Most cities and towns are still figuring out their finances for the 2014 fiscal year beginning July 1, but if the recent past is any indicator, not many communities will ask voters this spring for a tax increase to help pay for municipal operations.
While requests have risen statewide over the past few years for temporary tax hikes to pay for new schools and other building projects, they have fallen for permanent increases to cover salaries and other day-to-day costs.
Both types of ballot questions let communities boost property taxes beyond what is allowed under Proposition 2½, the state law limiting increases in the total annual tax levy to 2.5 percent plus revenue from new growth.
“In this economic climate, it’s been very, very difficult to: A, live within the revenue stream, but B, to ask residents who are suffering from the same economic climate to raise their taxes,” said Needham Town Manager Kate Fitzpatrick.
Across the state, municipal officials put approximately 42 requests for a permanent tax increase, through a Proposition 2½ override, before voters for the current fiscal year, down sharply from the approximately 140 proposals in 2009. The numbers are estimates because the state is unsure whether all communities report override questions that are unsuccessful.
In Arlington, voters approved a $6.5 million operating override in 2011. But Town Manager Adam Chapdelaine said that the drop in override attempts statewide may be due in part to a recent state measure that allows cities and towns to save money on health care costs, along with an increase in state aid to municipalities in recent years.
“Those two factors alone would have a positive impact on bottom lines and reduce the need for overrides,” Chapdelaine said. He added that broader political trends may also be at play. “There’s a larger antitax sentiment nationwide, and I’m sure that could have some impact.”
At the same time that operational override attempts have been declining, though, requests for temporary tax increases — known as debt-exclusion overrides — to pay for construction projects or other capital expenditures have been going up. Municipal officials put approximately 153 such questions in front of voters for the current fiscal year, up from around 130 for 2009 and 114 for 2010.
“I think the conventional wisdom is that it’s easier to achieve a positive result on a debt exclusion,” Fitzpatrick said.
State numbers show that less than half of operating overrides attempts are successful, with debt-exclusion questions faring much better at the polls.
Officials say debt-exclusion requests can be an easier sell because the tax increase is temporary — expiring when the construction or other loan for a capital project is paid off — and because voters can wrap their minds around a new school, library or firetruck more easily than the notion of operating expenses.
“Debt exclusions are finite, and they’re geared toward a certain result,” said Geoffrey Beckwith, executive director of the Massachusetts Municipal Association.
Debt-exclusion votes approved by area voters in recent years include funding for a new high school in Maynard, a new library in Millis, and elementary school projects in Needham and Norfolk.
On March 12, Newton will hold a special election for voters to decide the fate of $11.4 million in proposed tax increases. The three ballot questions involve an $8.4 million permanent increase in the form of an operating override, and two debt-exclusion requests totaling $3 million for the rebuilding of two elementary schools.
Newton’s operational override would pay for additional teachers and some modular classrooms, a handful of police officers, road improvements, and new Fire Department buildings.
Officials in many communities contend that Proposition 2½’s limits on tax increases create a “structural deficit” when costs go up by more than 2.5 percent in a year, and thus overrides are necessary to maintain existing services.
In Arlington, Chapdelaine said, town officials present voters with a multiyear financial plan when asking for a tax increase, demonstrating that they will not be seeking another one for several years.
In 2005, for example, Arlington officials asking for an override said the extra money would last for at least five years; it ended up lasting six.
“I think having that promise kept to voters was a piece of why the 2011 override was successful,” Chapdelaine said.
The degree of difficulty in passing a tax increase can vary widely by community. Continued...