigating historic cost increases and even tighter budget cycles, I’m cautiously optimistic that, here in Peabody, we have what it takes to weather these challenges while still investing in our city’s future.”
During the public comment period, Chamber President Deanne Healey raised concerns as a representative of the business community.
“I would like to just take an opportunity to remind the City Council that a split tax rate unfairly shifts the burden on the commercial properties,” she said. “… I recognize that you guys are representing the residents, and you want to keep their tax rate as low as possible, but I also want to remind you that property values, while they’ve gone up for commercial properties, which is certainly great news for people who own them, it’s not the same as cash flow. Higher assessments may look like capacity, but they don’t translate into dollars that a business can actually spend.”
She added, “At a time when we’re really trying to invest in revitalizing downtown and supporting small businesses, a higher commercial tax rate can actually undermine those efforts.”
Regardless, the CPI was approved by City Council with a vote of 10-1.
Councilor-at-Large Anne Manning-Martin was the dissenting vote, and she explained why. She had similar concerns to Healey regarding split tax rates, but Manning-Martin said that the real issue is overspending.
“(The overspending has) been happening year after year in our already bloated budget on unnecessary positions, newly created departments that drive up pension and health insurance costs, and automatic pay increases for department heads already earning three times the average city worker — as well as entering into expensive, multi-year Triple Net Lease Agreements,” Manning-Martin said. “This has been the norm in Peabody for over a decade with no end in sight.”
She continued, “My no vote is a vote against waste and the mindset that taxpayers are a bottomless pit. It’s also a reminder to the mayor that the solution is to rein in spending, not point fingers every December.”
