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Post Office Box 1147 ●
Marblehead, Massachusetts 01945 ●
(781) 639-9709
“Every Tax is a Pay Cut ... A Tax Cut is a Pay Raise”
45 years as “The Voice of Massachusetts Taxpayers”
— and
their Institutional Memory — |
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CLT UPDATE
Wednesday, May 22, 2019
The growing
abuse of Prop 2˝
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The weather is warming, flowers are blooming
and municipalities across the state are hosting Town
Meetings, a form of local government dating back more than
300 years, which historically has given residents the
opportunity to help decide on various issues related to
local governance and spending.
More recently, however, the scope of Town
Meeting decisions has narrowed for many communities, and a
lot of time is spent debating whether to fund new municipal
projects, such as schools, libraries and senior centers.
Approval of such projects typically
translate into higher taxes for property owners, which
advocates say is necessary to ensure dilapidating municipal
buildings and outdated schools are safe and adequate for
residents and children.
Opponents, meanwhile, say the process is
increasingly becoming a popular way for local governments to
pay for projects that should otherwise be affordable within
existing municipal budgets, especially at a time when local
coffers are growing with the recent surge of new development
and rising property values realized across the state.
“Initially, I thought it was bad budgeting,”
said Chip Ford, executive director of Citizens for
Limited Taxation, based in Marblehead. “But now I think
it’s evolved into a way to spend more than what’s available
by letting problems develop until they reach crisis level,
and then going to the voters for more money.” ...
But within the last decade, new construction
and rising property values have helped boost local revenue,
offsetting a declining share of state aid provided to
municipalities, which fell to 19 percent of municipal
revenue in fiscal 2018 compared to 28 percent in fiscal
1999, according to a 2019 report by the Massachusetts
Taxpayers Foundation. The increase in new building and
property values has also made overrides less common.
Between fiscal 2001 and 2010, Massachusetts
averaged more than 100 overrides per year across its 351
municipalities. In 2018, the number fell to 20 and only 12
were approved. That’s not to say the overrides are
disappearing altogether, as many communities are considering
them this year, including Arlington, Hopedale and Norwood.
But 2018 overrides accounted for $8.8 million in new taxes
compared to $37 million in 2009.
The declining number of overrides may come
as a welcomed sign to taxpayers who feel like tax bills
increase steadily each year, and the high rate of rejections
in recent years likely reflects voters’ wariness to new and
permanent taxes, especially for operational costs.
But as overrides fall, debt and capital
exclusions -- two more types of exceptions to Proposition
2˝, which allow municipalities to pay for major capital
projects such as new schools -- have become more popular.
Capital exclusions allow municipalities to collect taxes
beyond the 2.5 percent tax levy increase for one year to
make a major purchase. Debt exclusions allow municipalities
to collect taxes beyond the levy limit over multiple years
to pay back borrowed money plus interest, similar to a
mortgage on a house.
In 2018, debt and capital exclusions
accounted for $510 million in local taxes, representing a
near-40 percent increase compared to a decade earlier,
according to MTF. The exclusions also appear to be less
controversial -- for the most part -- and have a greater
success rate among voters in part because supporters are
successful in pushing the fact that the tax hikes are
temporary, and disappear once the debt incurred to pay for
the capital program is repaid....
Ford, whose taxpayer advocacy
nonprofit was instrumental in the creation of Prop. 2˝,
however, criticizes the budgeting practice, calling it an
“end-around” to working with existing funds.
“They are going outside the municipal budget
and looking for exclusions to pay for the things they used
to pay for with the budget,” he said.
Meanwhile, local proposals to build new
buildings are becoming ever more frequent, including in
Scituate where voters on May 13 approved a new
16,000-square-foot senior center with an estimated cost of
$12 million.
After accounting for interest and service
fees, the average homeowner would pay $2,230 over the course
of 20 years, adding to other recent tax hikes approved for
similar projects in recent years. Advocates say the
investments are necessary....
