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Hub strikes out on Series revenue

Tax structure hinders city, study finds

By Matt Viser
Globe Staff / February 3, 2009
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The Red Sox may have swept the Rockies in the 2007 World Series, but Denver also came out a winner.

The Mile High City was able to boost its municipal coffers by $940,365 during the playoffs from taxes generated by fans eating at restaurants, staying at hotels, and patronizing local businesses. Boston, where most taxes generated in the city flow to the state, ended up losing about $650,000.

The findings are contained in a report being released today by the Boston Foundation, which analyzed the tax structures of both cities and estimated the financial impact in local governments.

The nonprofit research organization has done several studies in recent years to make the case that Boston's tax structure is putting the city at a disadvantage compared with other cities, requiring that the city rely more heavily on property taxes.

The losses in Boston were not all due to meals and hotel taxes flowing to the state. Part of the difference was a result of police details. In Denver, the Rockies picked up the tab for security; in Boston, the city pays. Another portion of the financial hit, of course, was the $360,000 cost of the Red Sox victory parade, complete with duck boats.

Mayor Thomas M. Menino, who has been pushing for state officials to give the city more authority to raise its own taxes, hailed the Boston Foundation's comparison as evidence that something must change.

"We won the battle on the field, but we lost the battle at the cash register," he said in an interview. "We should be able to decide our own destiny, each city and town."

Both cities generated about $1.5 million in tax revenues, according to the study. But while Denver kept nearly two-thirds of the revenues - with the rest going to the state - Boston only kept 11.5 percent of its revenue, which was generated from a local option on the hotel tax.

Boston also had $1.5 million in costs, mostly for police details, trash cleanup, and emergency medical services. In Denver, the baseball club is required to reimburse the city each month for extra costs for police, additional traffic management, and even food license inspectors.

Boston, along with many other Massachusetts cities and towns, has contended for years that it is too dependent on state funds because it is prohibited by state law from raising revenue through local sales taxes, meals taxes, or other means.

The restrictions have their roots in century-old laws and political rivalries between what was once the Yankee-dominated Legislature and the Irish-controlled city.

Since taking office, Governor Deval Patrick has been pushing to give local communities more flexibility to raise revenues. He recently filed legislation that would not only increase the state's meals and hotel tax by 1 percentage point - raising $150 million - but would also allow communities to levy a 1 percent tax on all hotel and meal collections.

The Legislature, unwilling to cede power on taxes to local governments, has rebuffed the governor in the past but now appears to be more willing to look at the measures, in an effort to stem the deep cuts in local aid that Patrick is implementing.

If Boston were able to levy a 1 percent local tax on meals and hotels, it would raise about $24.6 million annually, according to administration estimates. Cambridge could raise $3.9 million, Chicopee could raise $2.1 million, and Worcester could raise $2.8 million.

"It's important for municipalities to have these tools in their toolbox - whether it's the biggest city in the state, Boston, or the smallest," said Lieutenant Governor Timothy P. Murray, who had served as mayor of Worcester. "Other states have a much more diversified revenue stream. It's just common sense."

Boston could have collected $4.2 million during the playoffs if it had the same tax structure as Denver, according to the Boston Foundation report. Denver charges a 10 percent admissions tax to sports and entertainment events at city-owned facilities, and 4 percent on food and beverages.

"There are benefits to Boston to having the Red Sox here - it gives you the status of having a world-class city," said Elaine Beattie, vice president of the Boston Municipal Research Bureau, which did the research for the study. "But if you look on the impact on the budget, it's a drain on it that is not happening in other cities."

The Boston Foundation study accounted for such things as the size of the baseball parks and the numbers of home playoff games that were played in each city (Boston had eight in 2007; Denver had five).

The new study is a follow-up to a 200-page report that the Boston Foundation released two years ago. Like many other US cities, Boston can impose taxes on hotel rooms, jet fuel, and motor vehicles. Other cities have an array of other taxes. Denver, for example, has a car rental tax. Atlanta taxes insurance premiums. San Francisco has a parking tax.

As a result, nearly 60 percent of Boston's revenue comes from property taxes, compared with 10 percent in Denver, 20 percent in Atlanta, and 25 percent in New York.

Matt Viser can be reached at maviser@globe.com.

Boston lost about $650,000 from the 2007 World Series.
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