HomeMy WebLinkAbout1980-09-29 Evaluation of Prop 2 1/2.rpt
~
- ~ 3 :: ~~
1~
v.::.
~,
t
1 ~ .~
.~y:.
~~~~
SEPTEMBER 29, 198® .
~ ..
TAX PpLICY CpM."4ITTEE
LEXII~tGTON, MASSACHUSETTS
Jahn McLaughlin, Chairman
Ronald Levy,. Vice Chairman and Chairman, Fiscal Impact Subcommittee
John Pierce, Chairman, State-Local Relations Subcommittee
Robert Dodd
Mansfield Neai
Steve Politi
Laurence Redgate
Christina Welch
Linda Wik
Ex-Offieio
Robert M. Hutchinson, Town Manager
John Lawson, Superintendent of Schools
't ..
t
~.-
.y..
c~ ~t~ti
October 3, 1880
Robert M. Hutchinson, 3r., Town Manager
Town Office Building
1b25 Massachusetts Avenue
Lexington, MA. 02173
Dear Mr. Hutchinson:
Enclosed is the report of the Tax Policy Committee of Lexington.
Personal schedules allowing, the members of the Committee will make themselves
available to discuss the report until our mandate expires November 1. I suggest
that the Selectmen consider holding an open discussion meeting on this report.
As Chairman. of the Co~mtittee, I would like to make two personal observations:
- Lexington has been fortunate to enjoy the professional management
which you and Dr. Lawson have brought the Town. Given recent
conditions (soaring energy costs, declining school enrollments,
etc.), Lexington's record of financial performance should be
envied by other municipalities in Massachusetts.
- Lexington is lucky, too, to have the kind of dedicated and talented
citizens erith whom I have had the pleasure to serve on this Committee.
We argued on ~verythina but agreed upon much. It has been my privi-
ledge to work with them.
Best regards,
doh.-~ F. McLaughlin, Chairman
Tax Policy Committee
JFM:jmt
1115 MABBAGMU$~,FF® AYENUE • LEXEN QFE9 H, MAR®ACMUiETTB 07173 • TELERHOME (`/7} ~61•RSRO
QJ, MDAFr~~
v~
~~~~ ~'s
yw
u a^
.,e~~wn
t~naato~`
ACKNOWLEDGEMENTS
The Tax Policy Committee wishes to thank the following persons who appeared
before the committee to explain their positions on tax policy:
Barbara Anderson -- Citizens for Limited Taxation
Michael E. Gapuano -- Committee on Taxation, rassachusetts House of Rep.
Wesley Matthei -- Citizens for Limited Taxation
K. Heinz Muehlmann -- Associated Industries of Massachusetts
Alan Tasti -- Massachusetts Municipal Asscsciation
Our thanks too, to Mr. Robert Hutchinson, Town Manager and Dr. 3ahn Lawson,
Superintendent of Schools for providing financial forecasts and other
assistance.
Mr. Richard Perry, Comptroller, Mr. William Streeter, Management Intern and
Miss Phyllis Smith, Administrative Assistant to the Town Manager provided
quick and competent responses to our numerous requests for information and
administrative support. The Committee appreciated their assistance.
TABLE OF CONTENTS
Page
Introduction ....................................................... i
I. Summary and Conclusion of the Tax Policy Committee ............. 2
II. A Summary of Proposition 2-1/2 ................................. 6
ITI. Proposition 2-1/2 -- The Fiscal Consequences ................... 7
IV. The Local Override Provisions of Proposition 2-1/2 ............. 14
V. Proposition 2-112 -- Other Changes in Governmental Structure ... 18
Appendices
A. Text of Proposition 2-1/2, House Bili 5933
B. Lexington"s Municipal Budget, 1976 - 1986
C. Lexington's School Budget, 1.977 - 1984
D. Attorney's Response to the Tax Policy Committee's Questions on
Proposition 2-1/2
INTRODUCTION
By direction of the Selectmen of the Town of Lexington, Town Manager Robert M.
Hutchinson, Jr. appointed a Tax Policy Committee which convened initially on
May 21, 198Q.
The Committee was charged with reviewing and evaluating "Proposition 2-l/2",
(Ballot Questior. Number 2j and other proposals far restructuring state and local
taxes which were then under consideration by the legislature. Since these other
proposals did not emerge as legislation, the Committee's report focuses upon
Proposition 2-1/2.
The Committee looked at Proposition 2-1/2 from an admittedly parochial viewpoint.
Our primary yardstick was, "how will 2-1J2 affect Lexington?" To this end, the
Committee attempted to project bath the local financial impact and likely
changes in the relationship between Lexington and the Commonwealth.
Part I of this report summarizes our findings.
Part II contains a stunmary of Proposition 2-1/2 prepared by its proponents,
Citizens for Limited Taxation, and references the Committee's discussion
of each section.
Part III is deviated to a detailed review of the tax reduction articles of
Proposition 2-1/2 and an analysis of the projected fiscal impact upon
Lexington.
Part IV reviews the local override provisions of Proposition 2-1/2 and their
bearing on Lexington's current budget process.
Dart V includes a review and analysis of the other portions of Proposition
2-1/2 which would restructure the political and. economic relations
between the Commonwealth and its municipalities.
It should be noted that another referendum question concerning taxes was added
to the ballot in Rugust. Ballot Question Number 3, sponsored by the Mass-
achusetts Teachers Association (MTA), would amend state laws to provide (1}
that the percentage growth in state and local taxes be limited to the percentage
growth in statewide personal income and {2) that reliance upon the property tax
for education funding be gradually decreased so that by fiscal 1984 the
Commonwealth would pay 50~ of the costs of laval education. .
Since the proposition was not placed on the ballot until August and since the
Committee has been unable to secure detailed information on the proposition, we
have not considered it in our report.. Our silence on Question Number 3 should
not be construed as supporting or opposing it.
- 1 -
I. SUMMARY AND CONCLUSIONS OF THE TAX POLICY COMMITTEE
On November 4, 1980 the citizens of Lexington will be asked to vote for
or against Ballot Question Number 2, commonly referred to as "Proposition 2-1/2."
THE MEMBERS OF THE TAX POLICY COMMITTEE OF THE TOWN flF LEXINGTON UNANIMOUSLY
URGE LEXINGTONIANS TO VOTE AGAINST PROPOSITION 2-1j2.
Fiscal Impact
The tax reductions imposed by Proposition 2-1j2 would reduce Lexington`s
spending on schools and municipal services by $3.4 million - or 7:0~ - during
its first year of implementation.
In the fifth year after its passage, Proposition 2-1j2 would require
Lexington's budget to be reduced by $7.8 million or 19~k. Cumulatively aver five
years, Lexington would suffer a gross revenue shortfall of $2b.1 million.
LEXINGTON'S REVE'QUE SHORTFALL UNDER PRflP. 2-1/2
{$ Millions)
FISCAL YEARS
1982 1983 1984 1985 1986
Projected Tax REVenues Required 29.2 30.2 32.1 34.0 36.5
Revenue Allowed By Prop. 2-Ij2 -25.8 -26.4 -27.1 -27.9 -28.7
Gross Revenue Shortfall 3.4 3.8 5.0 6.1 7.8
Shortfall as ~ of Total Approp. 10.1$ 11.0$ 13.7$ T5.7~ 18.8
While Proposition 2-1j2 will bring property tax reductions for many
Lexingtonians, the Tax Policy Committee is convinced that budget reductions of
this magnitude will result in serious damage to Lexington's schools and a
significant curtailment of other municipal services.
Fiscal Disputes
Proponents of Proposition 2-1j2 have maintained that approval of the Proposition
will not be harmful because:
1. Loss of tax revenues can be compensated by "cutting waste."
2. Individual municipalities can over-ride Proposition 2-ij2's tax Limits
by means of annual popular referenda.
