With state aid cuts likely, the search is on for new revenue
When it comes to taxing phone company equipment or requiring a deposit on bottled water, the Harvard selectmen are united in their support. But they are split—for now—when it comes to asking voters to approve a new town tax on meals.
“I spell ‘tax’ with two Xs,” said Chairman Ron Ricci at Tuesday’s Board of Selectmen meeting, who, with selectman Peter Warren, does not favor asking Harvard residents to pay an extra three-quarters of a percent tax on pizza, hot dogs, and doughnuts purchased from local restaurants, farm stands, and other businesses.
Selectmen Lucy Wallace and Tim Clark favor putting the question to voters either at a Special Town Meeting this fall or at Annual Town Meeting next spring. “I think in all due diligence, we have to take advantage of every tool the state is giving us,” said Wallace.
Massachusetts could face an additional $500 million revenue shortfall this fiscal year, according to recent press reports and an “action alert” from the Massachusetts Municipal Association (MMA), a group that lobbies state government on behalf of Massachusetts towns. If this trend continues, says the MMA, whose report Town Administrator Tim Bragan read at the meeting, cuts to local aid, including money earmarked for Harvard, are likely to follow as the state struggles to balance its own budget. Aid to Massachusetts towns has already been cut by $700 million compared to 2009 and Harvard was forced to close the town library on Fridays and to cut town staff and their hours to deal with a 13 percent drop in state funds that amounted to nearly $600,000.
Because of changes to the Massachusetts meals tax enacted by the state legislature this year, Harvard can collect its own tax on any meals purchased at town businesses. This three-quarter percent (0.75 percent) tax would be added to the 6.25 percent meals tax (up from its previous 5 percent) that Massachusetts consumers already pay, bringing the total tax to 7 percent. Harvard voters must approve the additional tax at a town meeting, but first the selectmen have to agree to place the measure on the ballot. If the local tax is enacted, it can take effect the first day of the next quarter after it is enacted, i.e., if the tax were voted at a special town meeting in November, it would begin to be collected Jan. 1.
Bragan estimates that 10 Harvard businesses would be affected. On every $10 meal, Harvard would collect 7.5 cents. The state has said Harvard could expect $9,000 to $12,000 dollars from the tax annually.
“I’d like to put the question before the town,” said Wallace at Tuesday’s meeting. “If the town says ‘absolutely no,’ then fine. They’ve decided. But I think for us not to give them the opportunity is not correct.”
With the four members of the Board of Selectman split in their support, and the need for a Special Town Meeting this fall in doubt, no action on the tax is likely for several weeks. Meanwhile, the selectmen did vote unanimously Tuesday to support two other measures that could bring additional revenue to Harvard: taxing the equipment that cable and phone companies deploy throughout the town, and expanding the state’s container law to require deposits on bottled water as well as soft drinks and beer.
Telephone and cable companies are currently taxed on their poles and wires along—and under—public roads. The money is collected by the state and then returned to towns. But equipment on those wires and poles is exempt, a loophole the state legislature will try to close this fall. The MMA estimates towns could receive an additional $25 million by taxing telecom equipment; no estimate of the amount that would return to Harvard was available at the time this article was written.
As for bottled water, a bill before the state legislature would expand current law to require deposits on the plastic containers that are seemingly everywhere. The state already collects deposits on soft drink and beer containers, and much of that money—so-called “abandoned deposit amounts”—sits unclaimed in a state account. In voting their resolution to support an expanded container deposit law—the original bottle bill is 27 years old in 2009—the selectman also asked that the state amend the current bill to return “at least 50 percent” of any abandoned deposit amounts to the towns, based on the sizes of their respective populations. According to Bragan, a 2002 report showed that nearly $30 million worth of deposit money was unclaimed at the time, and that the town could have received $12,000 if it had been disbursed.
Neither of the two measures endorsed by the selectmen is likely to result in revenue this year or next, so a local meals tax is one of the few options that could be enacted in time to affect the 2010 or 2011 fiscal years.
Warren prefers to “wait and see,” concerned that neighboring towns will not enact the tax and that Harvard residents will take their business elsewhere. Clark and Wallace said that they expected that it was too early to conclude that Harvard would be alone. “I think there’s going to be a real change by next June,” after annual town meetings, said Wallace.
“It’s not a huge amount of money,” said Wallace, “but as someone once said, a little money here, a little money there, and pretty soon you’ve got some real money.”
Both candidates for the open seat on the Board of Selectmen—Marie Sobalvarro and Bill Johnson—have said they support a local meals tax for Harvard.
