CITIZENS   FOR  LIMITED  TAXATION  &  GOVERNMENT

 

CLT Update
Monday, July 2, 2001

Happy 20th Birthday Proposition 2 !
(Born July 1, 1981)


The Sun
Lowell, Mass.
Sunday, July 1, 2001

Editorial
A proud proposition

Two decades ago, Proposition 2 was a revolutionary idea. Proponents saw it as the Mother of All Anti-Tax Initiatives, a way to put the lid on uncontrolled spending and soaring property taxes.

Opponents called it the "Mad As Hell Vote" -- a shot at housewife Barbara Anderson o the Citizens for Limited Taxation who collected signatures to put the measure on the 1980 state ballot. They feared major losses of local revenue accompanied by massive layoffs of teachers, public safety personnel an municipal workers.

Not since the Boston Tea Party more than two centuries ago, when Bay State colonists rebelled against King George III's "taxation without representation," had Massachusetts residents worked up such a lather over an issue.

And the "fiscal patriots" of the 1980s successfully won their revolution under Gen. Anderson. Voters approved the measure at the polls, 59 percent to 41 percent.

Massachusetts, at the time, had the third highest property taxes among the 50 states. Throughout the 1970s, communities raised annual property taxes in the 5 percent range with little fiscal oversight or adherence to sound budgeting policies. School spending, in fact, was protected by state law and couldn't be reduced by the local population even if it wanted to.

All that has changed -- with some initial pain but none of the critic's doom and gloom forecasts.

In fact, Proposition 2 created an environment for fiscal responsibility and accountability across the commonwealth. It led to tax fairness and more public input on how tax dollars are raised and spent. Overall, it made cities and towns leaner and meaner.

The cornerstone of Proposition 2 is the limit it places on a community from raising annual property taxes to no more than 2.5 percent of the previous year's level. A community has three options in which to exceed the 2.5 percent tax increase -- override, debt exclusion, capital outlay -- and each triggers a democratic townwide vote.

The accompanying chart shows how Proposition 2 has generated greater citizen input in the operation of municipal government in Greater Lowell communities. For the past 20 years, residents have had a direct say in the raising and spending of the municipal tax dollars.

In essence, Proposition 2 has heightened taxpayers' freedom of choice and given them a solid measure of fiscal control. Long live Proposition 2!


The Sun
Lowell, Mass.
Sunday, July 1, 2001

Proposition 2 at 20: Still a looming presence
By Peter Ward
Sun Staff

Children watched glumly on July 14, 1992, as Dracut officials hanged a "CLOSED" sign on Moses Greeley Parker Memorial Library.

The previous day, voters had refused to pump $250,000 into the library, a victim of a tightened town budget, reduced state aid and a national recession.

The library stayed closed for six months.

"It was a depressing time for the community, and one that won't go down as a bright time in its history," says Susan Schwarz, the library's director since 1990.

But, residents had made the choice. For many residents, it was their first encounter with Proposition 2, the law that restricts the growth of property taxes.

Voters approved Proposition 2 in 1980, and it went into effect 20 years ago today. Opponents looked at the law as a fiscal Armageddon: massive layoffs would ensue; needed services would be eliminated or drastically cut; high school sports would vanish; children would be walking miles to school each day rather than ride buses.

But to proponents, Proposition 2 was overdue discipline imposed on government that treated tax dollars like a bottomless well.

To Schwarz, the library director, it was a measure that made her do the unthinkable.

"It was probably one of the things I don't want to remember, having to turn away children, and that's not my job," she says. "I can't fault the people who said they couldn't afford the override. It was an economically horrible time. I can understand it, but that doesn't mean I can believe it," she says.

To others, it was the product of heavy-handed government, the overbearing uncle whom we learned to live with.

"One reason people can live under 2 is inflation is low," says John Robertson, deputy legislative director for the Massachusetts Municipal Association, which represents city and town governments.

"But if inflation gets up to 5 or 7 percent, the gap between normal costs and what communities can receive gets stressful. That's why in the past, when inflation was higher, there were proposals to change Prop 2," he says.

