When the controversial tax law Proposition 2 1/2 went into effect almost 10 years ago, many Massachusetts voters celebrated what they hoped would be the demise of the demanding tax structure which has since earned the state the nickname "Taxachusetts."

Since then, the measure, a tax cap designed to give citizens more control over their payments to municipalities and to limit a city's total property taxes to 2.5 percent of the market value of the community, has indeed proven to be a successful and durable law.

But as it approaches its second decade of existence, critics are blasting Proposition 2 1/2 for tying the hands of local governments and rendering them incapable of providing vital community services such as quality public education and police protection.

The recent wave of criticism has led even some of the law's most fervent original advocates to question whether the tax cap in its current form is doing more harm than good.

"We don't want to say we favor changing 2 1/2 because we feel it has been effective," says Lewis C. Howe, spokesperson for Senate minority leader David Locke (R-Sherborn). "But we have to look down the road. Some change may be in order."

Locke, who still describes himself as "a pretty staunch supporter of the tax cap," helped to push the original bill through the state house in 1980.

Advocates of the law point out that a built-in override system allows local voters under Proposition 2 1/2 to choose to raise their property taxes at any time.

"As far as we're concerned, that solves the problem," says Barbara Anderson, chair of Citizens for Limited Taxation (CLT), the lobbying group which originally sponsored Proposition 2 1/2. "If the people in town want [higher taxes] they vote for them, and if they don't, they don't."

But critics point out that high unemployment rates and the overall economic gloom which has descended over Massachusetts are causing voters in recent weeks to reject overrides by overwhelming margins.

Recently, voters in the towns of Norfolk, Weymouth, Needham and Chelsea soundly rejected overrides of the law.

Educational Quandary

Many opponents focus on the state's troubled public educational system, charging that without the added funds which an repeal of the law would generate, many schools will never be able to overcome the problem of insufficient funding.

Amidst worries that the U.S. educational system cannot compete internationally, Massachusetts is being forced to cut back public library hours and to bus some students outside their local schools because of budgets stretched beyond their limit.

"Declining school enrollments helped [Proposition 2 1/2] to work in the '80s. That has turned around 180 degrees," says Buck Holtz, senior research associate at the Massachusetts Taxpayers Foundation, a research and lobbying organization which opposes the law.

"Proposition 2 1/2 isn't the only reason that communities are in trouble, but it certainly contributes. Education is definitely affected by taht," he says.

But Anderson denies that the tax cap is hurting Massachusetts public education.

"This idea that education has been devastated is simply not accurate," she says. "We're spending far above the national average in education per student than in other states."

Gambling for Time

Whether Proposition 2 1/2 will weather this latest storm of criticism remains to be seen.

In the meantime, local legislators are scrambling to find ways to make ends meet without risking the political suicide of demanding that their consti- tuents pass overrides of the tax law.

Officials in some of the most fiscally desperate cities have proposed municipal lotteries, hoping that gambling revenues will fill the gap in funding for public schools and police protection.

The Brockton City Council recently applied to the legislature for permission to establish a local lottery.

And while the CLT does not favor any kind of tax increase, Anderson says that an increased income or sales tax would be preferable to a repeal of Proposition 2 1/2.

"Property tax comes to your door whether you're unemployed or working. It's a particularly regressive tax," she says. "At least with income or sales taxes the voters have a choice."

Anderson maintains that Proposition 2 1/2 is effective in its current form, but that the second provision of the property tax will remain controversial. In addition to putting a ceiling on property taxes at 2.5 percent of the assessed value, the law also mandates that taxes cannot increase by more than 2.5 percent annually, regardless of whether community values skyrocket during the year.

Such a stipulation works well during prosperous economic times, but has not helped during the downturn in today's tighter economy, Anderson says.

"During the 1980s when people were working and there was lots of money, the overrides were passing. It's a question of the economy," she says. "The key to making 2 1/2 and everything else work is getting us out of this recession.