User fee hikes urged to aid towns and cities

The commission's report contains a potentially big money maker for municipalities. It says local officials should have the option of raising meal taxes by 2 percentage points and increasing taxes on hotel rooms by 4 percentage points.

The increases, along with a variety of other taxes and fees, would raise at least $409 million to benefit municipalities as state lawmakers are reducing local aid payments. It would be a crucial boost for struggling cities and towns, panel members and city leaders said.

"It's the first light we've seen in a dark tunnel," Mayor Thomas M. Menino of Boston said in an interview yesterday. "It seems positive to me. We've been advocating for local options for several years, and if this says cities can have their own local option, it's a good beginning."

The report recommends raising the state's $29 car registration fee by $6, which would raise $27 million annually for community policing and State Police training.

It would add a 5 percent tax on satellite dish services like DirectTV, raising an estimated $25 million, which would probably be collected through viewers' monthly bills, the report said. Such taxes are already imposed on cable users. The money would go to the state, but it would be set aside to benefit municipalities under the plan.

Cities and towns would also be able to directly impose their own taxes on telecommunications companies for telephone poles and wires.

"We're still facing a lot of shortages at the local level," said Representative Paul Donato, a Medford Democrat and cochairman of the Special Commission on Municipal Relief, a panel of lawmakers that has been studying tax codes for nine months. "What we're attempting to do is provide some revenue opportunities."

The fate of the report and of the accompanying 48-page proposed bill is uncertain. They arrive a little more than a week after House lawmakers voted to raise the state's 5 percent sales tax to 6.25 percent.

As another politically difficult proposal, the local taxes legislation is expected to encounter resistance, and it will pit municipal officials against business groups that say residents are unable to pay higher taxes and fees during the recession.

Many of the proposals mirror ideas that have been pushed by Governor Deval Patrick since he took office in 2007.

Patrick administration officials declined to comment last night, because they were still reviewing the recommendations.

"We'll need to look at all options, and we're taking this report very seriously," Senate President Therese Murray said in a statement.

House Speaker Robert A. DeLeo did not comment directly on whether he supports the recommendations, but said through spokesman Seth Gitell that he congratulates "the members of the commission for their hard work and is supportive of finding additional tools to help cities and towns during this fiscal crisis."

The recommendations were made by a 14-member, bipartisan commission made up of House and Senate lawmakers. Members include the chairman of the Committee on Ways and Means, Representative Charles Murphy, a Burlington Democrat, and Senator Steven Panagiotakos, a Lowell Democrat.

The report calls for action "in short order," and hearings are slated to begin next week.

The report includes dozens of detailed proposals to increase local revenue, from stronger collection efforts for boat taxes to more efficient billing methods for local taxes.

But the ones that will probably spur the most debate are around meals and hotels. The current hotel-motel tax is 4 percent in most communities, levied on top of a 5.7-percent statewide tax. The commission recommends allowing communities to double that local portion, to 8 percent. It would also broaden the definition of what can be taxed to include vacation rentals and time-shares.

All told, that increase could raise $80 million statewide, all of which would go back to the communities where they were raised.

The state currently assesses a 5 percent tax on meals, which is the same percentage as the statewide sales tax. The legislation being filed by House and Senate lawmakers would give local communities the ability to raise that tax by 2 percentage points. If all communities voted to levy the tax, it would raise about $250 million. The communities would get to keep most of the money, although about $15 million would be placed into an account used to promote regionalization.

"We're trying to encourage regionalization of municipal services, everything from public safety to public health, from education to libraries and road maintenance," said Senator Stanley Rosenberg, a Northampton Democrat and cochairman of the Special Commission on Municipal Relief. "We have 351 cities and towns, and most of them are well under 30,000 people."

The commission also makes several complex changes in healthcare payments for municipal employees, which local officials are planning to oppose.

"The health insurance piece is worse than doing nothing; it would be a major step backward," said Geoff Beckwith, executive director of the Massachusetts Municipal Association. "We've told the commission we respect very much their efforts, but we feel the plan they've developed on health insurance would actually be a step back, not a step forward."

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