3. Additional state aid to municipalities might be forthcoming in order to
compensate for local loss of revenues.
4. Municipalities can off-set tax losses by raising fees far specifie local
services.
The Tax Policy Committee rejects these positions.
1 - While many towns and cities might be able to absorb tax cuts by eliminating
"waste," the Committee feels that Lexington has been sufficiently well managed
- 2 -
in recent. years that the budget does nest have 1Q~ to 19~ of "waste" to be cut.
Proposition 2-1/2 would mean cutting "muscle", not just '"fat". It would pen-
alize those communities, such as Lexington, that are better and more pro-
fessionally managed as they are probably closer to a "bare-bones" budget already.
2 - The local over-ri_de provision~of Proposition Z-1,/2 requires approval of
two-thirds of voters in order to increase the local tax levy in any given
fiscal year. This provision effectively gives one-third of the electorate
a veto over local operating budgets. The over-ride process also requires
the state legislature to authorize referenda in odd-numbered years and
municipalities would be required to finance such special elections. Addi-
tionally, a referendum to over-ride must be held. in November, but muncigali-
ties presently approve their fiscal year budgets before July 1 and issue
tax bills in Octobex. The Committee finds the over-ride provisions of Pro-
. position 2-1j2 to be anti-democratic, awkward and wasteful.
3 - Massachusetts has no surglus income from which it might grovide new state
aid to municipalities. In order to provide new funds, the state would be
required to raise new taxes. Given the greater impact of Proposition 2-1/2
on cities, the Committee feels that any new taxes would be distributed in
such a manner as to favor Boston, Cambridge, Lynn, Quincy and other large
cities and towns at the expanse of smaller towns such as Lexington. Zt
appears likely that present state aid to Lexington also: might be reduced by
such rescue efforts. Additionally. further reliance upan state aid effective-
ly reduces local control of spending and taxation.
4 - Increased fees for specific local services might be appropriate in many
instances. In the case of Lexington, however, imposing a sewer usage fee and
raising other fees to cover "costs" {as allowed by Preposition 2-1/2) would
have an insigni~icant impact upon local funding. The increased use of such
fees also has a neg«tive impact upon most Lexington residents by transferring
such costs from "local taxes" - which are deductible from personal federal.
income taxes - to "fees" which are not deductible.
Other Financial Considerations
Proposition 2-1J2 has other serious defects:
- Under Proposition 2-1j2, municipalities may not increase their total tax
revenues by more than 2-1j2~ per year, regardless of changes in their tax base.
In the opinion of the Committee, this limitation might discourage towns from allow-
ing new residential, commercial or industrial development. Municipalities will be
unable to off-set the cost of new development by honest increases in their tax base.
- Proposition 2-1/2 allows renters to deduct one-half of their annual rent from
their state income tax. This deduction - which well cost Massachusetts between
S3L million and $80 million annually in state income tax zevenues - has no known
relationship between the renter's income or the property tax actually incurred for
any given rental unit. Ind_vidual renters qualify for the reduction if their
apdrt~-~ent owner p~:ys no property tax, a situation common to public housing and
some luxury rental units built under tax abatemcMnt laws.
- 3 -
- Proposition 2-1j2 would allow state :agencies and authorities such as
Middlesex"County, the Metropolitan District Commission {MI3C) and the Massachusetts
Bay Transit Authority {MBTA) to increase their assessments and charges to municipal-
ities by 4~s per year. Municipalities, limited to a 2-1j2$ annual increase, in
total property tax revenues, therefore can expect to spend an ever increasing
proportion of their income to support the META and Middlesex County as opposed to
local schools and fawn services.
Other Legislative Changes
Passage of Proposition 2-1j2 also legislates the following items:
- Future state mandates {comparable to compulsory Kindergarten) must be fully
funded by the Commonwealth.
- Compulsory and binding arbitration for police and firemen would be abolished.
- The fiscal autonomy of local school committees would be eliminated.
Members of the Committee have varied views upon these individual articles.
The Committee is unified, however, in believing that these provisions do not off-
set the negative financial impact of Proposition 2-1/2 upon Lexington. Regardless
of our individual positions on these items, we feel that each of them is of
sufficient importance to warrant consideration on specific merits, not as part of
an omnibus tax bill.
The Language of Proposition 2-1j2
The Tax Policy Committee has studied Proposition 2-Ij2 far approximately four
months. The Committee includes two attorneys and many other members conversant
with legislation and regulations. We are quick to admit, however, that the
Committee may have misinterpreted the language of the legislation.
The language of .the cot frequently is vague. The proponents readily admit
that the bill is technically flawed. The proponents have argued before the
Committee and in the press that these technical flaws can be corrected easily by
the legislature in 3anuary if Proposition 2-1/2 is enacted by referendum in November.
The Tax Policy Committee takes issue with this casual approach to legis.latian.
The public should be asked to vote tax legislation only when they can understand
and appreciate the true meaning of the legislation. Legislative language which
creates public confusion and invites unlimited legislative and judicial re inter-
pretation appears to be more of a "problem" than a "solution"~
Proposition 2-1j2: Invitation to a Financial Crisis
Many advocates of Proposition i-1l2 - such as Boston Globe columnist Ian Menzies -
disavow the specifics of the legislation while pushing for its approval. Such
advocates admit that Proposition 2-1/2 is badly flawed, but contend that its passage
will create a fiscal crisis for the state and its municipalities thereby forcing
the Legislature to undertake comprehensive tax "reform".
- 4 -
The Tax Policy Committee considers this position to be naive or misleading.
While all members of the Committee consider the present tax structure as requiring
"reform", we are divided in what "reform" means. We agree, however, that the
existing state legislature is unlikely to enact meaningful tax-"reform" legis~.a-
tiorb within the few months allowed it under the provisions of Proposition 2-1/2,
If citizens vote for 2-1/2 because they want tax. reform badly, that is how they
will get it.
In Closing
All of the members of the Tax Policy Committee favor some reform of state
and local tax policies in Massachusetts. Many members of the Committee are
sympathetic to some form of litaitation upon taxation. "
Despite our personal predilections we concur unanimously that Proposition
2-i/2 is the wrong way to go. We think that it hurts the average person in Massa-
chusetts; we know it will hurt the quality of life for the average family in
Lexington.
Proposition 2-1/2 imposes severe limitations upon local governments while
tolerating or endorsing the growth of county and state spending. As citizens. of
Lexington, we feel that our local government has been relatively efficient. We
believe that our elected Town Meeting members, Berard of Selectmen and School
Committee are responsive to public concerns.. We have real qualms about legislation
that limits taxpayers from deciding what Level of local services they wish to
support. We also object to tax legislation that does not attack the problem of
state spending.
F'OR ALL flF THE ABOVE REASONS, 6+TE URGE LEXINGTONIANS TO VOTE "Nfl" ON FROPOSITION
2-1/2, BALLOT ¢UESTION NUMBER 2. _
- 5 -
II. A SUMMARY QF PROPOSITION 2-I/2*
This Summar,~ was prepared by Citizens for Limited Taxation,
SECTION 1 -Limits property taxes in a city or town to 2.5$ of the fair cash
value of all real & personal property in a city or town.
( Page 2 )
-Provides for 15$ annual reduction in total tax levy of city or town
until the 2.5$ limit is reached. (Page 2 )
-Limits annual increases in total taxes to 2-1/2~. (Page 3 )
-Allows raising of 2-2j2`a limit on total property tax levy and 2-1/2~
annual increase gay vote of 2/3 of those voting in local referendum.
