Override

Proposition 2 ½ is a Massachusetts law enacted in 1980 that limits the amount of property tax revenue a municipality can raise through taxes. This revenue is called the tax levy.

Prop 2 ½ also limits how much the tax levy can be increased from year to year. The maximum amount a community can levy in any given year is called the levy limit. 

Prop 2 ½ caps the tax levy at a 2.5 percent increase based on the value of all taxable commercial and residential property in the City, as well as New Growth. 

A community can permanently increase the levy limit through overrides with a majority vote by ballot.

Learn more on the Proposition 2½ and Tax Rate Process state webpage.

By passing an override a community can assess taxes in excess of the automatic annual 2.5% increase and any increase due to New Growth or its Levy Limit. An override results in a permanent increase in the levy limit of a community. These funds can be used for both operating and capital expenses. 

While an override results in a permanent tax increase that is used to fund recurring operational expenses, debt exclusions result in an increased property tax levy for a defined period to pay for capital projects.

For debt exclusions, the debt service costs are added to the levy limit for the life of the debt only. Debt exclusions do not become part of the base used to calculate future years’ levy limits. Once the construction debt is paid off, the cost is removed from property owners’ tax bills.

The expected cost of the proposed override would increase property taxes for the average single-family home in Amesbury (assessed value of $626,318) by approximately $964.53 per year or $80.38 per month, IF we use all $6,000,000 in one year. That would be far above the average annual budget increase and is not our intention.

****Please note that these numbers are based on the FY25 tax rate and average single family home value. The override would take effect for FY27 and the tax rate has not yet been set, nor has home values been assessed, or a budget been approved. 

The actual increase for each homeowner is based on the assessment for the home. Use the Department of Revenue Override Estimate Calculator to see the impact of the proposed override on your tax bill based on the assessed value of your property. Using this tool, you will see that for every $1,000,000 collected, the average single-family home in Amesbury would see an increase of approximately $162.84.

In 1992, two override ballot questions totaling  $2,184,919  were proposed for additional money for school and city operating expenses and to replace decreasing state aid. Both questions failed. 

Budget books dating back to 2010 can be found here:https://www.amesburyma.gov/Archive.aspx?AMID=36

Information for Exemptions and Abatements can be found  on the Assessor's page of the city website. 

Our budget increases every year to accommodate cost increases (e.g. personnel – wages and benefits, vendors and their contracts, services, materials, etc.). To achieve level funding (a $0 increase) we would have to make significant cuts every year. We still make reductions annually to keep our budget increase to a reasonable number and to balance expenses with revenues. Municipal revenue sources are limited, particularly by Proposition 2 ½. Level Services (a $ increase that would keep everything we are doing now but increase to match those costs) are often not achievable within the limitations of our revenues. Last year (FY26) we cut $3million to balance the budget.

The main reason for the FY21 increase was due to the first year of our debt service payment on the new elementary school ($1,827,231 - annually).  Total spending in FY21 increased by 5.7% in comparison to FY20. However, without the debt service payment it would have been a 2.7% increase.

Additionally, inflation impacts costs in many ways, just like it does for you at home. You can see from this data that CPI starting in late 2021 increased dramatically. It’s come down some but still not to what it was from 2010 to 2020 and most of our big contracts are 3 year contracts so we get locked into increased based on those terms. We are subject to procurement law for almost everything we do, so rest assured, we are almost always taking the lowest cost vendor, but they do still have increases in their contracts to cover their own costs.

Yes. The cost of services, personnel, inflation, higher interest rates on borrowings, health costs, etc., all continue to put additional pressures on annual budget growth. We include a 5-year budget forecast in our Annual Budget Book (most recent one). You’ll see that we outline some baseline assumptions in that forecast. Our Financial Advisory Board who worked on the language of the override question dialed up those assumptions based on what we are still seeing for increased costs. We are expecting an average of 5% increases for the next several years.