For Ford, who tracks issues related
to Prop 2˝, the increasing reliance on exclusions has eroded
the initial intent of the 1980 law, which was designed to
make local governments work within existing budgets, and
prevent major tax hikes unless absolutely necessary.
“They have learned how to scam Prop 2˝,”
Ford said. “Debt exclusions were meant for emergencies. It
was never meant to be an outside budget form of taxation,
but that’s what it has become.”
Wicked Local Newspapers
Wednesday, May 22, 2019
Prop 2˝ overrides disappearing, but taxpayers still pay
By Eli Sherman
During one of its busiest weeks, when it
debates one of the most significant pieces of legislation of
the year, the Senate is opting to cut in half the number of
people from the public allowed to observe debate from the
chamber's newly-renovated galleries.
The east gallery in the Senate, one of two
public galleries that allow members of the public,
lobbyists, activists and reporters to watch the Senate from
within the chamber, is closed Tuesday as the Senate begins
debating its $42.7 billion budget due to "increased activity
in the State House today," Antonio Caban, a spokesman for
Senate President Karen Spilka told the News Service.
Chief among the activity in the State House
on Tuesday is the Senate's debate of the fiscal year 2020
state budget. Advocacy groups, including those for increased
public higher education funding and funding for nursing
homes, are also in the building Tuesday to lobby
policymakers. A Senate court officer sat outside the closed
gallery and directed observers to the other side of the
chamber.
By closing one of two public galleries, the
Senate has cut in half the number of people who have access
to the Senate Chamber, the product of a recent $22.6 million
renovation. Caban said the public can still watch the
session online or from the one remaining gallery.
State House News Service
Tuesday, May 21, 2019
Senate limits public access during budget debate
Sen. Tarr said based on the explanations
just given I have a point of parliamentary inquiry. Based on
the explanation of the revenue raising measure is this a
money bill?
Sen. Spilka talked with [Senate] Clerk
Hurley and called a recess.
Sen. Spilka said we believe that this is
a money bill.
State House News Service
Senate Session - (10 AM - 1 PM) - Tuesday, May 21, 2019
By the close of the Senate's first day of
fiscal 2020 budget debate, the chamber had approved 89 of
1,142 amendments filed to the spending bill and rejected
another 141.
Many of the highest-profile proposals
received attention but no actual vote, however -- amendments
that would have brought in significant new revenues by
increasing corporate tax rates were withdrawn after remarks
by their sponsors, as was one that would have implemented
the first year of the higher-education reforms contained in
the Cherish Act.
Later in the evening, the Senate performed
its first bundling process of this year's budget debate to
combine dozens of amendments for local earmarks and
education, allowing them to be approved or rejected with a
single vote each. The Senate also used the evening to
approve the annual Chapter 90 road maintenance bill, which
passed in the House earlier this month. Senators will
continue their budget debate Wednesday starting at 10 a.m.
State House News Service
Senate Session (7:35 PM - 8:26 PM) - Tuesday, May 21, 2019
By Chris Lisinski
When it recessed for lunch around 12:45 p.m.
Wednesday, the Senate had dealt with more than half of the
amendments filed to leadership's proposed $42.7 billion
fiscal year 2020 budget.
Senators had proposed 1,142 ways to amend
the Ways and Means Committee's budget plan and by lunchtime
on the second day of debate had dispensed with 661
amendments, or roughly 57.88 percent of the total.
Senators have adopted 229 amendments -- 195
of them through the bundling process in which several
amendments are adopted on a single voice vote. Another 315
amendments have been rejected, 268 of them included in the
two "no" bundles.
The Senate did not debate either of its amendment bundles on
Wednesday and dealt with 312 amendments in the bundles with
two voice votes that took about 30 seconds. Senate President
Karen Spilka, who presided on the rostrum, did not read out
which amendments were included in the bundles before calling
the vote.
