Officials like local option on tax hikes

Municipal officials, struggling to deal with fiscal headaches, gave cautious endorsements to Governor Deval Patrick's proposal to allow cities and towns to raise local taxes.

The local officials were still busy sorting through the options described by Patrick last week, but generally said they liked what they had heard. Most, although not all, praised Patrick's plan to give communities the flexibility in deciding whether they want an extra tax or not.

"He's providing us with the tools and a tool chest," said Plymouth Town Manager Mark Sylvia. "Let every city and town make their own decision."

Under Patrick's proposal, which is getting a mixed reception in the Legislature, towns would be able to increase the local meals tax by two percentage points, and could increase the local hotel tax from 4 percent to 5 percent.

Other proposals include an effort to let municipal employees join the state healthcare system, known as the General Insurance Commission, which could cut costs significantly. Also, under Patrick's plans, about one-third of the state's 106 underperforming pension funds would be absorbed by the state fund.

Allowing communities to increase the hotel tax by one percentage point "would be a good thing for us," said Dedham Town Administrator William G. Keegan Jr. The town has about five hotels, he said. A selectman recently filed a bill to increase the tax by two percentage points, which Keegan said would add about $250,000 to town coffers.

Even more significant would be the change in the meal tax, he said. Legacy Place , a proposed large-scale mall and deluxe movie theater complex in Dedham, could have up to seven high-end restaurants, he said.

"Those are significant dollars," he said about the revenue that might be collected.

Braintree officials will look at any measures that save money or increase revenue, said Charles Ryan , chairman of the Board of Selectmen . The hotel tax yields $800,000, he noted, and an increase would help. "That would benefit the town and wouldn't impact residents."

A proposal that intrigues officials because of its potential savings is having local employees join the state health system. Rising healthcare costs are the most pressing concern in many communities. But because it would also require union votes, officials believe it would be a tough sell.

Mayor William J. Phelan of Quincy said the city spent $18 million on healthcare costs in 2002, and that has soared to $40 million .

"You don't have to be a mathematician to see something has to be done," Phelan said. "The problem is that no one agrees what that something is."

Other towns shrugged off the proposal to increase hotel and meal taxes.

"It doesn't help us at all," said Mark Fisher , the town administrator in Avon . "It's great for Boston or towns with tourism. . . . We don't have any hotels. I can count all the restaurants on the fingers of one hand and there's not one high-ticket place among them."

On the other hand, he would be interested in wrapping town employees into the state health care system. Since 2001 , health care costs in town have shot up 160 percent , he said. The question will be whether union employees are interested in joining, he said.

Paul Sullivan , the municipal administrator in Bridgewater , said it would be more fair if Patrick and the L egislature raised taxes across the state, rather than give the option to communities. Bridgewater has no hotels, but has some popular bars and restaurants.

Raising taxes in one town but not next door "creates problems for merchants," he said, noting that people might go to restaurants in the town with lower taxes.

Philip Edmundson , chairman of the selectmen in Hingham , said his town would examine the health insurance proposal. "We're interested in that flexibility."

Officials apparently are divided on the proposal to have the state absorb the assets of some retirement boards.

William R. Farmer , the administrator for the Plymouth County Retirement Board, said communities like the idea of local control.

He doubted there would be great savings, saying someone still needs to do all the administrative work, like sending out checks and talking to retirees about health care changes. That still would require a local staff.

But Phelan disagreed. Quincy could save $100,000 in administrative costs, he said.

Town officials have been hit hard in recent years by cuts in state aid, soaring costs, especially in health care, and an inability to tap into new revenue. Many towns have experienced layoffs and cuts in services.

Residents, angered by soaring property taxes, increasingly have voted down overrides that would raise taxes. Property taxes now make up, on average, 53 percent of municipal revenues, the highest level in 25 years , according to the Massachusetts Municipal Association .

Matt Carroll can be reached at mcarroll@globe.com.