{ Pages 2, 3 )
-Allows lowering of 2-1j2~ limit on total tax levy by simple majority
of vote in local referendum. (Pages 3, 4 )
SECTION 2 -Forbids future unfunded mandates from the state. (Pages 4 - 6 };
-Forbids expansion of progeny tax exemptions mandated by the state
unless the state assumes the cost of such exemptions. (Pages 4 - 6 )
SECTION 3 -Gives state auditor the authority to hire and fire within his
department. (Page 6 )
SECTION 4 -Requires establishment of a division of local mandates to demonstrate
the financial impact on cities and towns of laws, proposed or in
effect, imposed by administrative agencies of the Commonwealth.
( Pages 6, 7 )
SECTION 5 -Gives-municipalities the authority to revoke optional mandates.
( Pages 7, 8 )
SECTION 6,7,8-Repeals fiscal autonomy of school committees. ( Pages 8, 9 )
SECTION 9 -Reduces auto excise tax from $6b to $25 per thousand of valuation.
( Page 9 }
SECTION 10 -Eliminate compulsory & binding arbitration for public employees.
( Page 9 )
SECTION I1 -Allows renters one-half of annual rent as a deduction on state in-
come tax. (Page 9 )
SECTION 12 -Limits fees & assessments of costs to no more than 4~ increase a year.
No fees may he charged far goods or services in excess of the cost
of providing said goods or services. (Page 9 )
* Page references made to House Biil No. 5933
- 6 -
ITI. PROPOSITION 2-1/2 - THE FISCAL C.O23SEQUENCES
A. Tax Limits: Sections 1 and 9
1. Intent
Section 1 of Preposition 2-1/2 will limit property taxes in Lexington to
2.5$ of the full and fair cash value of all real and personal property in ,
Lexington in the year of enactment. The section requires annual reductions in
the total tax levy until the 2.5~ limit is reached, and thereafter limits annual
increases in total taxes to 2.5~ of the previous year's levy.l This 2.5~ growth
limit can be contrasted to the current tax.. cap of 4§s in Massachusetts, which
permits exemptions. The 2.5$ tax cap is assumed not to be parcel-specific, but
applies to the community's total tax revenues. The limit can be overruled by a
two-thirds vote by local referend.un. (See next chapter} .
Section 9 would reduce the automobile. excise tax in the first calendar year
of implementation from $66 per $1000 of auto value to $25 per $1000.
2. Analysis and Implications
An analysis of the impact of Sections 1 and 9 on the Town of Lexington must
take into account:
- The current level of taxatior. relative to 2.5~ of the full and fair cash
value (which is analogous to the Towns equalized value}.
- The forecast levels of town and school budgets in, the foreseeable future; and,
- The current and anticipated levels of automobile excise tax revenues in
the Town.
Excluding state and county assessments: Lexington appropriated $32 'million for
fiscal year 1980-81, and, after allowing for state and county assessments and
revenues from the Cherry Sheet, the motor vehicle excise tax and other sources, the
net amount to be raised by taxes in the current fiscal year amounted to $25.2 million,
or 2.8$ of current equalized value.
The analysis carried out :~~ the Committee is herein presented, and has utilized
forecasts to fiscal year 1936. prepared by th? school Superintendent and the Tawr~
Manager's Office and represents their best estimates at this time. CSee appendix).
Without Proposition 2-1j2 the Town projects that:
- the amount to be appropriated will increase from $32 million in FY 1981
to $42.5 million in FY 1986 (measured in current, inflated, dollars)
- the amount to be raised by property ta.ves, which includes the school budget
requirements, will increase at a rate of about 6.0$ per year to $33.7 million,
or at a rate below that anticipated for general inflation.
- the anticipated 'auto tax revenues will increase from $2 million currently
to $2.8 million in FY 1986.
1 Proposition. 2-1/2 also requires that the tax levy remain below 2-I/2 per cent
of ec~uaiized value in every future year. This is largely an academic requirement
for. the majority of the cities and towns as it is highly probable that property
values will increase far more rapidly than 2-1j2 per cent per year, but it could
affect those cities with a declining tax base,
The analysis (Table A} conducted by the Committee assumes that Proposition
2-1/2 is first fully in effect in fiscal year 19822 and applies to the projected
equalized value of $998.3 million, estimated by the flown. Section 1 of Proposi-
tion 2-1/2 would limit Lexington's property tax revenues in the first year to
2.5$ of the market value, or $25.0 million {Column 4). This would result in an
immediate reduction of 8.1~ in property tax revenues, reaching the target. set in
the first year. Increases in subsequent years would. allow the revenues to reach
$27.6 million by 1985. A reduction in the auto excise tax rate to $25 per thousand
dollars would have an immediate and additional impact on the Town`s revenue base
by reducing excise tax revenues from $2 million to $0.8 million in the first year.
This revenue level would increase very gradually from $0.8 to $l.l.million in 1986
in comparison to $2.8 million projected without Proposition 2-1j2.
The cumulative effect of limitations on property tax and auto excise tax
revenues would be to create a gross revenue shortfall for the Town of $3.4 million
in the first year of implementation {here assumed to be 1981-82}, growing to
$7.8 million by 1986. (Column 6). The greater part of this 1986 shortfall ($6.1
million) will result from the limitation or. the property tax revenue but the impact
on the Town of the total shortfall is quickly evident. The Committee projects that
the Town would Y:ave to reduce its total appropriation by 10.1 in FY 1982, the year
of implementation, in order to live within its permitted revenue base (Column 7).
This annual percentage shortfall would reach 18.8 by FY 1985 and continue to
increase in each year thereafter unless it were to be made up from increased state
.allocations or user fees, by reduced Town services or by reduced state assessments.
Measured an a cumulative basis over the first five years {FY 1982 to FY 1986),
Lexington stands to forgo $26..1 million in potential revenue. Essential services
in Lexington would probably have to be curtailed since Praposition 2-1/2 would
place a cap on all future property tax receipts, regardless of inflation, business
expansion, population growth, or increased energy costs, The cutbacks would pro-
babiy result in manpower layoffs and resulting unemployment compensation costs.
The Committee examined the sensitivity of the base case analysis to variations
in the assumptions:'
a. Total appropriations and the net property tax revenue required by Lexington is
projected to increase at 6.0~ per year over the next fic*e years. If this rate
of increase is arbitrarily assumed to be 8~, or closer to that expected for
general inflation, the Committee has estimated that the gross revenue shortfall
would increase to $ll.l million by 1986, or 26.7 of 1986 appropriations. On
a cumulative basis, Lexington would then forgc $35.7 million in potential
revenue. In other words, a higher rate of general inflation would have the
effect of further reducing Lexington`s purchasing power under Proposition 2-1/2
and would quickly cripple our municipal economy without some form of significant
relief from other revenue sources.
Z As automobiles are subject to an excise tax on a calendar and not a fiscal year
basis, the Town will. actually stand to lose $I.2 million in auto excise tax
revenues in early calendar 1981 (or the second half of fiscal year 1981}.
- 8 -
I
N
a
a
_~ z a
H
~ a W
H O G~
p a
H fsl
0
z
. a~3
A
a
m
~ .. ~ o r r w rn
w r o 0 0 ~ r~ ~n w rU
~ ~ ~ ~ ~ ~ ~ an
~ s~ ~
~ ~
w d
rt
~ ~
~ w
~~
ar ~
~ ~
~' '~ -• ~r w o '•t w v
O O t0 O O e+~ en to t0 r ~ •O
~ ~ ~ ~
.4 f:
fi >~ t+~
''t7 O ap
N to Ot
~ ~ U ~
W~ ~ O O q q O~ O .-1 N O
Gt `-' N N O O Q ~-i r-1 U~}~ ~
O ~ {~
~ E" H 5 ~,
f CT W U
~ ~ ~ ~
~ ~ ro ~
~ `° a '~
~ ~ >~ N ~
O E W N N O l0 N 01 ~p ,Q QJ ~.t
r~-1 1~'s O y t1~ r ttt u1 ~ t0 r ~ U \ •~
rl Sd 'r1 N N N N N N N 7) G1 r-i f.{
~ a U U .O N O
tn~ ~ ~ 4a W t; tla
~' G4 Ri j.~ O Q~
N ~ .i.) ~
f ~ ow•a~
~ ~ ~
o ~ ~° w ~°
~~ c ••~iaUia
O W •n ~
v~ -, o a o N ~ ~o w ~ ro t a
O~ "' N N N N N N N ~ T1 ~ O •~
~ b rtS N *C3 ~{ .-!