Another 117 amendments have been withdrawn by their sponsors
before coming to a vote.
The Senate continued Wednesday afternoon to churn through
the remaining 481 budget amendments.
State House News Service
Wednesday, May 22, 2019
Senate briskly moving through budget amendments
By Colin A. Young
Senators on Wednesday are continuing to make
their way through their fiscal 2020 budget debate are
expected to continue into the evening. Amendments discussed
so far have dealt with topics including aid for rural
schools, civics education, home care worker pay, and food
insecurity. Amendments that have been approved include
proposals for funding for the North Shore Community Health
Center, a mural restoration in Springfield, kitchen
renovations at a Worcester County family shelter and
plentiful other local earmarks.
State House News Service
Senate Session - (10:30 AM - 5 PM) - Wednesday, May 22, 2019
By Katie Lannan
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Chip Ford's CLT
Commentary
As has concerned us, the Senate has
deemed its budget a "money bill" open for any tax hikes
proposed by state Senators. This comes despite the
House – but for House
Minority Leader Brad Jones' (R-North Andover) last
minute amendment – avoiding
them. The House touted its avoidance of tax hikes,
but by intent with Rep. Jones' poison pill, opened the
floodgates in the Senate. So far the Senate hasn't
gone wild with new tax hike schemes. Let's hope
that lasts for another day or two.
Meanwhile, the purpose and intent of
CLT's Proposition 2˝ to limit
unrestrained property tax increases is being quietly
turned upside-down using debt and capital exclusions.
In recent years
operational overrides – permanent increases of property
tax rates just to maintain municipal government
functions – have fallen out of favor dramatically.
So local governments have learned to defer maintenance
which they used to fund, let capital stock deteriorate
to the point of worthlessness while revenue is directed
elsewhere, then cry for more taxes to replace what they
allowed to disintegrate.
Wicked Local /
Gatehouse News Syndicate reported:
Between fiscal 2001 and 2010, Massachusetts
averaged more than 100 overrides per year across
its 351 municipalities. In 2018, the number fell
to 20 and only 12 were approved. That’s not to
say the overrides are disappearing altogether,
as many communities are considering them this
year, including Arlington, Hopedale and Norwood.
But 2018 overrides accounted for $8.8 million in
new taxes compared to $37 million in 2009.
The declining number of overrides may come as a
welcomed sign to taxpayers who feel like tax
bills increase steadily each year, and the high
rate of rejections in recent years likely
reflects voters’ wariness to new and permanent
taxes, especially for operational costs.
But as overrides fall, debt and capital
exclusions -- two more types of exceptions to
Proposition 2˝, which allow municipalities to
pay for major capital projects such as new
schools -- have become more popular. Capital
exclusions allow municipalities to collect taxes
beyond the 2.5 percent tax levy increase for one
year to make a major purchase. Debt exclusions
allow municipalities to collect taxes beyond the
levy limit over multiple years to pay back
borrowed money plus interest, similar to a
mortgage on a house.
In 2018, debt and capital exclusions accounted
for $510 million in local taxes, representing a
near-40 percent increase compared to a decade
earlier, according to MTF. The exclusions also
appear to be less controversial -- for the most
part -- and have a greater success rate among
voters in part because supporters are successful
in pushing the fact that the tax hikes are
temporary, and disappear once the debt incurred
to pay for the capital program is repaid.
I explained to
investigative reporter Eli Sherman that our Proposition
2˝ incorporated overrides intentionally for unforeseen
emergencies – a tornado destroys a school, an explosion
destroys town hall, a flood washes away a firehouse – an
unexpected and rare event outside the predictable annual
budget. Schools, public safety, road maintenance,
snow removal, personnel costs, and other normal
budgetary items would continue to be funded as usual
under the standard property tax, its growth limited by
Prop 2˝.
