Boston's new revenue reform package, designed to tax non-residents for use of city resources, is a vital step in maintaining the city for public and private educational institutions, President Bok said yesterday.

The so called "Boston Bailout" bill, passed by the State Senate on Monday, would help protect tax-exempt property holders, such as Harvard, from any payment increase and at the same time would allow the financially troubled city to raise capital to meet public obligations, Bok said.

Harvard Medical School, and Harvard's Schools of Public Health, Business Administration and Dentistry are among the University's tax-exempt holdings in Boston.

Through what some describe as "in-lieu-of-tax" payments, Harvard pays "over a million dollars" to Boston annually, Bok said.

The new revenue package--which must pass the House and the Senate one more time before becoming law--would allow Boston and other communities to impose a 5 percent tax on jet fuel and to increase the tax on hotel and motel rooms by 4 percent. Officials predict Boston will raise $22 million annually with the new taxes.

Boston currently relies almost solely on funds raised from city property, of which some 50 percent is tax exempt, for revenues. Because colleges and universities are taxexempt institutions. Boston, which has a relatively high percentage of educational institutions, is prevented from collecting a considerable sum.

However, University officials, such as Bok, have argued that colleges provide the city with valuable resources such as jobs, health services and tourist attractions.

Bok, who this spring submitted testimony during the debates in the state legislature and last week wrote a letter to The Boston Globe in favor of the measure, said Harvard has a vital interest in guaranteeing the financial stability of Boston because he said Harvard workers, faculty, and students depend on the way Boston appears and operates.

"We use Boston, our employees live there, and our schools operate there. We have a special responsibility for the health of Boston," said Bok.

Structural Gap

Citing a study conducted by Harvard and MIT professors, Bok said the city has a "structural revenue gap" caused by its over-reliance on property taxes and inability to raise tax money from city users. He said

Boston needs a "permanent, systematic solution" for its financial problems.

"But Boston cannot, and should not, solve its fiscal problems by imposing added tax burdens on its independent colleges and universities, for they already contribute far more in services and benefits than the amount of revenues foregone to the city because of their property tax exemption," Bok wrote in his testimony.

Vice President of Government and Community Affairs John Shattuck, who sponsored a conference here for local public officials on the benefits of revenue reform earlier this year, agreed that Harvard more than makes up for its tax-exempt status.

He said that in addition to sales tax generated for the state by students, staff and faculty brought into the city, Harvard and other local colleges have helped make Boston a high-tech center by offering employers top-notch graduates and academics.

But both Shattuck and Bok emphasized that the state benefits much more from the college presence than the city, since the latter is not able to tax the college property but the state collects sales tax and benefits from the industry fostered in the academic atmosphere.

The new plan, they said, would give the city the right to collect some of the revenue of which they are deprived.

The state, the colleges and the city would come out winners, they said