The Honorable Mark J. Cusack, House Chair
The Honorable Susan L. Moran, Senate Chair
Joint Committee on Revenue
State House, Boston

Delivered electronically

Dear Chair Cusack, Chair Moran, and Distinguished Members of the Committee,

On behalf of cities and towns across the Commonwealth, the MMA is writing in support of S. 2571, An Act Empowering Municipalities and Local Governments. We appreciated the opportunity to testify in person at last week’s hearing, and would like to offer additional comments through this written testimony. We greatly appreciate your consideration of this important legislation that provides greater tools and resources for cities and towns to support the delivery of essential local services.

Increase the Local-Option Meals Tax
We strongly urge you to support the provisions in S. 2571 to increase the local-option meals tax, which would enable municipalities, with local legislative approval, to add an additional .25% to the local meals tax, creating a maximum meals tax of 1%.

Since 2009, when the Legislature authorized a local-option meals tax, 251 municipalities have adopted the measure at a rate of .75%. Currently, this option adds only a small amount to the cost of a meal. For example, on a $100 meal, the tax currently amounts to only 75 cents. Under this proposal, on that same $100 meal, the total meals tax would increase by 25 cents to $1.00, which is hardly enough to dissuade patrons.

As we noted at the hearing last week, this proposal is smaller than the still-modest proposal in S. 1800, which the MMA strongly supports. This bill would increase the meals tax by .75%, bridging the total meals tax to 1.5% overall. Even with a higher increase, Massachusetts would still remain very competitive in terms of our overall meals tax rate. All neighboring states in New England and New York have at least a combined sales and meals tax rate greater than 7.35%. The proposal included in S. 2571 would bring our combined sales and meals tax rate to just 7.25% — still the lowest combined tax rate of the region.

We acknowledge that there may be some concern with this proposal, but we feel that this incremental increase is incredibly reasonable. While the cost is minimal to consumers, the meals tax can generate significant revenue for a city or town. In fiscal 2023, the local-option meals tax generated $151 million in municipal revenue statewide. This revenue can be used where the city or town needs it most, in order to support critical municipal services.

Cities and towns know that their partnership with local restaurants is critically important to thriving downtowns and business districts. And municipalities support those districts through improved sidewalks, pedestrian access, municipal parking lots, public safety and supportive city and town staff. We appreciate this bill’s potential to support our restaurants through provisions such as outdoor dining and to-go cocktails, and we strongly support this modest increase to generate much-needed local revenue.

Increase the Local-Option Lodging Tax
In addition, we ask for your support to increase the local-option lodging tax from 6% up to 7% (from 6.5% to 7.5% in the City of Boston). A 1 percent increase on the lodging tax has the potential to generate $49 million annually to support local government services, a rate that has not increased since 2009. Critical infrastructure services, which cities and towns must provide and maintain for motels and hotels to thrive, come with hefty price tags, and funds generated from this slight increase would be going right back into local services.

Establish Local-Option Motor Vehicle Excise Surcharge
Further, we ask for your support of a new proposal to allow municipalities to adopt a 5% surcharge on the motor vehicle excise tax. This provision seeks to offer help to all municipalities, especially those who have not seen the benefits of the existing meals and lodging local options. For many of our smaller or rural communities, where meals or lodging revenue options are not practical, S. 2571 proposes a solution from which any city or town could benefit: a 5% surcharge on the motor vehicle excise tax. This surcharge would be added, with local approval, to a resident’s motor vehicle excise tax. The average motor vehicle excise tax bill is $154, meaning a 5% surcharge would only cost the vehicle owner an additional $7.70 annually. This could generate close to $50 million for cities and towns in all corners of the Commonwealth.

Provide Further Relief Through Technical and Operating Efficiencies
In addition to local option revenue-generating provisions, the MMA offers support for the following sections that will provide flexibility and efficiencies for municipal government:

• Section 27 allows multiple communities to implement a Regional Board of Assessors. This eliminates the necessity of each town having a local board and aims to streamline the duties imposed upon such officials while reducing challenges communities have in filling vacancies.

• Section 38 clarifies M.G.L. Ch. 44, Sec. 53A, to allow the Select Board in a town, City Council in a city, or School Committee for school-related gifts or grants to be the default acceptor of any gifts or grants made to the community, even if the gift is made to a specific department or person. This section would make the language in state law much more clear for municipal officials.