Today cities and
towns squander the general property tax revenue while
deferring maintenance, then gin up special interests to
advocate for and promote special projects that benefit
the few at the expense of all. Projects that used
to and should be funded within the existing
municipal budget from existing property tax revenue more
commonly are being funded with an element of Proposition
2˝ that was never intended to be used but for emergency
– not day-to-day operation of a municipality.
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Chip Ford
Executive Director |
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Wicked Local Newspapers
Wednesday, May 22, 2019
Prop 2˝ overrides disappearing, but taxpayers
still pay
By Eli Sherman
It’s that time of year again.
The weather is warming, flowers are blooming and
municipalities across the state are hosting Town
Meetings, a form of local government dating back
more than 300 years, which historically has
given residents the opportunity to help decide
on various issues related to local governance
and spending.
More recently, however, the scope of Town
Meeting decisions has narrowed for many
communities, and a lot of time is spent debating
whether to fund new municipal projects, such as
schools, libraries and senior centers.
Approval of such projects typically translate
into higher taxes for property owners, which
advocates say is necessary to ensure
dilapidating municipal buildings and outdated
schools are safe and adequate for residents and
children.
Opponents, meanwhile, say the process is
increasingly becoming a popular way for local
governments to pay for projects that should
otherwise be affordable within existing
municipal budgets, especially at a time when
local coffers are growing with the recent surge
of new development and rising property values
realized across the state.
“Initially, I thought it was bad budgeting,”
said Chip Ford, executive director of
Citizens for Limited Taxation, based in
Marblehead. “But now I think it’s evolved into a
way to spend more than what’s available by
letting problems develop until they reach crisis
level, and then going to the voters for more
money.”
More than half of all municipal budgets are
funded by property taxes, which in many ways are
dictated by a 1980 law approved by Massachusetts
voters called Proposition 2˝. The law limits a
municipality’s authority to increase the amount
it collects, known as the tax levy, to 2.5
percent per year. But there are some exceptions.
The first exception is called an “override,”
which allows property-tax levy increases to
exceed the 2.5 percent annual limit if voters
agree additional money is needed for operations,
such as payroll, covering unexpected costs and
closing deficits.
For many years, overrides have been the primary
focus of public debate, especially because the
increases are permanent, unless voters approval
a reversal known as an “under-ride.”
But within the last decade, new construction and
rising property values have helped boost local
revenue, offsetting a declining share of state
aid provided to municipalities, which fell to 19
percent of municipal revenue in fiscal 2018
compared to 28 percent in fiscal 1999, according
to a 2019 report by the Massachusetts Taxpayers
Foundation. The increase in new building and
property values has also made overrides less
common.
Between fiscal 2001 and 2010, Massachusetts
averaged more than 100 overrides per year across
its 351 municipalities. In 2018, the number fell
to 20 and only 12 were approved. That’s not to
say the overrides are disappearing altogether,
as many communities are considering them this
year, including Arlington, Hopedale and Norwood.
But 2018 overrides accounted for $8.8 million in
new taxes compared to $37 million in 2009.
The declining number of overrides may come as a
welcomed sign to taxpayers who feel like tax
bills increase steadily each year, and the high
rate of rejections in recent years likely
reflects voters’ wariness to new and permanent
taxes, especially for operational costs.
But as overrides fall, debt and capital
exclusions -- two more types of exceptions to
Proposition 2˝, which allow municipalities to
pay for major capital projects such as new
schools -- have become more popular. Capital
exclusions allow municipalities to collect taxes
beyond the 2.5 percent tax levy increase for one
year to make a major purchase. Debt exclusions
allow municipalities to collect taxes beyond the
levy limit over multiple years to pay back
borrowed money plus interest, similar to a
mortgage on a house.
In 2018, debt and capital exclusions accounted
for $510 million in local taxes, representing a
near-40 percent increase compared to a decade
earlier, according to MTF. The exclusions also
appear to be less controversial -- for the most
part -- and have a greater success rate among
voters in part because supporters are successful
in pushing the fact that the tax hikes are
temporary, and disappear once the debt incurred
to pay for the capital program is repaid.