Then there are the converts.

"I was against it, but right now, if anyone tried to take it away, I'd fight for it -- to death," says Warren Shaw, a Dracut selectman for 23 years. "Local municipal officials have become better at budgeting and it's probably been the thing that's brought about many changes in the town's structure."

Dracut has since adopted a strong town manager form of government, one that purportedly makes the budget-setting process more participatory.

"But the biggest thing it's done is forced the state to pick up a large share of services, particularly education. From my standpoint, that's a good thing," Shaw says.

Tewksbury Selectman Joe Gill also was leery of Proposition 2. But unlike Shaw, Gill says the law has been a failure.

"It's made government lazy. The government always tries to spend the most it can, and at 2 percent above last year's level it became an easy way to get money whether it was needed or not," says Gill, who served on the budget-preparing Finance Committee when Tewksbury and other communities were grappling with budget cuts, which some contend were caused, if not exacerbated, by Prop 2.

To those who still feel unduly hampered by the constraints of Prop 2, proponents ask them to recall the days when property taxes fluctuated unpredictably and spending was out of control.

"There was a structure and custom to state and local finances in the years prior to 2. Cities and towns relied heavily on property taxes while state aid was not a main component of spending," says the MMA's. "Keep in mind that after 20 years, Prop 2 is part of the whole pattern of how state and local finance is done in Massachusetts. Clearly what we saw (since 1980) was a new state commitment to local aid. The downside of reduced reliance on property taxes is that state aid is less stable while cities and towns have to project revenues."

Prior to its passage, critics called the law the "Mad As Hell Vote." The anger was embodied in Barbara Anderson, the housewife-turned-executive director and lightning rod spokesman of Citizens for Limited Taxation. CLT is the nonprofit anti-tax grassroots group that collected the signatures to put the question on the 1980 ballot.

Anderson, a Pennsylvania native who was incensed in the late 1970s about rising taxes in the face of reduced municipal services, laughs as she recalls how the Boston Globe predicted ominously that legions of disabled veterans would lose their benefits.

"I said, 'What about the disabled vets who can't afford their property tax and could lose their homes?'" she says.

"The major benefit of Prop 2 is voter control," Anderson says.

But did Prop 2 give control over taxation back to the people?

Tewksbury's Gill said municipal budgets in pre-Prop 2 days were balanced and hammered out by a bevy of accountable elected officials and ultimately approved by the unquestionably democratic Town Meeting.

But Anderson says budgets were built on the backs of taxpayers who weren't privy to the process.

"Once we got the cuts and adjusted the education budgets to suit the declining student population -- believe it or not, the number of students was declining then -- and once we got through the initial years, the biggest benefit was voter empowerment, the fact that elected leaders in every community have to ask or remind themselves, 'Who's in charge here?' They have to make their case with the voters. You used to hear about the arrogance of local officials, that they don't listen," Anderson says.

Under Prop 2, if a community wants a new school, expanded library or bigger budget for police or ambulance service -- and if such an expense would exceed the 2 percent limit -- proponents may mount a campaign to pass a general override or debt exclusion override.

Passage requires approval at Town Meeting, then a special election with ballots.

The general override expands the levy limit permanently while a debt exclusion does so only for the duration of the debt incurred for a specific project. Both expand the levy limit and result in raising taxes for the purpose of building tax revenue.

But even though the overrides and debt exclusions that go hand-in-glove with the law appear to place the ability to raise taxes with the majority of a community's voters, Anderson said the CLT opposes all overrides, regardless of the projects they fund.

"We like the concept of voter approval, but not voting to raise my neighbor's taxes. If a majority wants to spend their money that way, that's how the majority works. But once it's on the ballot, we support a no vote," says Anderson.

CLT occasionally lobbies to defeat override attempts. CLT has 8,000 supporters in its data bank and four full-time paid leaders, including Anderson, who takes a $34,000 salary.

An unofficial part of the Prop 2 package, and the reason some say the measure became palatable, was the wholesale increase in state aid to local communities. CLT and the Massachusetts Municipal Association teamed up to lobby for greater spending.