• Section 39 amends the revolving fund statute to eliminate the requirement that payment from a revolving fund for wages or salaries for full-time employees may only be made if the revolving fund is also charged for the costs of fringe benefits associated with the wages or salaries. While the cost of fringe benefits must still be included in the local operating budget, this would allow revolving funds to offset the wages or salaries of an employee without having to also fund benefits through the revolving fund.

• Section 40 allows municipalities to maintain a previously approved spending cap for each departmental revolving fund until another vote, as opposed to the current inefficient system that requires a new vote each year even if the cap has not changed.

• Section 41 allows a community to utilize enterprise fund accounting for broadband-only MLPs and landfill purposes by adding clarity to M.G.L. Ch. 44, Sec. 53F ½. While this only applies to a small number of communities, it is an important distinction for those cities and towns.

• Sections 42 and 43 would allow municipalities that have accepted M.G.L. Ch. 44, Sec. 53F ¾, PEG Access and Cable Related Fund, to spend the receipts credited to the fund without appropriation.

• Section 44 codifies Chapter 90 apportionments approved by MassDOT are spent without appropriation. The community would also be permitted to spend in anticipation of funds in a manner similar to anticipated grants pursuant to M.G.L. Ch. 44, Sec. 53A. While language allowing the expenditure to be spent without appropriation is traditionally included in each bond bill, this change would streamline that process.

• Section 45 clarifies that the voting threshold for land purchased using Community Preservation Act proceeds as being a two-thirds vote. This simply adds clarifying language to avoid confusion.

• Sections 49, 50, 51, 53, 54, 63, 85 all pertain to property tax exemption issues. From extending property tax exemptions to senior citizens, veterans, or providing a cost-of-living-adjustment provision to exemptions, these provisions are all aimed at giving municipalities flexibility to provide assistance to some of our most vulnerable populations.

• Section 55 allows municipalities to adopt a one-year override for non-capital expenditures. Similar to a capital outlay exclusion, which is a one-year-only increase in the amount to be raised by taxation to pay for a capital item for which a municipality could borrow, this would be for operating expenses. For instance, a municipality might ask voters to approve a one-time investment in their OPEB fund, or might need a one-time payment for storm-related damage. This would provide a mechanism to do so.

• Sections 56-59, and 86 centralize the valuation of telecommunication company personal property and utility company personal property in the Department of Revenue’s Division of Local Services (DLS) to promote consistency in assessing and utility reporting throughout the Commonwealth. Extending central valuation to all telecom companies and to utility companies would result in a more efficient and cost-effective process for both municipalities and industry. We support these provisions if amended to permit centralized valuation by local option.

• Section 64 requires all property taxpayers to pay in full to appeal. Currently, personal property taxpayers, such as utility companies, need only pay half of the tax bill to preserve their right to appeal, while residents and commercial taxpayers are required to pay in full. Utility companies should have the same responsibility as residential and commercial taxpayers during an appeal process.

Add an Establishment of a Municipal and Public Safety Building Authority
Finally, we ask for your consideration to amend S. 2571 to include another critically important provision for municipalities: the establishment of a Municipal and Public Safety Building Authority. Current legislation, S. 1489 and H. 3802, would establish this new independent state authority, as well as a separate municipal and public safety building fund, to assist municipalities with the construction of or improvements to public safety or municipal office buildings. We support this framework as a way to help cities and towns address critical, unmet infrastructure needs.

Every municipality in the Commonwealth can identify critical infrastructure needs. We believe that the establishment of this Authority, even with limited initial funding, would have a tremendously positive impact for communities. Municipal employees working within these buildings are delivering essential services each day, from critical public safety responses to holding elections. The ability to deliver these services with maximum efficiency is often hindered by the lack of modern updates, and even safety concerns, within dated infrastructure. As S. 2571 takes a comprehensive look at improving local government, we believe that this important provision should be included and respectfully ask for your support.

As cities and towns continue to see expenses outpace local revenue growth, especially within the restrictive confines of Proposition 2½, finding other sources of revenue is critically important, as is finding ways to make local government more efficient. We appreciate this opportunity to submit testimony on these important municipal issues and thank you in advance for your work and consideration.

If you have any questions or require additional information, please do not hesitate to contact me or MMA Deputy Legislative Director Jackie Lavender Bird at at any time. Thank you very much for your partnership and your lasting support of cities and towns.


Adam Chapdelaine
MMA Executive Director and CEO