Patrick in city to promote bill; Meals, hotel stays could be taxed.

Byline: Priyanka Dayal

WORCESTER- Flanked by state lawmakers and local officials, Gov. Deval L. Patrick and Lt. Gov. Timothy P. Murray yesterday promoted a bill that would raise revenue for ailing cities and towns by allowing them to levy taxes on restaurant meals and hotel stays. It also would close a 92-year-old loophole exempting telecommunications companies from paying property taxes.

The governor and his supporters have been plugging the legislation as a device that would give communities the tools they need to diversify and increase revenue without raising property taxes. Yesterday at City Hall they urged constituents to lobby their representatives to back the legislation.

"Property taxes have been going up at an alarming rate around the commonwealth," Mr. Patrick said. To stop further property tax increases, the state needs to partner with municipal governments, he said.

He called a 1915 law that exempts telecommunications companies from paying property taxes obsolete. If companies such as Verizon paid property taxes, overall the state would generate $140 million in annual state revenue, according to data provided by the governor's office.

Although some customers are concerned that taxing telecommunications companies would result in higher phone and Internet bills, Mr. Patrick said there is no correlation between taxes paid and rates charged. His office released information noting that while Massachusetts has the fourth lowest tax burden of all the states in which Verizon does business, the company's customers here pay the fifth highest monthly bills.

"This (bill) empowers city and town officials to make decisions that are best for their communities ... by giving them the tools to keep the police on the streets, to keep the teachers in the classrooms," Mr. Murray said.

Worcester is struggling with a $21 million budget deficit this year.

Members of municipal government from Worcester and surrounding towns, including Uxbridge and Leicester, expressed support for the measure yesterday.

City Manager Michael V. O'Brien said elected officials in neighboring towns are all facing budget constraints and welcome the local options outlined in the Municipal Partnership Act.

"We're looking for diversified, sustainable revenue. This is it," Mr. O'Brien said. "Short-term quick fixes are not options."

Supporters say closing the telecommunications tax loophole could raise $3.6 million, and imposing a 1 percent meals tax could raise $2.2 million for Worcester alone.

State Sens. Edward M. Augustus Jr. and Harriette L. Chandler, both Worcester Democrats, and state Reps. James B. Eldridge, D-Acton, and James J. O'Day, D-West Boylston, also touted the bill.

The Municipal Partnership Act, proposed by Mr. Patrick during his first month as governor, also includes provisions to cut health care costs for municipal employees, reform the state pension fund and ease home-rule petition restrictions.

The act includes so many different provisions that it is being considered in not one, but in several, committees in the state Legislature.

House Speaker Salvatore F. DiMasi, D-Boston, has decried the meals tax and lodging tax as simply another way of raising taxes.

The governor's office, however, points to those components of the proposal as the mechanism to provide some property tax relief. Twenty-five percent of the new revenue would be deposited into the Municipal Property Tax Exemption Fund and reimbursed across cities and towns for property tax exemptions for qualified senior citizens. The balance would be returned to the originating municipality.

The governor, still glowing from a major victory last week in rallying lawmakers to preserve gay marriage in Massachusetts, yesterday acknowledged that many lawmakers are not supporting his municipal partnership package.

"It's still very uncertain if this will move forward," Mr. Patrick said.

Mr. Augustus said he thinks the bill is "gaining momentum."

State Rep. John J. Binienda Sr., D-Worcester, chairman of the Joint Committee on Revenue, said in a telephone interview that legislators are still studying the bill.

Like many of his colleagues, Mr. Binienda supports some provisions but not others. He said he is not convinced that local-option taxes would help Worcester.

"If Worcester adopts the tax, and Holden, Auburn and Shrewsbury don't adopt the tax, would that hurt Worcester? That's something that needs to be looked at and studied," he said.

The governor said that while a 1 percent or 2 percent meals tax would go a long way in helping communities with tight budgets, it was not enough to affect where restaurateurs choose to do business.

Mr. O'Brien agreed. "I don't believe it's going to put Worcester at a competitive disadvantage," he said.

A public hearing on the bill held weeks ago at the Statehouse drew many municipal government officials, including Mr. O'Brien and Worcester District 5 City Councilor Frederick C. Rushton. The governor has traveled to Dartmouth, Pittsfield and Springfield promoting the legislation, and he is asking supporters to attend a rally at the Statehouse Thursday.

Mayor Konstantina B. Lukes, who is running for re-election, said at a mayoral debate last week that she does not support local-option taxes because they pit communities against one another. But she signaled that she could support the Municipal Partnership Act if it did not include local options.

Mr. Rushton, who is running for mayor against Mrs. Lukes, said local-option taxes are a good way to "grow the economic pie."

Howie J. Savard, a Dracut resident who came here to support the governor yesterday, said the bill is fair and practical.

"Cities and towns are very short on revenue, and something needs to be done," he said.

Telegram & Gazette intern Emily Groves contributed to this report.

ART: PHOTOS; CHART

CUTLINE: (1) Worcester City Manager Michael V. O'Brien, left, introduces Gov. Deval L. Patrick yesterday at City Hall Plaza. At the right is state Sen. Harriette L. Chandler, D-Worcester. (2) Gov. Deval L. Patrick speaks about the Municipal Partnership Act to a crowd gathered at City Hall Plaza. (CHART) Municipal Partnership Act highlights

PHOTOG: (PHOTOS) T&G Staff/PAUL KAPTEYN (CHART) T&G Staff/MARCOS SALDANA