At the time in Massachusetts, we got lot less from the state than other states," says Anderson. "The state was the target as much as cities and towns. The way we see the world, (control over taxes goes) to the individual, second is the local community and third the state. We prefer to see our money sent back to the communities."

The Prop 2 package also eliminated school autonomy, a law that prohibited non-school officials from reviewing and possibly cutting school budgets.

"That's where the non-accountability was, and that's why schools appeared to have taken hits," says Anderson, adding that eliminating school autonomy "was inevitable and the right thing to do."


The Sentinel & Enterprise
Fitchburg, Mass.
Sunday, July 1, 2001

State's property tax relief plan turns 20
By Lisa E. Dupill
Staff Writer

Its name is usually spoken with a tone of weariness by public officials, in particular, by school committees battling to keep budgets and services intact.

The tax-saddled homeowner, who may favor one or more of those budgets, probably praises the 1980 state law that limits the amount of new local taxes raised annually to 2.5 percent plus growth.

It's the 20-year anniversary of the implementation Proposition 2, the bane of bedroom community government, but possibly a boon for cities.

Ashburnham Selectman Ronald W. Reed said the measure has had a big impact on his town and in small towns in central and western Massachusetts in general.

"We have learned to live within it. But our vendors don't necessarily raise their fees by 2.5 percent a year. The risk of living in a bedroom town is that you may not have services," Reed said.

Costs and inflation rise annually at more than 2.5 percent. In Ashburnham health and liability insurance alone increased by 18 percent in Fiscal 2002.

Add to that, an effort to disband county government. In Worcester County cities and towns are now forced to pay rising retirement costs for former county workers, while the state government scooped up the assets, Reed said.

Water and sewer are user-based services, paid by customers, and that is the only way it could have been done, Reed said.

"But police, fire and highway services can't be user-based. People can't say they don't have to pay for a cruiser if it doesn't drive by their house," Reed said.

Town vehicles and equipment are kept longer than recommended, with attendant repair bills, and building maintenance budgets the first to go in fiscal crisis.

The foundation of Ashburnham's historic Steven's Memorial Library leaks and needs replacing on three sides, its Fairbanks Memorial Town Hall needs painting, and there is little money to take care of parks and playgrounds.

But the state mandates towns to fund schools at a minimum level, in spite of what many say are out of control special education costs.

The fault is in the formula the state Department of Education uses to determine school spending, generating massive budgets which take up more of a town's operating budget each year, he said.

"I think that formula is extremely unfair to regional schools, because it looks at each town as having equal value, and that's not the case," Reed said.

Ashburnham goes right up to the levy limit every year, and annually voters place override and debt exclusion questions on the ballot to fund projects.

"But it's still not enough, and the voters just say no," Reed said.

A debt exclusion allows taxes to be raised above the tax levy limit to fund a project, and then expires when the debt is paid. An override raises taxes by the amount requested, and then becomes a permanent part of the formula used to determine the tax rate.

Since 1983, Ashburnham voters have said no to 16 overrides, and yes to three. They said no to four one-time capital exclusions this year. Since 1990 they said yes to 72 one-time debt exclusions and no to nine.

Debt exclusions have become a customary method to fund everything from fire truck to road repairs.

With a $551,515 Proposition 2 1/2 school override on a special election ballot this month, the second of the year, Reed said tax revenue wasn't enough to fund municipal government this year.

"I was recently talking to selectman from Marshfield. They have $10 million in their free cash account. They don't have to worry about Prop 2," he said. Ashburnham had just over $59,000 in its stabilization fund as of June 2000.

"I think it's the old story that the state capital is in Boston and they think Massachusetts ends just outside of Route 495," Reed said.

The city of Leominster has never reached the 2.5 percent tax levy limit, said Mayor Dean J. Mazzarella.

"I will say one thing. Prop 2 has forced municipal governments to look at the roots of doing business and focus on costs," Mazzarella said.

