Gov. Deval Patrick has signed legislation that will shift more of Massachusetts’ real estate tax burden onto commercial property owners.

“This is good news for homeowners,” said Samuel R. Tyler, president of the Boston Municipal Research Bureau, a city watchdog group that supported the measure. “Businesses will pay a little more, but it’s a reflection of the improved value of their real estate, which has increased by more than $3 billion in each of the last two years.”

In 2004, lawmakers gave communities with a dual tax classification system the option to tax commercial property at up to 200 percent of its assessed value rather than the limit of 175 percent that existed at that time. In exchange, the measure provided that the 200 percent limit would then be decreased over the next five years and drop to 170 percent next year.

Opponents have said that lawmakers promised businesses the reduction to 170 percent in July 2008 in order to compensate them for the hike to 200 percent in 2004. They argue that the Legislature broke their promise. Associated Industries of Massachusetts said the shift would put an undue burden on businesses, which enjoy fewer services than homeowners.

But proponents, including Boston Mayor Thomas M. Menino and House Speaker Salvatore F. DiMasi, who favored repeal of the 2004 law, say that allowing the reduction to 175 percent would give businesses a tax break at the expense of homeowners who would see a property tax hike.

The new statute also eliminates language that would prevent the residential share of the tax levy from being less than the prior year. Supporters said the code was a flaw in the classification law that could have resulted in homeowners paying additional property taxes at a time when residential housing values are flat or declining. The law takes effect in fiscal year 2008 and will be reflected in tax bills that are due in the first quarter.

The Massachusetts classification law was amended three years ago to mitigate large projected increases in residential tax bills in Boston and other large cities due to divergent residential and business value trends. For municipalities who adopted the law, the business classification factor was increased temporarily to 200 percent up from 175 percent. A provision was included that would reduce the rate annually until it returned to 175 percent next year.

Efforts to keep the business factor at 183 percent for two more years or to only reduce the factor to 179 percent in 2008 were defeated.

The Boston Municipal Research Bureau supported the position that the business factor should be returned permanently to 175 percent as agreed to by state and local officials and business leaders. That also meant that the business rate would not be reduced to 170 percent in 2009 for those communities that adopted the 2004 law.

Last fall, Menino and the bureau argued that changes in the property classification law were needed to restore the maximum tax share borne by business to its traditional level, and to delete a flaw in the language that may result in homeowners paying additional property taxes this year, even when residential housing prices are stagnant.

Applying the same ceiling of 175 percent for the business classification factor for all communities is a preferred tax policy that had been followed from 1988 up until the temporary change in 2004, Tyler said. The restoration in 2007 comes at a time when the business share of the tax levy in Boston has decreased from 70 percent in 2002 to 58 percent this year, he added.

Split Share

Classification of property in Massachusetts allows the city to determine, within limits, the share of the annual tax levy borne by residential and business property. Municipalities with split tax rates have been allowed to reduce the residential share of the tax levy to 50 percent of its share of the total taxable value and increase the business share of the levy to 175 percent of its share of taxable value.

Boston always has shifted as much of the tax burden as is allowed onto business property to benefit residential property owners, Tyler said. As a result, in fiscal 2007, business property represented 32 percent of taxable value but paid 58 percent of the tax levy. At the same time, homeowners represented 68 percent of taxable value and paid 42 percent of the levy.

Homeowners who occupy their home also enjoy the significant benefit of the residential exemption, which represented more than a $1,500 decrease in their taxes last year.

For many years prior to 2004, business and residential values followed a relatively similar trend and their split share of the tax levy hovered at 70 percent and 30 percent, respectively. In 2003, however, the trend shifted due to economic forces, particularly the high rate of residential property growth, the slowing of commercial property values and Boston reaching the maximum the tax levy could shift to the business ceiling of 175 percent.

“We think this is a formula that everyone can agree on,” Tyler said.