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“Offices are not as desirable as they used to be,” Horowitz said. “Boston’s got a lot of offices. If those offices are less desirable, then they are worth less and you can’t charge as much in taxes.

“A tax falloff representing 10 percent of Boston’s total spending is too large to be offset by creative accounting or other kinds of financial management,” the report said. “The city will need to raise new revenue or reduce its medium-term spending plans.

One of the biggest unanswered questions amid Boston’s ongoing recovery from the COVID-19 pandemic is how much slumping commercial real estate values could wallop city finances. A new report out Thursday aims to answer just that.

Simply raising taxes on commercial properties or transactions to make up for losses isn't wise, according to Horowitz.

Tumbling market values for office buildings are poised to cost Boston more than $1b in tax revenue over the next five years, as the pitfalls of the pandemic and hybrid work continue to reverberate through city budgets.

"The shift to remote work means fewer people are traveling to offices and there's no reason to expect that office work is going to come back, so this shortfall will continue," Horowitz said.

"It's important to emphasize that Boston's current and former leaders are in no way responsible for this coming crisis. What we face is something like an economic act of God," Horowitz wrote. 

“More than one-third of Boston tax revenue comes from commercial property taxes, by far the highest proportion among major U.S. cities,” the report states. “This leaves Boston especially vulnerable to falling real estate values.”

In a year when tax revenues are projected to grow only a little, the estimated $1.3 billion from the 4 percent surcharge on income over $1 million was the only area of the budget where policymakers could have some fun.