The city has $6 million in excess levy capacity, and hasn't had to go to voters for overrides to fund anything, he said.

"Even with Prop 2 though, the elderly have a hard time keeping pace with their taxes," Mazzarella said.

Leominster has a mix of commerce, industry and residential property, so the entire burden of taxes is not set upon homeowners.

That is a factor that may place cities at an advantage over towns.

Fitchburg has had one override and one debt exclusion, both of which failed at the polls, said Councilor at large Dan H. Mylott.

"It's worked well for the property owner. It's made property affordable. That vote was a landmark to limit taxes that were geting out of control. And the state has increased local aid, so it's not adversely harmed us," said Mylott.

Fitchburg is poised to spend $89 million this fiscal year. State aid has increased 66 percent from 1981, he said.

Barbara Anderson, the principal mover and shaker in changing the identity of "Taxachusetts," is the director of Citizens for Limited Taxation, the non-profit grass-roots organization that placed the tax levy limit before voters.

"I came here from another country, and as a Navy wife I've lived all over the U.S. So, I knew it was possible for municipal government to offer good services without having taxes that were 81 percent higher than the national average," Anderson said.

Proposition 22 wasn't really a new idea, she said.

A group tried to pass a similar measure in the 1920s when they realized that local governments were becoming over-reliant on the property tax.

"Then the state passed an income tax to alleviate the local tax. Then we had an income tax and property tax. Then we passed a sales tax and we had a property, state and sales tax. Then the state tried the state lottery to alleviate lower property taxes and fund schools. It just got out of hand," Anderson said.

The doomsayers lost the battle to defeat the legislation, and dire predictions of lost services to the state vulnerable populations fell on deaf ears.

Anderson remembers people were marching in the streets to protest the passage of the bill in the eight months between the ballot and the start of the fiscal year.

"I saw a photo of a stack of bills filed in the state legislature being carried by someone into the chambers that reached the man's face. They were attempts to repeal it," Anderson said.

Eventually legislators sharpened their pencils and came up with a plan to provide state aid to cities and towns.

Anderson said the strongest effect of the bill's passage was to remind government officials who was really in charge: Voters.

The return of financial power to voters has engendered a new relationship between local government and citizens, one of respect, she said.

"People used to complain about how arrogant local politicians were. But we never hear that now. It's probably because those politicians know they may have to ask voters to fund something," she said.

The citizens group rarely hears complaints from cities, and finance committees will contact them for information.

"Assessors and tax collectors are actually relieved, because people used to blame them for high taxes. Now they can blame Proposition 2," she said.

Any visitor to a town meeting may observe how easily a small number of voters will place a Proposition 2 override on a special election ballot.

The same visitor to a polling place would also observe the large number at the polls that frequently defeat the question.

Town officials often comment that voters at the election haven't taken the time to become informed about an issue for which an override is requested.

Anderson doesn't hesitate.

"I wouldn't begin to describe the voters at a town meeting as more informed than voters at the ballot. What I usually see is people representing special interests who come just to pass one article, and then leave," Anderson said.

Voters don't have to understand much to know what they can afford, she said.

It's not perfect, she admitted.

Regional school systems with one wealthy and one less than affluent member do suffer. But she said before Prop 2 passed, it was possible for the wealthier member of the school district to bully the other to pay more than it could afford.

The bill wasn't designed to assist small towns, but was targeted for medium-sized ones.

"We're working on a solution. We'd like to pass a bill that would place a box on people's tax bills so they can voluntarily pay more taxes. It's such a foreign concept, paying more taxes, but people donate to charities all the time," she said.

Citizen's for Limited Taxation is opposed to both overrides and debt exclusions.

"We don't feel that we should raise our neighbor's taxes," she said.

Anderson said the group is also working on a broader-based tax which would require state government to fund schools, and give voters vouchers to pay the school of their choice.

That would take school funding off the property tax all together, she said.

Citizens for Limited Taxation released the results of a 20-year study on the effect of Proposition 2 Wednesday.

Copies are available on the Web site: http://cltg.org


NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml


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