In Marion, Town Meeting on May 14 approved a
$569,800 debt exclusion for the town’s share of
a $2 million plan to design and construct
improvements to the Old Rochester Regional
School district’s athletic fields and
auditorium, according to The Standard-Times.
In Whitman, voters approved a debt-exclusion
proposal to cover debt payments on bonds
borrowed in 2008, according to The Whitman
Times. Town Administrator Frank Lynam said the
debt exclusion is necessary because covering
capital expenses isn’t possible with a tight
operating budget, despite the average property
bill in 2019 totaling $4,949, representing a
20.6 percent increase compared to five years
earlier.
Whitman’s budgeting issues are indicative of why
more municipalities, faced with rising costs,
and a dwindling share of revenue from the state,
are relying on debt exclusions to pay for
municipal needs, which still might not be
enough.
“The debt exclusion enables us to fund what we
need to, but looking at the future, the only way
to meet our capital needs and operating expenses
is to raise the levy limit,” Lynam told The
Whitman Times. “This capital issue is
significant, and not going away. We need to come
up with an operating plan that will enable us to
fund the needs of the town.”
Ford, whose taxpayer advocacy nonprofit
was instrumental in the creation of Prop. 2˝,
however, criticizes the budgeting practice,
calling it an “end-around” to working with
existing funds.
“They are going outside the municipal budget and
looking for exclusions to pay for the things
they used to pay for with the budget,” he said.
Meanwhile, local proposals to build new
buildings are becoming ever more frequent,
including in Scituate where voters on May 13
approved a new 16,000-square-foot senior center
with an estimated cost of $12 million.
After accounting for interest and service fees,
the average homeowner would pay $2,230 over the
course of 20 years, adding to other recent tax
hikes approved for similar projects in recent
years. Advocates say the investments are
necessary.
“If we do not do this now the cost is not going
to go down,” Jerry Kelly, vice-chairman of the
town’s advisory committee, told the Scituate
Mariner. “I personally think that the time is
far past due.”
In Weymouth, voters on April 30 approved a
debt-exclusion proposal to pay for a new middle
school, costing nearly $96 million, according to
The Patriot Ledger, marking the first time the
town has approved such funding.
The proposals are not always successful.
Brookline rejected a debt exclusion to fund two
school projects on May 7, including the creation
of a ninth elementary school, which opponents
said wasn’t necessary.
“Our message was clear and strong: ’Brookline
doesn’t need the ninth school,” John VanScoyoc,
chairman of Spend Smart Brookline, told the
Brookline Tab. “Don’t waste $88 million on a
school we don’t need.”
The debate in Brookline was related to
overcrowding, but proposals for new school
projects will likely continue to increase in
future years. A 2016 survey by the Massachusetts
School Building Authority found nearly one of
every five schools assessed needed imminent
“moderate to extensive” renovation.
For Ford, who tracks issues related to
Prop 2˝, the increasing reliance on exclusions
has eroded the initial intent of the 1980 law,
which was designed to make local governments
work within existing budgets, and prevent major
tax hikes unless absolutely necessary.
“They have learned how to scam Prop 2˝,” Ford
said. “Debt exclusions were meant for
emergencies. It was never meant to be an outside
budget form of taxation, but that’s what it has
become.”
Eli Sherman is an investigative and in-depth
reporter at Wicked Local and GateHouse Media.
State House News
Service
Tuesday, May 21, 2019
Senate limits public access during budget debate
By Colin A. Young
During one of its busiest weeks, when it debates
one of the most significant pieces of
legislation of the year, the Senate is opting to
cut in half the number of people from the public
allowed to observe debate from the chamber's
newly-renovated galleries.
The east gallery in the Senate, one of two
public galleries that allow members of the
public, lobbyists, activists and reporters to
watch the Senate from within the chamber, is
closed Tuesday as the Senate begins debating its
$42.7 billion budget due to "increased activity
in the State House today," Antonio Caban, a
spokesman for Senate President Karen Spilka told
the News Service.
