Mayor Garcia defends Holyoke’s affordability amid tax hike

HOLYOKE ― Mayor Joshua Garcia says the city remains affordable, even as property taxes are set to rise by an average of $352 next year.

"Holyoke remains one of the most accessible and affordable places to live and work in the region for people across the economic spectrum, from low-income folks to higher-income earners," Garcia said in a statement Tuesday.

Garcia said the tax increase reflects pressures that continue to shape Holyoke's budget, and its ability to pay for future capital projects and municipal services.

Each half-percent change in the tax rate equals about $600,000 in revenue, Garcia noted.

One major strain is the city's sewer system, which faces a $1.21 million deficit.

Holyoke had built enough excess cash capacity to cover unexpected costs, but the shortfall wiped out that cushion, Garcia said.

Without an updated sewer rate, Garcia said, the deficit will recur annually.

The good news is that the city recently entered the first year of a long-term contract for sewer operations, which he expects will prevent similar surprises. Still, he stressed that sewer operations must be self-sustaining. Without a sewer rate adjustment, taxpayers will continue subsidizing the gap, he said.

Alongside the tax hike, Holyoke saw favorable shifts in its tax structure that will ease the impact on homeowners and businesses, Garcia said.

The City Council reduced both residential and commercial tax rates for 2026, while keeping increases for single-family homes at a "manageable level," he said.

The City Council met on Dec. 2 and approved a new residential tax rate of $17.43 per $1,000 and a commercial tax rate of $38.16 per $1,000.

Last year, the tax rate for residential was $17.46 and the tax rate for commercial was $38.54.

Garcia acknowledged that "manageable" means different things to different people but said the average single-family tax bill will rise by about $352 for the year—roughly $29 a month.

The mayor said the increase is largely tied to rising home values and mounting obligations, such as escalating costs for insurance, schools, transportation and contractual commitments.

Education costs are climbing under the Student Opportunity Act, with Holyoke's required local contribution rising 5.87% — an increase of $773,886 — to $13.96 million. After offsets, the city's net school cost will grow 5.23%, or $1.19 million, to nearly $23.9 million.

Transportation expenses jumped 10.32%, adding $1.2 million, for a total of $12.78 million. Health insurance premiums rose 9%, or $661,859, bringing that line item to $13.75 million.

Pension costs also increased 4.65%, or $584,545, for a total of $13.15 million. Roughly $8 million of that amount keeps Holyoke on track to fully fund its retirement system by 2032.

"This is where your taxes are tied up the most," Garcia said.

By 2032, Holyoke expects to free up about $8 million, money that could go back to taxpayers or help pay for important city projects, Garcia said.

Garcia said progress with the city's financial management reflects teamwork among department heads and strong backing from most councilors.

He noted that the city balanced its budget without dipping into free cash or reserves, avoided using one-time funds to close gaps, and relied on conservative revenue estimates.

Garcia said he's heard people argue that Holyoke isn't as affordable as nearby towns and cities, but that's not true.

High housing costs are a statewide problem driven by limited homes for sale, rising property values and strong demand, he said.

The median home price in Holyoke is lower than many nearby communities, making it easier for families to buy a house, he said.

Although the city's property tax rate is similar to or slightly higher than some towns, residents save in other ways, like free curbside trash pickup and utility rates among the lowest in the state, he said.

Additionally, he said, about 40% of rental homes are set aside for low- and moderate-income families through government programs and subsidies.

State data shows the city has the highest share of subsidized housing in Massachusetts, with 19.34% of its homes on the list. The statewide average is 9.68%, he added.

Garcia pledged to keep working on solutions by adding housing, growing the tax base and working to keep services running while limiting tax hikes.

Some costs are beyond local control, but Garcia said he plans to ease the burden through strategies like adopting the Municipal Finance Modernization Act , setting a sewer rate to close the deficit, and reforming zoning to attract business and grow the tax base.

The Reminder contributed to this article.

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