Governor won't cut state aid for schools

Local meals tax debate heats up

Governor Deval Patrick is planning to tell a large gathering of municipal officials this morning that he will not cut local school aid to cities and towns this year, but will be targeting other forms of local aid.

The announcement will add to the swirl of debate over how to protect Massachusetts cities and towns from devastating cuts in local aid as Patrick and the Legislature try to balance the damage caused by the economic downturn.

In a sign that the scope of problems locally is growing quickly, cities and towns have swamped the state with proposed infrastructure projects, 4,000 by one count, which the state could fund from an expected federal stimulus package.

Restaurants across Massachusetts are preparing a major lobbying effort to stave off another bid on Beacon Hill to let cities and towns levy local meals taxes, saying they are worried lawmakers will hurt their businesses in their rush to find more money.

In an address to the Massachusetts Municipal Association this morning, the governor plans to detail to local officials his approach to the cuts he plans to make next week to cover a midyear $1.1 billion budget gap. His plan is expected to include dramatic cuts to the $5.3 billion the state provides to communities in local aid.

But he will pledge that those cuts will not touch the $3.9 billion of that pool that goes to communities for public schools, said an administration official who insisted on anonymity.

Eliminating school funding from the cuts preserves one of the governor's top priorities, but it does not mean all public education spending by the state will be spared, because communities use other sources of funding for local education.

The commitment the governor will make is only for midyear budget cuts and does not include next year's budget, which Patrick plans to unveil next week.

In 2003, during the last round of midyear budget cuts to local aid, Governor Mitt Romney also avoided cutting Chapter 70 education funds. But Romney was roundly criticized for the $114 million he sliced in other state aid.

With cuts on the table, local and state officials are watching progress on a federal stimulus package that would include relief to state governments. Lieutenant Governor Timothy P. Murray has been compiling a list of municipal projects that could begin almost immediately after federal money arrives. But the list has grown excessively large as local officials contemplate the possibility of new money injected into their communities.

There's no way "we're going to get all that money," said Mayor John Barrett III of North Adams. "Too many people are going to the trough here. They've really got to streamline them down."

Barrett said he put in only one request: the restoration of the Mohawk Theater, which would use $7 million from public funding and $10 million from private developers.

Inevitably, the tough times are pitting major constituencies against one another. Local cities and towns, led by Mayor Thomas M. Menino of Boston, want to be able to impose local meals taxes to ease the burden on property taxes.

The state currently assesses a 5 percent charge on meals, which is the same percentage as the statewide sales tax.

The proposal that lawmakers are looking at would give local communities the option of adding a surcharge of up to 3 percent on meals sold in that community.

But restaurants say that they are getting crushed by the recession and that this would be the worst possible time to let cities impose a new tax on the bills that diners pay.

"Why single us out?" said Peter G. Christie, president of the Massachusetts Restaurant Association. "Don't single out one industry, particularly an industry that is really reeling right now. I don't think many people in the Patrick administration realize that."

"They can tell you a lot about biotech, why it's important, and why we need to give them $1 billion," he added. "But they want to tax your hamburger."

The restaurant association is planning to launch a campaign next week against the meals tax increase, sending letters and asking its network of restaurateurs to make phone calls to their local legislators.

Lawmakers are continuing to examine the issue and have not decided how to disburse the money so that all communities benefit.

"When you go to Lawrence, Lowell, Worcester, Fall River, and Boston, you've got hundreds of restaurants," said Representative Paul J. Donato, a Medford Democrat and a cochairman of a legislative commission studying a municipal relief package.

"You go to Gardner, Orange, and small towns like Acton; they may only have three or four coffee shops," Donato said. "We're trying to figure out the fairest way" to distribute the money.

A Globe survey of communities in 2007, for example, showed that North Adams would have received about $150,000 from about 15 restaurants in the city.

But in Fall River, which has about 60 restaurants, the meals tax could bring in about $2 million. Boston would get the biggest boon of all, with about $40 million in additional revenue.

"We'll fight it," said Joseph Pignato, owner of Joseph's Winter Street Cafe in Newburyport, which has 58 employees.

"It's selective taxation, total selective taxation," Pignato said. "It falls on the back of the most needy people, the single mom who works four nights for me. Her 18 percent gratuity is going to become a 15 percent gratuity."

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