RC E+ N 0~ A O
+ ~ r•i t0 O
~ !•a ~ CP ~
H ~ ~ ~ ~ ~~
~ •~ N N ri ~ Ra O
~ ~ ro~a+~
~ .. N N N o r cr r • t ~ vU.+ W~ l~.I
N . N U •.-t .-..-.
O O tt1 r r q Q r1 M ~ W M to N
a C N N N N N M M (~' •ri v~ ,3
'~.. R'. •UY tH U ~ ~ dF
O a+ W N e!' .~
~i QS v
~4 ~ ~ •~~~
rf .., ri N N M cr u; ~o .C U tC O O O
~ r-i q CO w CI} q q q i-~ ~ V2 ~1 U L' U
>i+ * * 2 ( ~ rv r, ~
rn
b. There are some indications fran a sampling of recent property sales in
Lexington, that the actual ratio of property tax to equalized value will prove
to be lower than 2.5~ vs. about 2.8$ currently. If the official equalized
value were to be revised prior to July 1, 1881 it would prevail in implementing
Proposition 2-112 in FY 1982. Under this scenario, Lexington would not be
required to reduce property tax revenues in the year of implementation but be
permitted annual increases of 2.5~ based on FY 1981 revenues.
The Committee's analysis of this possibility suggests that the gross revenue
shortfall in FY 1982 would be $2.6 million (vs. $3.4 million in Table 'A') and
increasing to $6.9 million in FY 1986 ~vs. $7.8 million). C~.unulatively Lexing-
ton could then forgo $21.7 million in potential revenue.
c. If the equalized value is not revised upwards prior to July 1, 1981, the current
value of $907..5 million would hold. The first-year gross revenue shortfall
would be $5.3 million {vs. $3.4 million in the base case), or 15.7$ of total
appropriation in FY 1982 {vs. 10.10 . In other words, the Town would face an
even greater impact if the equalized value is not increased.
3, Related Issues
A number of philosophical issues related to Sections 1 and 9 of Proposition
2-1/2 were also addressed by the Committee.
a. Proposition 2-Ij2 makes no provisions for exemptions under the 2.5$ tax cap.
Unlike other tax limit proposals in Massachusetts, expense .items such as the
existing debt burden and mandated pensions will not be exempted from the cap.
b. Many of the proponents of tax reform legislation feel that reform is necessary
in order to encourage industrial growth. The Committee feels, however, that
tax legislation of tfie nature of Proposition 2-1~2 would act as a strong dis-
incentive to new construction since the community would not be permitted a
significant growth in tax revenue no matter how large a tax base it achieves.
Moreover, it is possible that cities and towns would alter zoning regulations
to discourage future industrial; commercial or residential development unless
these deveioprnents themselves were prepared to carry the incremental costs of
the infrastructure {roads, water, sewer, police and fire protection, etc.)
required to service them.
c. Proponents of Proposition 2-1/2 have also argued that its passage in November
is only a message to the state legislature, who will then have. the. opportunity
to modify it into a form more palatable to the cities and towns in Massachusetts,.
The Conuaittee is uncomfortable with that premise. What assurance do we hat=e
that the legislative body that has been partly responsible for creating the
fiscal and tax problems that. exist in this state will act responsibly in re-
forming the system equitably? In fact, there is every reason to be concerned
that ot~Fer cities and towns, such as Boston, Cambridge, and the more industria-
lized communities, will be considerably more burdened. The rollback in Boston
has been estimated at 70~ in comparison to 8~ for Lexington. It is inconceivable
that the legislature will stand aside and allow impacts of this severity to occur.
- IO -
It will act, and will act in an environment of crisis. St will probably try
to dampen the impact of Proposition 2-1/2 on such communities by increasing
state reimbursements. But at whose expense? Certainly, our major cities
must be supported but the burden is likely to land fully on suburban communi-
ties, such as Z,exington, and might manifest itself in reduced Cherry Sheet
reimbursements to our Town in future years. In fact, in assuming Cherry Sheet
anticipation steady in its analysis, this Committee may have been unduly
OptlmlSti.C .
d. Another factor cited by the proponents is the historic growth of state revenues
from its sources of revenue. They claim. that this growth of state revenue
would permit much larger local aid, which would close any revenue gap resulting
from Proposition 2-1/2. In this regard, we note that. state aid has always
exhibited large fluct~sations, depending on the general health of the national
and state economy. In the absence of an absolute guarantee of a steady
increase in state aid, this appears to us to be a weak reed to lean on.
e. Strong arguments can be made both against and for the proposed changes i.n.the
auto excise tax under Proposition 2-1,f2. Against the change is the belief
that the excise tax is non-regressive, in that it penalizes only those who
wish to invest in a more valuable vehicle and gresumably can afford .to do so,
and that it reverts directly to Lexington. Also, the reduction in the tax
would be immediate and totally in the first year of implementation, with no
phase-in provisions. On the other hand, a Iower excise tax rate may induce
the car owner to replace his vehicle more freesuently, resulting in a direct
employment benefit to the state's automobile industry and its distributors,
in greater energy conservation, in reduced air pollution and in increased high-
way safety.
B. Renter's Tax Deduction: Section 11
1. Intent
Section 31 will permit an individual who rents his principal place. of residence
in the Commonwealth (a renter) to deduct from the state income tax an amount
one-half of the annual rent paid.
2. Analysis and Implications
Our Committee was informed by proponents of Proposition 2-1/2 that the purpose
of this Section was to avoid the unfortunate experience of California where
mandated property tax decreases were not passed on to tenants by their land-
lords. The proponents £eel that there is no way to accomplish this by direct
legislation and therefore attempted to make the Proposition more attractive to
renters by what amounts to a small subsidy (nominally 2-1J2~} via the state
income tax deduction.
We view this provision as an implicit transfer payment from homeowners to
renters.. This transfer payment would be imposed. on a homeowner even if Proposi-
tion 2-1/2 did not result in a decrease in his property tax. It would be given
to the renter independent of how much or how little of his rent was a result
of the property tax, ar how much that property tax was changed by 2-1J2.
Furthezmore, we note that the maximal benefit of this provision accrues to
renters that are required to file a return and. pay income tax and the least
- 1.1 -
benefit would accrue to those (such as low income families and the elderly)
who do not. We feel that, whether one espouses rent-contrdl or free market
economies, less gimmicky ways could be found to pass an to renters the
advantage of property tax reduction.
In financial terms, this section will not have a direct effect on Lexington
but will reduce income tax revenues at the state level. The amount of this
reduction is difficult to estimate but the legislature has placed the loss at
$29 million while other estimates have put it as high as $$0 million.. The
Committee believes that the amount of loss will be significant at the higher
level and that, as there is no provision in Propositior. 2-1/2 to close this
gap through increases in other state taxes or cuts in service, Massachusetts
will find it increasingly difficult to prepare a balanced budget while pro-
viding necessary aid to cities and towns.
G. Fees and Assessments: Section 12
1. Intent
Section l2 states that any governmental entity authorized to assess "costs,
charges or fees" upon cities and towns may increase the assessment in any
fiscal year by no more than 4~ over the assessment of the previous year.
It further states that no city, town, county, district, public authority, or
other governmental entity shall charge any fees for goods or services greater
than the "cost" of furnishing the goods or providing the services.
