Slumping City of Lynn Turns to Tax Override

TIMES have changed for this once-prosperous working-class city just north of Boston. During the 1950s Lynn thrived as a shoe manufacturing center. Now, old downtown factory buildings stand abandoned and covered with graffiti, empty storefront windows display ``For Lease'' signs, and a long line of people can be seen waiting at the unemployment office. In the midst of these hard economic times, Lynn residents must nevertheless face a tough decision about their city's future: Should local property taxes be raised to restore declining city services?

For Mayor Albert DiVirgilio, who has made substantial budget cuts already, the answer is a definite ``yes.'' Over the past two years, Mayor DiVirgilio has had to lay off school employees, issue a hiring freeze in the police and fire departments, and close three branch libraries. And if that is not enough, Lynn - along with other cities and towns - faces a cut in local aid funding next year because of a $850 million state budget deficit.

So the mayor, rather than trying to work with limited city resources, decided to go directly to the voters. He, like many local leaders in Massachusetts, is asking voters to support an override of the 2 1/2 percent property tax rate cap imposed on municipalities in a 1980 referendum. Proposition 2 1/2, as the referendum measure is called, also limits a community's yearly tax increase to 2 1/2 percent.

Local officials, struggling with shrinking revenues amid a sagging regional economy, say Prop. 2 1/2 is forcing them to make severe cutbacks.

``My fire department is down basically from 250 to 210 men. My police department is down basically from 190 to 150 policeman,'' DiVirgilio says. ``As a leader of a community you have a responsibility not just to keep on cutting but you have a responsibility to go to the public.''

The city's Prop. 2 1/2 override proposal includes six different questions adding up to an extra $6.5 million in new revenue, says City Council president Richard Coppinger. That amounts to roughly an extra $180 per household, he says. The new money would be used to hire additional police and firemen, cover trash collection costs, build a new police station, and fund positions in the library and school departments. Voters will decide on the questions in a special election to be held April 30.

WHEN Massachusetts' Prop. 2 1/2 - similar to California's precedent-setting, Proposition 13 in 1978 - was passed in 1980 the state had the second highest property tax rate in the country. The measure came at a time when property taxes all over the country were beginning to rise. From 1984 to 1989, property taxes grew faster than personal income taxes in 37 states, according to Scott Mackey of the National Conference of State Legislatures. That trend was quickly followed by a movement in many states for property-tax relief, Mr. Mackey says.

In Oregon, for example, voters approved a 1.5 percent property-tax cap last November. Nebraska increased its sales tax last year to help reduce property taxes. In addition, new governors in Michigan and Kansas say they will provide property-tax relief to middle-income homeowners.

But some states, strapped for money because of budget shortfalls, can no provide extra money to cities and towns.

``States are facing fiscal problems now,'' Mackey says. ``In a lot of areas, there's nowhere else to go,'' but to the property tax.

In Massachusetts, cities and towns fared pretty well during much of the 1980s despite Proposition 2 1/2. In many communities, new revenue from a booming real estate market and increasing local aid more than made up for Proposition 2 1/2. From 1981 to 1989 local aid to cities and towns nearly tripled.

But over the past few years as the economy has slowed, communities are struggling with decreasing revenues. Many have attempted Prop. 2 1/2 overrides but not all have been successful; for fiscal year 1991, 227 Bay State communities attempted overrides but only one of out eight cities was successful in passing any override questions. Only two Massachusetts cities in total - Springfield and Northampton - have passed overrides.

In Lynn, DiVirgilio is assembling a special blue-ribbon committee, made up of private citizens and business leaders, to help generate support for his override. He says educating the public is essential because people tend to be skeptical. Lynn resident William Kennedy, recently laid off at the city's General Electric plant, is one such skeptic. ``I don't like it,'' he says. ``There still seems to be a lot of things they could do first before asking for more money. A lot of people just can't afford it right now.''

City Council president Coppinger admits people may be hesitant. One big factor may be the city's unemployment rate, which was 8.5 percent in December. Another problem is getting city employees to work together on the entire initiative.