Already facing heat for flying to events in a state police helicopter, driving a pricey Cadillac DeVille and spending nearly $30,000 for new office furnishings, Gov. Deval Patrick has ignited a firestorm by proposing tax increases on commercial properties.

“NAIOP appreciates the need for cities and towns to raise more revenue to avoid budget cuts,” said David Begelfer, chief executive officer of the National Association of Industrial and Office Properties, a national trade group with offices in Needham. “But we are deeply concerned over the impact this will have on Massachusetts businesses.”

NAIOP wasted no time in organizing its opposition to three specific items contained in the Patrick administration’s legislation that would allow cities and towns to boost revenues by raising taxes.

Among the most contentious issues in the proposed Municipal Partnership Act is language that would increase rates for commercial real estate. Under state law, the tax rate on commercial properties is scheduled to drop to 175 percent of the full and fair cash valuation of the taxable property in 2008 from a high of 200 percent a few years ago. But under the proposed legislation, cities and towns would be allowed to extend the higher rates over several years.

“This will hit both large and small businesses that have already been paying a disproportionate share of those cities’ real estate taxes that use classification,” said Begelfer. “The language would allow for cities and towns to unfairly push the real estate tax burden onto thousands of businesses and would renege on a compromise that was reached in 2004.”

Extending the increased rates for commercial real estate will not promote economic growth, Begelfer contends. Furthermore, he said that the business community made a compromise in good faith and it is only fair to allow the plan to be implemented as it was enacted.

Facing a $1.3 billion shortfall in next year’s state budget, Patrick has been scrambling for ways to fill the state’s coffers as well as keep a campaign promise to reduce the property tax burden on homeowners.

In the midst of trying to figure out a solution to scarce state revenues, the newly elected governor caused an avalanche of criticism when he used a state police helicopter and hired a $72,000-per-year staff member to handle his wife’s scheduling.

In additon, Patrick leased a Cadillac with tinted windows and security features including concealed blue lights and a siren for $1,166 per month for two years. The previous gubernatorial car was a Ford Crown Victoria that was leased for about half that amount. Patrick was also skewered for spending $27,387 in tax dollars on new furnishings for his office.

Since then, Patrick has vowed to reimburse the state for the difference between the Crown Victoria and the Cadillac – $543 per month. He also will reimburse the state for the cost of new office furnishings.

‘Empower Our Municipalities’

The proposal to allow cities and towns the flexibility to raise taxes came following meetings Patrick and Lt. Gov. Timothy Murray held with local elected officials across the Bay State. The administration filed the Municipal Partnership Package, a series of initiatives aimed at improving the health of the Commonwealth’s 351 cities and towns and strengthening the partnership between local governments and state government.

“This administration is fully committed to an active, working partnership with every city and town in this Commonwealth,” said Patrick in a prepared statement. “When they are strong, the Commonwealth is strong. So, whether it is encouraging business growth, housing, improving and expanding the rails and roads or strengthening schools – by working on these issues together we will move Massachusetts forward.”

In addition to the option to raise commercial real estate taxes, the legislation includes provisions that would allow cities and towns to impose a meals tax, participate in the state’s health insurance program, require the state pension board to take control of underperforming municipal pension funds and close a corporate tax loophole to make utility companies pay their fair share to cities and towns.

“For far too long, cities and towns have suffered under a state government unable to realize the benefits of a collaborative partnership with its cities and towns,” said Murray in a prepared statement. “The local communities our citizens call home know best what they need to thrive. I am proud to be part of team that recognizes that, and I look forward to working to empower our municipalities and to building a long-lasting relationship.”

Highlights of the legislation include:

• In order to lower the skyrocketing health care costs municipalities are facing, the legislation includes a provision to allow cities and towns to participate in the Group Insurance Commission. Rapidly escalating health insurance costs have forced cities and towns to either cut services or increase already high property taxes. GIC was established by the Legislature in 1955 to provide and administer health insurance and other benefits to the Commonwealth’s employees, retirees and their dependents and survivors.

• The legislation proposes to save cities and towns money by requiring underperforming municipal, county and authority pension funds to be taken over by the state retirement board. The state’s pension fund is one of the most successful in the country.

• Fulfilling a campaign pledge to provide property tax relief to homeowners, Patrick will allow cities and towns to impose a meals tax that would help generate revenue to provide tax relief to senior citizens. The legislation allows municipalities to enact a meals tax of up to two percent of gross receipts. Twenty-five percent of the amount collected would be deposited into a state reserve fund to be used for the purpose of reimbursing cities and towns for property taxes abated for qualifying senior citizens.

• Patrick is also proposing to close long-standing loopholes in property tax laws that enable telecommunications companies to avoid their share of local taxation. Recent aggressive use of outdated tax provisions has resulted in a shift in tax burden from profitable businesses to residential and other business taxpayers across the state. The closure of the loophole will assist cities and towns in their efforts at stabilizing residential property taxes. The measure could raise as much as $140 million in annual property taxes due to the loopholes.

Begelfer said while he understands that cities and towns are cash-strapped, the power to raise taxes locally should not be given to municipalities without something in return to benefit everyone. While NAIOP cannot support changes to the commercial property tax rate, there are areas of potential agreement.

“If we are all in this together as the governor says, then in exchange for some of these tax changes, municipalities should be required to amend their zoning regulations to allow for more dense housing,” Begelfer said. “Without affordable housing for workers, we will not be able to attract and keep workers in a state where housing costs are out of control.”