2. Analysis and Implications
The immediate and obvious fiscal impact of Section 12 on Lexington is that
Lexington must absorb up to an annual increase of. 4~ in assessments while
operating under a 2-1/2~ tax cap. This 4~ increase in assessment charges is
permitted even sn the first year of the tax limit when Lexington must roll
back its tax levy by 8.l$.
The long term implications of Section 12 are uncertain and depend on several
factors. Unlike the present Hass. 4$ tax cap ar~d other i_imits specified in
Proposition 2-1/2, there is no provision for an override of the 4~ limit
increase in assessments, That is, governmental entities such as the MDC,
regional schools, prisons, county hosgitals, MBTA etc., can increase their
charges to cities and to;,ms by only 4~ no matter what their budgets or expenses
and no matter what services their constituents want.
The question is what happens when these entities cannot operate under a 4~
cap. As in the town budget, it can be expected that the cumulative effect of
the 4$ lim~.t under inflation would create an increasing shortfall. The gap
would. have to be made up by state allocations, reduced services or a complete
takeover by the state (e.g., court costs, welfare). Unless services are
reduced, state taxes will have to be increased. In some cases, such as county
govern*nent which many reform groups feel should be abolished, a state takeover
- 12 -
would be a beneficial side effect of Proposition 2-1J2. However, not all
services presently provided by regional areas would be better managed at the
state level.
Sponsors of 2-1/2 are willing to decrease the 4~ limit to 2-1j2$ even though
they initially believed a 4~k limit to be an appropriate and necessary level,
While this modification would help Lexington in its awn budget, this reduction
would increase the shortfall described above.
The second part of Section 12 essentially requires that fees be limited to
actual costs. Examples of such fees in Lexington include sewer and water
charges, recreation, licenses and permits, etc.. There is no doubt that
additional revenues can be raised through realistic user fees. However, it
is also clear that the user fee mechanism will be inadequatE to compensate
for the gross revenue shortfall that could result from Proposition 2-1/2.
- 13 -
N. THE IACAL OVERRIDE PROVISIONS OF PROPOSITION 2-1f2
The statute that would be created by Proposition 2-1/2 contains override provi-
sions that would permit local voters to modify the percentage limitations
applicable to their community. Specifically, it permits the voters at a November
election to
a. Increase the allowable average tax rate, by a 2f3 vote;
b. Increase the growth rate of total tax revenue by a 2f3 vote;
c. Decrease the allowable average tax rate, by a simple majority.
R. Interpretation
As in other parts of the proposition, there are certain ambiguities of warding
that leave it open to slightly different interpretations. However, the follow-
ing discussion appeals to summarize the mechanics of the budget-setting process.
Under current law, in order for tax bills to be mailed to the townspeople in early
fall, it is necessary for the IIepartment of Revenue of the state to have certified
the tax rate. This includes a review of the budgetary figures and the tax base
to ensure that proper accounting procedures have been followed, and that the pro-
cess has adhered to various statutory requirements. Under the provisions of
2-1f2 it would also be necessary to certify that:
1, the tax rate complies with the percentage limitation on tax
rate then in effect;
2. the total property tax levy does not exceed the previous year's
by more than the percentage growth limitation then in effect..
The certification process currently takes place in the summer, and assumedly would
continue to occur then.
Since there is no possibility for the voters to modify the limitations between
the time that budgets are dravrn up in the spring, and the time that real estate bills
go out in the early fall., it appears that the limitations in effect would be based
on the provisions of 2-1/2 as modified by the voters at the most recent November
election.
B. Special Points, and Ambiguities
There are a number of special paints to which attention should be called in
evaluating the override provisions.
i. The tax rate of a community does not depend only on that community"s budget.
The "Cherry Sheet" distributed in July by the state contains sizable assess-
ments against Lexington and sizable reimbursements to the Town from state aid.
These assessments and reimbursements fluctuate in an unpredictable. manner
from year to year. It is quite possible for Town Meeting to enact a budget
that would comply with the various percentage limitations under the assumption
of constant state aid, and then find that the budget is in violation of the
- 14 -
act because the state aid decreased. There is no mechanism in 2-I/2 for
handling this problem.
2. The ballot questions permitting a change in the percentage limitations would
.appear on the regular ballot during the gubernatorial or presidential elec-
tions in even-numbered years. In add-numbered years, the questions per-
mitting increases would only appear if the state legislature calls a special
election. In the absence of~such a special election, the limitations would
remain. in effect for two fiscal years.
3. There is a provision in 2-1j2 {with minor or no impact on Lexington} that
requires communities with a tax rate above 2.5$ to decrease their total tax
levy by 15$ a year until they reach the limitatian. There is no direct over-
ride procedure that would permit a more gradual decrease.
4. The ballot questions that would permit larger gercentages have a blank space
in which to insert a specific numerical value of the percentage. The act
does not specify whether this blank is to be filled in by the local town.
governing body, the election commission, or the state legislature.
5. If Proposition 2-1/2 becomes law at the election of November 1980, there
ohviously is no chance°to hold an override vote between then and the Town
Meeting in the spring of 1981. Depending on how the Proposition i.s inter-
preted by the courts, or amended by the legislature at the beginning of 1981,
this could apparently lead to a situation where at least the first year's
budget would nave to be drawn up without any recourse to the override process.
6. The preparation of a town budget is so appallingly complicated under the over-
ride mechanism of 2-1/2, that our coftunittee was led to speculate that there
might be some way to bring about split-year budgeting, with different tax bills
in October and May, with a fall Town Meeting in between. There is no precedent
far this under our current mode of aperatien.
C. Philosophy and Intent
Proposition 2-I/2 represents a significantly different philosophy of govern-
ment than that. under which we currently function. At present, the budget
process of a municipality resides in the particular legislative body in that
municipality -- city council, representative town meeting, or open town:
meeting. Furthermore, current expenditures (as opposed to banded indebtedness)
are approved by a simple majority, The only time that the general electorate
is involved directly in the budget process is when there is a referendum vote
to overturn the action of the legislative body. The mechanism of these
referenda requires a substantial vote by the general electorate in order to
undo the actions of its legislative body. Historically, until the recent 4$
"tax cap", local governments have operated pretty much free of state limita-
tions or. their budget process, and with only occasional tests of the process
by the general electorate. Even the 9~ tax cap {which restricts the annual
growth of the total budget) can be overridden by the legislative body itself..
l5
Proposition 2-1J2 would make major changes in the autonomy of the local
legislative body vis-a-vis both t2ie citizens of the community it represents,
and the state. Proposition 2-1/2 implicitly says that there are Zimits on
taxation that are appropriate for the state as a whole, and that it is only
with great difficulty that a particular community should be allowed to deviate
from these general guidelines. Furthermore, the deviation is not entrusted
to the local legislative body, buff rather can be blocked by a minority of the
general electorate.
The two specifically philosophic questions that must be addressed in evaluat-
ing the desirability of these particular segments of 2-1/2 are then:
1. Should the creation of the current operating budget require
a 2/3 majority rather than the simple majority that
traditionally has been required?
2. Should this control of the budget be taken away from the
governmental body that must decide on its details?
The proponents of 2-1j2 believe that legislative bodies in general do not
reflect the sentiments of the average voter in fiscal matters, and that there-
fore the control should be left in the hands of the generhl electorate. With
regard to the 2J3 vote, they feel that taxation of any sort inherently
represents a confiscation of property which should not be imposed on 49~ of
the populace by the other 51$ but rather should be as difficult as possible.
Opponents of 2-1/2 feel that it is alien to our structure of government to
separate the control of a total budget from the control. of its details, and
to eliminate majority rule from this one aspect of government. The opponents
further feel that the legislative bodies can be made responsive to the
desires of the electorate, either by direct participation in an open town-
meeting form of government, or by voting for responsive representatives in
either the city council or representative town meeting forms of government.
