Doug Quattrochi

Earlier this legislative session, the city of Boston filed a bill to enact rent control locally. And earlier this month, Somerville jumped on the bandwagon. A total of 10 local-option rent control bills are now before the State House. How does this mean your schools will have less money for teachers? The answer lies in a thing called the cherry sheet. Before I explain, I give you the “steel man” argument (the strongest possible argument) for rent control.

Advocates for rent control say that low-income and fixed-income renters cannot keep up with rising rents. This is true. Just ask any senior on a state pension whether it has kept up with inflation. You will get a disparaging chuckle and a head-shake in response. The same shortfall occurs for a host of critical food service, hospitality, sanitation and other workers who don’t get preemptive, inflation-matching raises (which is to say, most of us). For everyone to remain in their neighborhoods would seem to require that some receive absolute price locks on rent. Since rent is usually the biggest single item on a household budget, advocates say, we should be controlling rents first among all expenses.

“Local option” was invented as a way to work around what is perceived as an unwillingness to consider statewide rent control. “If we can’t have it statewide, why can’t Boston or Somerville have it locally? We voted for it!” Yes, it’s true. Both Boston City Council and Somerville City Council have voted for rent control. So why can’t they?

Property Values Connected to School Aid

The answer is: Because we are all connected by something called the “cherry sheet.” This is a ledger (originally printed on pink paper) detailing the redistribution of state aid between and among towns and cities. If one town makes a bundle from their own local taxes, available state money gets redistributed to other towns in need.

This redistribution is constitutionally required, in the sense that schools are locally funded. Chapter V, Section II of the state constitution instructs us never to skimp. It reads in part, “Wisdom, and knowledge… diffused generally among the body of the people, being necessary for the preservation of their rights and liberties; and as these depend on spreading the opportunities and advantages of education … among the different orders of the people, it shall be the duty of legislatures and magistrates, in all future periods of this commonwealth, to cherish the interests of… the … public schools and grammar schools in the towns.” (Never did these words ring so true as today!)

Well-off communities like Boston, Cambridge and Somerville, where rents are high, receive comparatively little in state aid. Boston’s fiscal year 2024 budget describes Boston’s’ state aid as having “declined as a share of recurring revenue over the past two decades.” Boston’s fiscal 2024 budget is for $4.24 billion, of which 73 percent comes from local taxes and 3 percent  comes from State Aid. (Cambridge’s budget is 54 percent local taxes and 6 percent  State Aid; Somerville’s is 72 percent and 6 percent.)

Single family towns also receive very little state aid. In a small town like Washington, fiscal 2024 will have 75 percent of revenue from local taxes; bigger Weston, 72 percent; Winchester, 89 percent.

Gateway Cities are net recipients. In Worcester, 45 percent of the fiscal 2024 budget will be property taxes but 47 percent will be state aid. In Springfield and Lowell, 32 percent local taxes and 62 percent state aid.

Rent Control Hurts Property Values

How does rent control come into the equation? It reduces assessed values and therefore municipal tax revenue. This effect is not limited to residential buildings specifically under the regulations. David Autor, Chris Palmer and Parag Pathak showed in their 2014 peer reviewed paper that there is a “spillover” effect onto never-controlled properties. They looked at all residential properties. For Cambridge, this amounted to a cost of $2 billion of the $10 billion of assessed value. Everyone else paid into Cambridge so Cambridge could have rent control.

The cherry sheet is a forgotten reason why rent control was repealed by statewide ballot in 1994. There were signs up and down Route 20 in Pittsfield, Palmer, Wayland and Watertown, not all places you think of as being in the thick of the housing fight. This is why we’ve built RentControlHistory.com.

The economics of rent control and cherry sheets are the same today as they were 30 years ago. If the spillover effect repeats across all property classes in Boston, Cambridge and Somerville, which seems likely to me, then the historical 20 percent reduction in assessed values will reduce total redistributable state aid available for schools and local government by an astonishing $577 million per year, or 1 percent of the state budget. The more towns we allow to have local-option rent control, the faster we all race to the bottom.

The clear alternative is focused rental assistance. Otherwise, with rent control, we will be shooting ourselves in the foot and reducing our collective ability to help those in need. The price will be not education, but like our constitution warns, the very rights and liberties thus derived.

Doug Quattrochi is executive director of trade group MassLandlords Inc.