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Meals tax prospects called dim in House

Patrick exhorts localities to lobby

Governor Deval Patrick's closest legislative allies acknowledged this week that his proposals to allow communities to raise new revenue by taxing meals and hotel rooms appear to stand little chance of winning approval in the House, despite weeks of fierce lobbying by the chief executive.

Patrick supporters conceded that many state representatives fear the political repercussions of voting to raise taxes, especially if they cannot be sure their constituents will benefit. The House must approve the plan before it would go to the Senate, where it appears to have more support.

The legislation would allow communities, on a voluntary basis, to impose a meals tax of up to 2 percent and increase the local hotel tax by 1 percentage point. That would potentially bring in more than $250 million each year, according to estimates provided by the Massachusetts Municipal Association. But some communities may choose not to enact the taxes, and others have few restaurants or hotels.

"You're not guaranteeing that that money is going to be raised," said Representative Michael E. Festa, a close administration ally. "You're only guaranteeing that we take a bad vote."

Patrick, who has been traveling the state to build grass-roots support for his initiatives, held a campaign-style rally at the State House yesterday, exhorting local elected officials and supporters to persuade lawmakers to back the Municipal Partnership Act in its entirety. As about 250 selectmen, sympathetic lawmakers, and scores of supporters -- including 33 of the state's 41 mayors, according to the administration -- cheered and applauded, Patrick urged them to lobby reluctant lawmakers to support his legislation. "Are you ready to go to work?" he shouted. "We have work to do!"

Despite the grim prospects for Patrick's meals tax, aides said the governor scored an important victory yesterday when the House approved another element of the municipal relief plan that would allow communities to reap significant savings on employee health insurance by buying it through the state's Group Insurance Commission. The state panel purchases health insurance for state employees and teachers at a lower cost than what most municipalities pay.

"The endorsement by the House today of the governor's GIC initiative is a welcome and significant first step towards addressing the financial strain that communities across the state are facing," said Joe Landolfi, a spokesman for the governor.

The House estimated that communities could save a total of between $120 million and $180 million annually by adopting the change. But because municipal unions could veto a community's shift to the state system, however, all cities and towns may not be able to tap into these savings.

In coming weeks, both chambers are also expected to adopt another provision of Patrick's plan that would force underperforming municipal pension funds to join with the state's highly successful pension fund.

The point of Patrick's Municipal Partnership Act, however, was not only to help communities cut residential property taxes by saving money on pensions and health care, but also by giving them the choice, long coveted by many local elected officials, to tap new sources of local revenue.

Skyrocketing residential property values, state cuts in local aid during the last recession, and soaring municipal healthcare costs have put enormous pressure on residential property taxes in recent years, forcing many communities to either cut services or raise taxes. In his campaign last year, Patrick made property tax relief a central piece of his platform, promising to give cities and towns new ways to cut costs as well as ways to diversify their revenue stream .

As part of their lobbying effort, the municipal association and the administration have been brandishing new statistics showing how many cities and towns have been unable to pass local overrides this year. The figures also break out what portion of each municipality's shortfall could have come from the new optional taxes Patrick has championed. According to the figures provided by the association, 33 communities, seeking a total of nearly $60 million, have seen overrides fail this spring.

"I think we need all the tools to pass in order to make large strides towards solving the crisis," said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, one of the administration's primary allies in the fight for the municipal relief package. "Local voters are saying, 'Please don't just give us the choice between cutting services and raising the property tax.' "

In addition to the optional rooms and meals taxes, Patrick has also proposed ending a property tax exemption for telecommunications companies, which the administration says would bring in $78 million statewide. That provision has drawn more interest in the House than the meals or hotel tax proposals, say lawmakers close to both House Speaker Salvatore F. DiMasi and Patrick. Aides to Patrick say they are optimistic about its chances, but its fate remains unclear.

Senate President Therese Murray said yesterday that she believes about half the Senate would support some form of all three of Patrick's revenue-raising proposals, but she said it is unclear whether agreement could be reached on specifics. One way senators might be more likely to support the tax proposals, she said, would be to require cities and towns to use all the money they raise to reduce property taxes. "That's what would be the issue, that the money would be directed for municipal tax relief," she said.

Administration sources acknowledged an uphill fight on the meals tax, but said the lobbying will continue.

Some lawmakers said that effort will make little difference.

"With all due respect, local officials lobbying for more money is not really a new thing around here," said Representative Bradley H. Jones Jr., the House minority leader.

Some lawmakers worry that communities might spend the money on new services rather than provide property tax relief. Others oppose raising taxes.

Representative Linda Dorcena Forry of Dorchester, another strong Patrick supporter, admitted that the rooms and meals tax proposals give her pause.

"I'm still listening to both sides," said Forry, who represents both Boston, which could gain as much as $40 million from a small meals tax, and Milton, which has very few restaurants.

Mayor Thomas M. Menino did not attend yesterday's rally, but he has pledged to use all the revenue generated by the meals tax and ending the telecommunications exemption to reduce property taxes. His administration has said that if both measures pass, the average Boston homeowner would receive about $200 a year in property tax relief.

Menino has also persuaded more than 250 restaurateurs to back a small meals-tax increase. But so far, he has been unable to get DiMasi, who represents the restaurant-rich North End of Boston, to get behind the local option taxes.

"Why we can't convince legislators, that's anybody's question, because they represent the same constituents I represent," Menino said in a phone interview yesterday. "We need help now."

Members of DiMasi's leadership team who are also Patrick allies say DiMasi is working hard to find a compromise. At one point, they said, he floated the idea of changing the meals tax proposal to ensure that every city and town benefited from a meals tax increase by collecting it on the state level and distributing it to communities, according to need.