D. Implications for-Lexington
The implications for Lexington-- and other communities -- of the override
provisions fall in two categories:
1. They may either aggravate or obviate the adverse fiscal
implications of the Proposition.
2. They require a major modification of our budget process.
The first area is of central importance. Clearly, if the voters of every
community routinely weaken the fiscal constraints of 2-1J2, it will have no
major impact on budgets. This does not appear likely, however. First, the
ballot questions are worded in a way that can be paraphrased as asking voters
whether they would like their taxes raised, without telling them what services
they would get for the higher taxes. Furthermore, agreement of 2/3 of the
voters is needed to permit the increase. (Note that it is assumed in the fore-
going that there is no way to circumvent the problem posed by the sequence of
spring town meeting, summer certification, and November override.}
- 16 -
As a point of reference on this topic, Lexington has had a number of
referenda over the years in which capital appropriations for building con-
struction have gone to a special election as the result of petitions to
overturn the action of the Town Meeting. For example, the initial design
for Clarke Junior High School, the addition to the town office building,
and most recently the new swimming facility, have all been subjects of such
referenda. Now, i.n order to overturn the .appropriation action of the Town
Meeting, it is necessary for the opponents to get not only a simple majority
of those voters who actually turn up for the election, but also 20~ of the
entire list of registered voters. In the three examples cited, the majority
of those actually voting apposed the town meeting action (by very sizable
majorities in sane cases) and, in one example (Clarke JHS), also were suffi-
cient ir. number to overturn the 2f3 vote of the town meeting, and block the
construction.
One must be careful about extrapolating from these referenda to the probable
response of Lexi.ngtonians to the ballot override questions prescribed by
Proposition 2-1j2, since the 20~ feature of the current referendum procedure
makes a "stay-at-home" vote almost as effective a way of agreeing with the
Town Meeting as an actual affirmative vote. However, the cited referendum
results at least hint that it might be difficult to get support for a taxer
growth limitation percentage until substantial numbers of voters had been hurt
by loss of services.
The other majox impact or. communities would be a requirement for sophisticated
projection of expenditures over either a 2.5 or 3.5 year interval in advance
of need, in order to ensure that the override question requested a sufficient-
ly generous allowance for growth. This projection of expenditures would, of
necessity, have to include an estimate of the inflation rate over that peric~.
It also appIIars that the town might have to include in its budgets a very ample
contingency fund sufficient to accommodate a complete loss of state aid, in
order to ensure that partial ar complete loss of state aid would not result in
accidental violation of the limitations.
As a final small irritant, it will be noted that the town must provide for
the expense of the override elections in odd-numbered years when there is no
regularly scheduled election.
- 17 -
V. PROPOSITION 2-1/2 -- OTHER CHANGES IN GOVERNMENTAL STRUCTURE
Proposition 2-1~2 contains three sections that modify current governmental
practices. The ostensible purpose of these modifications is to make it easier
for Local government to keep future expenses under control, and thus easier to
comply with the fiscal limitations of the graposition. Specifically, these
three sections would:
I. Prohibit new unfunded state mandates and rules,
2. Abolish School Committee fiscal autonomy.
3. Eliminate compulsory and binding arbitration for police
and firemen.
A. General Comments
The three current practices which would be eliminated share certain common
attributes:
a. They have all been cited in the past as explanations of unpopular
budget increases, sometimes with justification.
b. There have been unsuccessful attempts to eliminate them independent
of the gresent Fropasition.
c. It is difficult to estimate how much impact they have had on past
budgets..
d. It is virtually impossible to estimate how much impact they might
have on future budgets.
All three of these elements of current governmental structure have both
positive and negative aspects. We have heard the argument advanced that their
abolition is necessary in order to make the fiscal grovisions of 2-1j2
workable. It is apparent, however, that if their benefits outweigh their dis-
advantages, then this is actually an argument against 2-I/2. We also have
heard the argument that abolition of the three structural elements is desira-
ble of itself and that this is an additional reason to support 2-Ij2. This
also seems somewhat questionable in that the same effect could be achieved by
three separate initiative petitions changing each provision separately.
B. Unfunded Mandates and Rules
1. Current Practice and Proposed Changes
From time to time the state legislature identifies certair_ services that would
be of general benefit to the citizenry and identifies local government as the
proger vehicle for delivery of the services. The result is what is known as a
legislative mandate to the local concnunities; it places a statutory require-
ment on the communities to deliver the services. The objectionable featTlres
of unfunded mandates are that:
_ 18
__
a. they are often enacted without knowing the cost of
providing the services;
b. the cost is added to the property tax rather than more
broadly based state taxes which cause less hardship in
poor communities.
In addition to mandates for new governmental functions, which haphazardly
result in increased property taxes, there are also examples of mandates
where the legislature has transferred some existing administrative function
from the state to the local government, with a net effect of zedueing that
component of the state budget and increasing the local budget accordingly.
Proposition 2-1/2 would not preclude mandated programs, but it would require
that the costs of the programs be borne by the state, and it would allow a town
to reject the mandate if it could be proved that. the funding was insufficient.
It also would allow towns to have second thoughts about their acceptance of
new, imperfectly funded mandates. A division of local mandates is estab-.
lishe3 by 2-1/2 as part of the administrative machinery necessary to deter-
mine the actual costs. Rules laid down by administrative agencies and new
property tax exemptions created by the legislature would be treated in the
same way as legislative mandates: they could be ignored by the communities
if funds to implement them were not provided by the legislature.
The classic example of a mandated program that is widely believed to haue
increase? local taxes is Chapter 766. This program sets down requirements
for educating students with special needs, with the goal. of integrating them
into the community as well as possible. The program resulted in assumption
of same educational costs that were previously borne by the state. It also
required extra administrative personnel in the schools, and some people feel
that overzealous enforcement of the provisions of the statute has also led
to occasionally excessive costs. Since the ceanmunities don't receive complete
reimbursement of all of the costs of the program, it has led to increased
local taxes. r~n•exact determination of the financial impact is difficult
since the state aid for general education Sunder the Chapter 70 entitlements}
might have been larger in the absence of the categorical reimbursement under
Chapter 766.
There are many other examples of mandated expenses within the school budgets,
and it is nearly always difficult to assess their exact financial impact.
For example, physical education at the elementary school level is a state re-
quirement, but the net cost of providing it is 3ess than the salaries of
physical education teachers, since the p.e. programs occupy time that would
have been filled !~y other teachers.
2. Questions of Interpretation
The section of Proposition 2-1j2 that eliminates unfunded mandates is
apparently straightforward. However, past experience with .categorical re-
imbursements suggests that there will be many disputes over validity of costs
assigned to the specific programs. Referring to the example of mandated
physical education cited in the previous paragraph, a local community would
- 19 -
__ _
__ ____ _
have been likely to claim that all of the salaries of gym teachers resulted
from the mandate, and the state would have been likely to claim that there
was no incremental cost at all.
Another gray area of interpretation relates to mandates or rules that require
all communities to do what. some of them are already doing. For example, at
the time that the state first required public kindergartens in all communi-
ties, many communities already had them. It is not clear whether the cast
of such a mandate would have included only the newly opened kindergartens, or
all of them, including ones in existence far years.
3. A Special Side Issue
The section of Proposition 2-1J2 that creates the division of mandates within
the state auditor's office apparently exempts the auditor's office from Civil
Service. The motive far this exemption is not known to us.
4. Implications for Lexingtor.
Elimination of future unfunded mandates, rules, or property tax exemptions
would have the beneficial effects of:
a. causing the legislature to be more cognizant of costs
in adopting new programs;
b. funding new programs through the state tax system instead
of through local taxes.
