Booming Boston is in financial dumps

Boston is booming, but the city government is in serious financial straits. How can that be? ``Overreliance on the property tax,'' explains Mayor Raymond L. Flynn.

At a recent legislative hearing on a measure he has proposed to broaden the city's revenue sources, Mr. Flynn said limiting Boston to that tax as its prime revenue source is ``outrageous.''

Lobbying for measures that would enable the city to raise money through other kinds of taxes, the mayor recently pointed out: ``Boston is the only major city in the country that leans so heavily on the property tax. . . . We rely on this levy for 98 percent of our locally generated tax revenues.''

And since 1980 -- when Massachusetts voters approved Proposition 21/2, limiting revenues from real property to 21/2 percent of its total value -- Boston has been restricted in its ability to utilize that source, even if its businesses and homeowners could have borne higher property assessments.

Other states have similar tax limitations, but most major cities affected by them have found other legal means to raise revenue.

Mayor Flynn points to another ``painful irony for Boston: We are home to institutions that are world leaders in new ideas, while we provide services to them using an out-of-date revenue structure.''

The irony the mayor refers to is that those idea-generating institutions contribute little to the city's coffers. More than 50 percent of Boston's parceled land area is tax-exempt, he notes, and of all the nation's cities, ``only Washington, D.C., comprises more tax-exempt property than does Boston.''

Flynn cites the other irony of a resurgent city facing municipal bankruptcy. Massachusetts has the lowest unemployment rate in the United States and one of the nation's strongest economies, he notes, and Boston is responsible for much of that prosperity. More than 60 percent of the jobs in Boston are held by people who live outside the city limits.

In 1984 some $3 billion was invested in Boston development projects. Business in the Port of Boston experienced a 41 percent increase last year. The city in recent months has seen the opening of two major commercial-hotel-residential complexes. One of the nation's top convention centers, Boston has closed down its major convention facility, Hynes Auditorium, to make it bigger and better (and perhaps compete better with San Francisco's Moscone Center).

``Few know it,'' Flynn says, ``but at Quincy Market [Boston's restored waterfront area], the annual sales surpass Disneyland's.''

Despite all this, Flynn gave the Boston City Council last week a preview of his fiscal 1986 budget, with a $57 million deficit on the bottom line. Since such a deficit is not permitted under state law, this was rightly interpreted as not-so-subtle pressure on the councilors and Boston legislators to get behind the $45 million revenue-raising proposal he has submitted at the State House.

This has become virtually a perennial ritual in Massachusetts: A Boston mayor walks up Beacon Hill on his knees and tells the legislature that the city is going to crumble beneath its feet unless it allows him to impose certain taxes. This year's Flynn proposal is typical: a parking tax to produce $12 million, an increase in the hotel-motel tax for $15 million, and an entertainment tax worth $18 million.

And it faces opposition from predictable sources: suburban legislators with constituents who drive to work in Boston and already feel they pay too much for parking; hotel owners, who say they are already overtaxed and that business will be lost to peripheral communities; theater owners and arts promoters, who see the entertainment tax as a wet blanket on their activities.

State Rep. John H. Flood (D) of suburban Canton, House chairman of the joint Taxation Committee, raised another objection. He said in last week's hearing on the Boston proposal that it would ``set a precedent in the commonwealth,'' and he wondered what the legislature's response would be when other cities and towns sought similar taxing power.

As if all that weren't enough, the mayor has to contend with competition for the hotel-motel tax from a fellow Democrat and South Boston neighbor. William Bulger, who as president of the Massachusetts Senate will have a great deal to say about how much help Flynn gets and from what quarter, wants to use that source of new revenue source to help finance a $141 million indoor sports arena for Boston. As a partial alternative, he suggests imposing an aviation-fuel tax and giving the proceeds to Boston.

Other alternatives suggested by legislative sources include state payment of certain county costs traditionally paid by Boston and of some $8 million of the city's annual share (about $42 million) of the metropolitan transit system.

Flynn appears willing at this point to let the legislators sift through the proposals; he's mainly interested in winding up with an addition to annual city revenues of $40 million to $50 million.

Meanwhile, in his own earnest but shrewd style, Flynn has provided some hostages to legislative fortune. At his behest, the City Council passed an ordinance Wednesday that would raise $6.5 million through increases in parking fines and certain city fees. And he enumerates savings already achieved: 460 full-time jobs eliminated; level funding or cuts for two-thirds of the city's departments in the current fiscal year (ending June 30); a 10 percent reduction in overtime; and $300,000 saved by moving offices back to City Hall from other locations around the city.

The mayor has at least one other factor going for him. If Senator Bulger wants to use a hotel-motel tax to finance his Boston sports arena, he can hardly refuse to help Flynn find alternative revenue sources to fund badly needed city services.