Create a Website Account - Manage notification subscriptions, save form progress and more.
The Division of Local Services (DLS) provides a lot of the information which finance committees find useful. They now have a Municipal Finance Knowledge database with, for example, a Glossary of financial terms and a primer on Proposition 2½.
Show All Answers
There are several factors that go into the determination of your real estate tax bill:
The result is the amount of the real estate tax levy for the Town. Under Proposition 2½, this levy is limited to:
Once the year's levy is established, the tax rate is determined by dividing the levy by the total assessed value of the Town's taxpayers' real estate. Therefore the change in the tax rate is determined by both the change in the levy and the change in the total assessed valuation. The resulting tax for your property is the product of its assessed value and the tax rate. In any year, the change in your property's assessment may differ from that of the average property in town. If so, the % change in your tax bill will differ from that of the average property in town.
Free Cash is the operating budget surplus from the prior year, which is available to be spent in the current year. Local receipts for car excise taxes, fees, or interest on investments, for example, which are higher than budgeted contribute to Free Cash. Expenditures for salaries, benefits, materials, and contracts that are lower than budgeted also go into Free Cash at year-end.
Free Cash is not available for new appropriations until the amount has been certified by the state as part of its annual procedure of reviewing and approving all the Town's year-end reports. This usually occurs in October and the money is then available at the Annual Town Meeting in April.
Because Free Cash varies greatly from year to year it is not considered a stable recurring funding source. It is the policy of the Finance Committee to use Free Cash for one-time expenses that can be deferred, such as purchases of vehicles and capital equipment, rather than for recurring expenses such as labor.
Proposition 2½ is a Massachusetts law that limits the dollar amount by which a community can increase its property taxes each year. The limitation is 2.5% over the prior year's tax limit, plus an amount for "new growth" - a figure provided by the Board of Assessors, based on actual new construction.
Towns can raise taxes above Proposition 2½ level by passing a General Override, which permanently increases the levy limit, or a Debt Exclusion, which exempts a specific long-term debt issue from the limit, but ends when that debt is paid off.
Please see the Division of Local Services website for their publication "Levy Limits: A Primer on Proposition 2½".
Massachusetts communities are permitted by M.G.L. Chapter 40, Section 5B, to set aside money each year to be held in a Stabilization Fund in order to provide for emergencies and unforeseen expenses. The funds can be used for any lawful municipal purpose, but a 2/3 vote of the Town Meeting is required to make an appropriate from the fund.
Rating agencies such as Standard and Poors look at the Town's reserves, and especially the Stabilization Fund, in setting the Town's bond rating, which in turn determines the rate at which Rockport can borrow money.
The Rockport Finance Committee has set a goal for the Stabilization Fund of 5% of the annual operating budget, or over $1 million. The fund was successfully increased to $728,834 by June 30, 2002, but was tapped by $350,000 to balance the FY '03 budget.