On the negative side, it is possible that the total of income tax,. sales tax,
and property tax paid by an individual Lexingtanian might increase since his
share of the state-funded costs in other communities might exceed his share of
the cost of implementing the program just in Lexington. In addition, the
division of mandates itself might grave to be a costl}= bureaucracy.
B. Sct~.ool uommittee~ Fisc~'~3 Autonomy
__ __1_ __Pres~nt Practise __. "'
The current statutes, as interpreted by the courts, permit local school
committees to decide haw much money they need to operate the schools, and
require that the communities provide this money. Furthermore they allow the
school committees complete flexibility in the use of the money after it is
appropriated: they may transfer money from one account to another. If a
community is dissatisfied with its school budget, its principal r~caurse is
the evolutionary change of electing different school committee members oven
the ensuing three year period.
- 20 -
2. The Changes Under 2-1/2
Proposition 2-1/2 lets the local legislative- body {the Town Meeting in
Lexington} control the overall size of the school budget. The exact wording is:
" ... no city or town shall be required to provide more money
for the support of the public schools than is appropriated
by vote of the legislative body ... "
A particular situation could arise from a school committee's autonomy in the
context of tax cap legislation like that in 2-1/2. This legislation imposes
a control on the total tax revenue, rather than separate controls on the
school tax and general tax. This has led to conjecture that._school committees __
might consider educational needs of paramount importance, and might find~it
difficult to make the same proportionate cutbacks as other town departments.
The assumed result is that the other departments would have to bear a larger
share of budget cutbacks.
Since court decisions have given school committees complete freedom to transfer
money from one account to another within the school budget, and since there is
nothing in the wording of 2-1/2 that specifically revokes this flexibility, it
may be assumed to remain in force. Consequently: although the Town Meeting may
choose to review individual items in the process of arriving at the total school
budget, there is no reason to assume that the School Committee will have to use
the money as the Town I~3eeting intended. For example, the Town Meeting might
decide to cancel the budget for a particular educational program, but the
School Committee might absorb the resulting smaller budget by eliminating
'the athletic program instead.
It is not clear what would happen under the changes wrought by 2-1j2 if the
budget appropriated by Town Meeting conflicts with the requirements of pro-
viding for existing mandated educational programs at the salary levels
dictated by existing contractual agreements with teachers: most of current
educational costs are necessary simply to staff the schools for the required
186 days. under work rules and salary levels embodied in the Lexington Education
Association's contract. It appears to our committee that this type of issue
ultimately will be resolved in the courts.
3. Implications for Lexington
The shape that public education in Lexington will take under 2-1/2 depends on
a mutual interaction among:
a. the School Committee, in proposing a budget, and admi.ni.stering
the funds appropriated by Town Meeting;
b. the Town Meeting, in apportioning the limited available tax
revenue between the schools and other town departments;
c. the state, in providing educational reimbursements and
categorical. aid to education;
d. the voters, in permitting a more liberal total budget via the
override provisions.
- 2l -
We have had the good fortune up to this paint not to have t,~ manage our
educational establishment in such a complex environment. The closest approach
to the difficulties we will face under 2-Ir2 was the period of rapid growth `
of school population in the 6g's when the need arose to provide new school
buildings at great expense, and double sessions and overcrowding were experi-
enced pending their construction. At this time it Would amount to wild specu-
lation to try and conjecture what our school system will look like after a
few years 'of government under the rules of Proposition 2-1/2.
C. Winding Arbitration
1. Background
The 2iistory•of compulsory arbitration in this state originates with Chapter 1495
which granted public employees the right to fain unions and to "present proposals"
to tY:eir employers. Further statutes granted additional rights to public em-
ployees, culminating in Chapter 15QE in 19?3 which extended foil bargaining
rights to all public employees, and required binding arbitration of disputes
involving the interests of police and fire department employees.
The argument ir: favor of binding arbitration is that since strikes by public
employees are forbidden by law, the police and fire department employees weuli3
not have any leverage to set a good contract. In addition, it is felt that the
availability of binding arbitration provides an atmosphere of labor peace that
is essential in providing police and fire protection..
Tha ,arguments against'bin8a.ng:arbitration'include the loss•of local control that .occurs
when contract decisions are made by an independent arbitrator with no links to
the town. In addition, many managers feel that binding arbitration hampers
bargaining in good faith, since it encourages employees to ask for more than
they think they should get. These managers also feel that settlements specified
by the arbitrators are typically mare liberal in terms of work rules, benefits,
and salaries, than would have been reached by more traditional forms of contract
negotiations.
Even in those towns that have not resorted to binding arbitration, it is
claimed that the threat of even mare costly settlements via the arbitration
route has forced the'town negotiators to settle far contract terms-that are
mare favorable to the employees and less favorable to the taxpayers than
wc~~uld 'nave been the case in the absence of the statute that requires binding
arbitration.
2. C?ianges Affected by 2-1/2
The change to occur under 2-1/2 is relatively straightforward:. compulsory binding
arbitration would be eliminated. (There is a curious problem in the draft of the
statute: as a result of a typographical error, the initiative petition apparently
eliminates the Labor Relations hoard instead of binding arbitration. We have
been informed that this will be amended before the petition appears on the ballot).
The significant thing to note is that no other means of resolving labor disputes
is provided by the statute.
- 2 ?. -
3, Implications for Lexington
Lexington is one. of the communities alluded to earlier that has not as yet
experienced the results of contract negotiations under binding arbitration.
Because of this, we have no way of knowing whether there will be any significant.
fiscal impact as a result of eliminating it. It must be recognized that under
the stringent fiscal constraints of 2-lJZ, the attitude of negotiators repre-
senting the town government is liable to be considerably less liberal than
prior to 2-l/2. This may well lead to disagreements during negotiations that
are much more difficult to resolve amicably. It would be pure speculation
to guess at the means that will be taken by our public employees to try
to emphasize the seriousness of their negotiation goals in the absence of
the settlment procedure provided by binding arbitration. It is necessary to
be cognizant, however, of some of the sophisticated tactics used by disgrun-
tled uublic employees in other localities in which "sickouts" „slowdowns, .~.
and other methods have been used to dramatize the earnestness of the employees'
goals .
-23-
__
__ __
w~:
r'~~T~T'}ZX A
`{
.<.
1~T"€r~~"IVY I7°I"I°I'lt~: I~ L~~t~,I~T~ I.., ~",~~sal~`
A~ ~`I"I-I Iy ~.
t'::i f~1 ,~~€: II~s~~~ €~f I?~ISe~~T~t~ir~e 9
i~cs~Et)it, P4~4~4~atc~3~a~~E$S
sir: __. 1 ~z'~+it$~ tr~T~srrait t€~ ~cs~~, ~T~ a~~~ir€~~c~ ~~~~t~. ttse ~'.;~=a£'~_
='I°,ti4 €~~ f~rti~nc t~VIII c~~'te r1m~Ti€~T~aert~ t t~?~ ~._ :_,',.~.. ~c~e~t, ka'a
:t~!siity~ f~€:~iti€~i~ f€~r aT3 ,~~t 1.itir~ tt ~€~ ~,€)Gal ~}~~~atii~T~ .fit}~:.
~ ~;,€:rric3;~.tar~~, ~i~ri~~ by ~~ri €~~ziiif 4~.ti ~r€~t~r5 ~r ? f;f: ' ~~'~t~~ t.~ de.~~•t_
r'4-i t'. `"3: €iat ~)€`. €; C'3Ii~'SC:C S, ~''~7€~., 2.C~};t°a~i~C S)JPI~~1 i€L~€~3fl: I'Ei)s €`{;a ii ~l ~.€~ ti?``d~<.',.,..
aIES'i."v S)T +;~'~.i:}7i~:~C~ '2'd3~t'F'S lf1 t~'3~ Ci€itY7~3€'T €9~ f)~3,~()~, ~'+i:iY3c 3U'1~fB_' ~f'"_._,~_ x.
