After reading Mr. Cole’s post(s) about the Newburyport School override, I was still confused about whether or not the entire amount of the $1.6 million override would be allocated to the Newburyport schools after one year, or if the money would go into Newburyport’s general fund. That is if the Newburyport school override would be voted in.
So I went on a hunt. And I talked to a whole lot of people. And spent a whole lot of time at the Mass DOR website.
“Proposition 21⁄2 establishes a limit on the annual property tax levy and approval of an override or exclusion question only increases the amount a community may raise in taxes. It does not authorize or require spending for the purpose of the question.”
“The additional funds raised by the override are “earmarked” for the stated spending purpose only in the first fiscal year.” (Mass DOR’s underlines, not mine)
So as I understand it, an override for the Newburyport schools would only be earmarked for one year. After that, the money would be allocated with all other funds as part of the annual budget process.
Whether or not the override would continue to be allocated to the Newburyport schools, as I understand it, is a very grey area. There are no guarantees.
The only guarantee that an override would be allocated for the schools permanently, is if it were for purposes of funding a Stabilization Fund or a “Rainy Day Fund,” a change made to Massachusetts General Law in 2003.
The one thing that is definite, is that if an override would pass, it would be a permanent tax increase.
Editor’s Note: I received this email from Mass DOR which I will pass onto the readers of the Newburyport Blog:
In order for an override for schools to be effective to increase the town’s levy limit, any appropriation for the specific purpose of the override must be at least the amount of the override, in the first year. That does not necessarily mean that additional appropriations have to be made to the schools, dependent on the specific language of the override purpose. After the first year, there is no requirement that the override amount be appropriated to the schools in order for the override to provide additional levy capacity. See our publication entitled Proposition 2½, part IV.A.1 on page 9 (PDF version), which also provides more information on Proposition 2½.
Gary A. Blau, Tax Counsel
Bureau of Municipal Finance Law
PO Box 9569
Boston, MA 02114-9569