Wednesday, April 21, Revolution 2010

House leadership attacks Proposition 2½;
Urges major tax hike

Ways & Means Committee moves to increase property taxes without local overrides

For Immediate Release

Believe it or not, in this year of voter anger and revolt, the House leadership has just released a proposal to hike property taxes over $500 million, which could be passed during the budget debate next week.

Rep. Charles Murphy, Chairman of the House Ways and Means Committee, has amended the Municipal Relief Bill, H-4618, to allow an exclusion from the popular property tax limit that was created by voters in 1980.

Prop 2½ presently allows communities to raise property taxes only 2½ percent a year over the previous year’s levy, plus a factor for “new growth”. There are no exclusions for public safety, debt, or any other expenditure, though over the years some legislators have tried. If communities want to increase property taxes, they must ask their voters to approve an override.

This proposed W&M change in Prop 2½ would allow all communities to increase the presently allowed levy by the amount in the community’s Overlay (abatement) account, i.e., the money supposedly set aside to pay taxpayers who appeal their property tax assessment to local assessors, though if not used for abatements it can be spent on anything at all. There would be no requirement to ask local voters’ approval of this property tax increase.

The last time this was tried, the Overlay Exclusion would have turned Proposition 2.5 into Proposition 4.2.

The dollar amount set aside in the overlay account varies each year; but if this bill passes, cities and towns would happily raise the maximum allowed, which is 5% of the total $11 billion property tax levy, a roughly $550 million property tax increase.

The assault on Prop 2½ was one of Tom Finneran’s first acts as House Ways & Means Chairman (and is the reason CLT never called him a fiscal conservative). CLT defeated his first attempt on the House floor; the next three attempts passed and were vetoed by Governor Weld. Finneran tried again as House Speaker in 2003, but Gov. Romney promised another veto and the issue was dropped.

Prop 2½ will be thirty years old this year, the week that all state legislators are up for re-election, many of them against energetic and viable challengers. CLT will be dropping a memo to the Legislature on Monday, urging a “No” vote on the W&M property tax hike.

An Act Relative to Municipal Relief


SECTION 8.  Said chapter 59 is hereby further amended by striking out section 25, as so appearing, and inserting in place thereof the following section:-

Section 25. The assessors of each city, town and district shall annually raise by taxation such reasonable amount of overlay as the commissioner may approve. The overlay account shall be used only for avoiding fractional divisions of the amount to be assessed and to fund abatements granted on account of taxes assessed for any fiscal year. The amount of such overlay approved by the commissioner shall not be included in calculating the "total taxes assessed" in paragraph (a) of section 21C or the maximum levy limit in paragraph (f) of said section 21C.

Citizens for Limited Taxation    PO Box 1147    Marblehead, MA 01945    508-915-3665