Chief among the activity in the State House on
Tuesday is the Senate's debate of the fiscal
year 2020 state budget. Advocacy groups,
including those for increased public higher
education funding and funding for nursing homes,
are also in the building Tuesday to lobby
policymakers. A Senate court officer sat outside
the closed gallery and directed observers to the
other side of the chamber.
By closing one of two public galleries, the
Senate has cut in half the number of people who
have access to the Senate Chamber, the product
of a recent $22.6 million renovation. Caban said
the public can still watch the session online or
from the one remaining gallery.
"We're not blocking the public from an
opportunity to view the session," he said.
"There is still a gallery available for the
public to still view debate and there are
various locations around the State House,
including Room 428, where the public can also
view the debate as well."
The Senate livestreams its formal sessions
online, though the stream can sometimes lag
behind the actual proceedings and be prone to
glitches.
"In a world that has become increasingly
virtual, the Senate chamber remains a place
where we can come together and sit side by side
as equals to work on behalf of the people of the
Commonwealth, a place where we can look each
other in the eye as we advocate for our
positions -- and sometimes respectfully disagree
-- and shake hands at the end of a long day,"
Spilka said in January as she welcomed guests
into the newly-renovated chamber.
The Senate has also set up a number of rope
lines outside the chamber on the third floor,
along the corridor that senators often use to
access the chamber. Those rope lines, which the
Senate does not typically erect for formal
sessions, are also in place due to "the
increased activity."
Caban said it is not known yet whether the
gallery closure and additional rope lines will
remain in place throughout the Senate's budget
debate this week.
State House News
Service
Tuesday, May 21, 2019
Senate Session - (10 AM - 1 PM) - Tuesday, May
21, 2019
Convenes: The Senate convened at 10:50 a.m.
...Sen. Tarr said we want to talk about the
rainy day fund. We will have some charts
shortly. We will have reproductions available so
you can take them home. We will be happy to sign
them. The cost is approval of just a few
amendments. We ask that they not be for sale on
Ebay once you are done with them. They may be
taxable now in a way they were not before. We
found some tax increases in this budget. I hope
we can understand them in context.
Sen. Rodrigues said I look forward to the charts
and graphs. If folks decide to sell them on Ebay,
make sure to collect or remit the sales tax.
There are a couple of new tax increases. They
should come as no surprise. They are the two
recommended by the governor, a good friend of
yours. He recommended three new tax increases.
We adopted two. The first being a targeted
excise tax on vaping products, equipment, to
mirror excises we collect on tobacco and
cigarettes. They will yield $12 million in the
coming fiscal year. The second is the excise on
opioid manufacturers, which will generate $14
million annually. We all know how the epidemic
continues to be one of the top issues. We
dedicate the new revenue to a substance abuse
disorder prevention and treatment trust fund. I
would like to say that new material increases in
tax revenues from last session, the Airbnb or
short-term rental tax, about $27 million was
included in this budget. We annualized the
expected revenue on legalized recreational
mariuana at $132 million. It was incorporated
into the budget. New revenues from expanded
gaming, the exact number escapes me, was also
included.
Sen. Tarr said based on the explanations just
given I have a point of parliamentary inquiry.
Based on the explanation of the revenue raising
measure is this a money bill?
Sen. Spilka talked with Clerk Hurley and called
a recess.
Sen. Spilka said we believe that this is a
money bill.
Sen. Tarr said I thank you for that
interpretation and it will save us 45 minutes of
debate. There are a couple of tax increases and
I am hoping that since he was willing to embrace
the governor's recommendations on that issue
that he will embrace them on others. Can he
explain where the revenues go from those tax
increases? Trust funds are created. Are those
funds separated from the appropriations process?
...
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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:
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Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ (781) 639-9709
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