Gov. Healey drops reform to liquor license approval process for now, files bill allowing cities to raise hotel, meal taxes

Days after announcing wide-ranging legislation that would allow municipalities to raise taxes on hotels and meals and gain control over approving liquor licenses, Gov. Maura Healey filed the so-called the Municipal Empowerment Act on Monday — but dropped the liquor license change.

Healey initially announced the massive municipal reform bill on Friday, heralding it as a win for Massachusetts’s 351 cities and towns.

Following a press conference with Senate and House leadership, the governor’s press secretary Karissa Hand clarified that the provision allowing allowing local municipalities to grant liquor licenses without state approval was removed from the version of the bill filed Monday.

Hand said the administration needed “more time to work on the language” and have “discussions with stakeholders on the path forward” regarding the liquor license provision.

“I do have to say with the liquor licenses, honestly, I never understood why the Legislature approves them to begin with,” Senate President Karen Spilka said at the press conference. “So I would certainly be willing to take a look at that and make some changes.”

Despite her positive remarks on the liquor license provision, both Spilka and House Speaker Ron Mariano withheld judgment on the proposal allowing municipalities to raise lodging and meal taxes. The full bill was not filed before the conference.

The proposal allows municipalities to raise local taxes on meals from about 0.75% to 1% and local taxes on hotels, motels and rentals from 6% to 7% — or from 6.5% to 7.5% in Boston. It also allows municipalities to collect a new Motor Vehicle Excise tax up to 5% for vehicles registered there.

Spilka said she had “mixed feelings” about the announced proposal over the weekend and was looking to hear from stakeholders.

“We’ll evaluate them all as they come in, along with all the policy changes that are in the municipal bill too,” said Mariano, asked about his previous statements against raising taxes. “They will be evaluated to see their impact on our competitiveness, which is one reason why we don’t want to raise taxes.”

Healey said the bill itself is “not raising taxes” but allowing communities to increase revenue for services like schools and parks.

“This is just an example of giving local communities the option to do what they think is in the best interest of their community,” Healey said. “And for some, if you’re a Cape Cod community, we heard raising a meals tax, raising a hotel tax that will be primarily paid by tourists is something that they may want to consider and do. Other towns may feel differently.”

Some business leaders have expressed skepticism towards the proposal in previous statements, arguing now is not the time to raise taxes.

The bill also makes some COVID-19-era policies permanent, including allowing hybrid public meetings, outdoor dining permits, and to-go cocktail sales.