~iar~~~~ r ic) ~€~r~ig~iy ~~tkt~~ ih~ ~~r€s~=sickn~ tit b,t~i ~T4i(:e'.
~ ;. ~,=~f~tic~ia hYi.~ ~~~€;r, ~clayf:~ aTi ire:T~s~i,~~.t:~! ~~;~°~~a~e ~~ s ~r~~t~~t
~i,t' ;~it~x ih~; ~t~t~ m~it€~t 1.,~~~ ~:°~rr~TTi~~si€a, rim s~is~~u~r~t €:,)~ifi~
$ , . .
e~ ~~°u~~ ;~~ggrgg~r~, pp yq qq
%.- I l O~ ~:: L .S .,.,Y. a ~.: 4 7 i l..n 5..3 v L) ~..{t , ip- a
I'isT~~a~~t t€~ ,~rti~~~ I.,'III ~s~ t~ rn~nrT~~Ttts its t~a~;; ~)T~~tit~i±+Ti
~ ~ .,;; ~'€~a~Ti€~T~4~~i, as mTi~€I, tie r~~~t`•ariT~~~ a~~~~f'i~€I ~~t~r
'~i~~~t~~T~~v~~lt, t~s~ ~}~ ~i~~a~~~° ~ " . '~ ~r ~t~t~c~r~ tic
~+~i€~~~t ~~~€~ l f tl~ f3t~~~i~ r~.~~.a -~a
t~
2 Flit'#.; ~ AIo. 93:~ lwel~ruary
~e ottttnnttealtlj of a~°tctt~eff~
In >ha Ye:~r One 7"~~.usaa~d P:°in~ 13t~¢~dred ~rzd h=~hty.
~~ ~s~°T Ltktt7i:~~ 5~°Al'E ANA? LC~i."~S. `rA~"t'lt)h Al~L"f tJCt'ENY'13't3~S.
~~ it ~rrrr°i~c}' ~y t}t~= S~at~tc~ r~r~c} t~c~uc~ of ~~~~~re~~r~tr~aav~~s~ in ~~n~r~}
C`c~~~rt c~sserr7}~}~~~, tzl~a 1~~- t}z~ ~aa~}~c~rity esf t}ae ~artrre. ~ts,f'~,dr~~~s:
1 ~C~'14~N l.. Chapter 5 caf the et~eral t,,aws is ha~ret~y arn€~nd-
c~i by insrrtin~ after ~ecti~~n ~l the follc~wir+ n~~+ ~ccti~rr'~
x~a'~~Pir~~t 2}~'. ~) ~'l~he tc~ttl taxes ~-ss~ased under any }~~ ~ ~ i;~ tt of
~ this chtiapter by the ccat~ttncan~a:~tltla or y any city°, tcaavtt, c~a~asnty,
~ district, authority or ether ovcrnratental entity upon real estate
~ and personal property as tle#aned in this chapter shall not, irs arty
~' fisca l year, exceed trWO and one-half percent of the full and fair cash
valuation thereof unless, at a biennial ~erteral election or at a
g general election called by the ~enerat court for the first ~°uesday
it3 after the first Monday in November in a year in which a laieraraiai
1 1 lrcneral election is not held, not less than two-thirds of ilea persons
1? v:~tin on tl~c yuesticsn shad vote °`~les" to the following eluestion.
3 ~ ghall the present (two and or-ii-half percent or such other
l~ percent as shall then be in effect pur:~aaattt to this Seetion~ limit on
i ~ the assessment of real estate and p~;rsonal property t:axcs 4vith
I t= respe~°t to this city for town] a increased to - -- - ..~~.... percent for
17 the fiscal year _- _.~._ '}
1k '~' ~i
l~~ f~l ~t~tdvithstandin the provisions of sub~sc~;tion (li, if i4i any
>t~ ti:e4'~ a}r t<g~va~ tht; tt~taat tax~:s ass~:ssecl a~port real cst.atc aartal p~rs~.ra,l
! larcaps:rty tas clefit3c~i in this ch.aptc~P sla~all exct"cd ts~°~~ ~r~~i t~s°~=°~haslf
~? p~:rcca°~t of the full atad fair cash valuation thcr~ of on the effective
?~ cl~atc of the e.nactrYaent of this ~e~,tiran, tlae ttstal t.ax~s so~ asses,,,. l
~~ ,hell he reduced annually by rant lt:ss than fifte~:n ~°rc~.r~st taf stash
?5 tc~t~al fair caa;h successive fiscal year until the total taxes so ,:~_, .~.;:~_
'~ shad 4~~~t exceed the said tc~ and one-half percent.
~~ f ~) Notvyithstandin~ the provisions of sub-section ~ l~, if in a€ay
?~ city or town the total taxes assessccf upon real c;statc and perstsraai
r,,.e,~,,,~.~,~.....~~...,_....~_,_......
~, :,~- ,_
s~~~ ~.v. n. , ~~ .
198{31 ~GS~ ~ l~la~, 9,~3 ~
9 praperty as defined in this chapter in the fiscal year 1979 were less;
~~) than two and c~netll~alf Percent csf ehe f€tll and fair cash valuation
3 ~ thereof in such fiscal yearn that lesser perct:ntage shall tie the
°3~ ~~;~igarn pcrccnta~c: cif full tsncl fair cash va1°~tt~tian +,t which ~_~
total tip%t',s tncty ~: ~sti~'s~c=t3 tiei~r :~eetit~rt acne t~t1 if Yaet~ +°~r ~~'..,.,~.,. ,~.,,~
. ~, ~,. ti..~ s
~~ flee{al yc€~~° 179 ar~d the effective date, of flee enactrr,~.nt al id
~~ sv$ctiaan the tc,tal taxes so as~;~'s~~d shell h~~~'~: incrc..as:d ~31"~C9vt t`._
{, s<aial less¢~r pca°ccrat~a~;c, the° t~~t.al taaxcs so assessed shall he redc~et~f
~7 anraa:ally by rat lc s ttyaaa l~i#"teen percent ol` sum Natal 1'~~r €bt~l~
~~ suc~;cssive fi:~cal year until tls: total saxes so assc:ased sh~sll cant
39 e~~°c~~~l tlac said lcsg~r lserc~:3 taa~;.
~i) ~} ~«twitl~st~arsclia~t; tl~c; pr•a~~isic~ras cif sectioa,s (~)< f~~ ~~ $-~),
~ l the fatal taxes assessed by th ~corrxrraanwealth or by ary city„ ta:~wra,
~? coua~ty, district, auth~srity ar atl~er govcrnm~:ntal entity altars r»<~~
°~~ es2ata, ar:d pcrsanal prafserty as dc:fincd in this cl?apta:r sham na-~t, in
ary fiscal ydar, pith respect to any city or tc~wrt, exceed thy: fatal °
~~ to xes sa assessed in the preceding fiscal year by snare than t~a and
=t tine-half percent unless, at a bier;raial general election or at ~
7 general eleetian which sly,°.tl ~_° called y the getters! ~;c~a~rt fc~r the
first `t°escfaay aft r the. fi. a .~rt~lay in islt~ven~bcr in.a year ire which
y a b'sa°t7nital general elct;tir ~, ns n€~t held, not less than twaa~tlait~i~ a~f
tl tl~e parsons vrrting can the cluewtic~r~ shall vats „~'es" tc~ the fc:~ll~at~ ing
1 gtaestian;
~~ Shall the total taxes assessed an real estate and ptrsottal
~~ property with respect t-~ this city (car tawny in the fiscal year
~~, ~..~, _-- be increased bye pr:rceni of the festal taxes
5 ~o assessed in the preceding fiscal year rather than ley the pr:scrat
S t~~rc~ and ~sne-half percent lirxtit on such increase's
5 f;~; 'f3
5~ ;5} 1f the legislative ltic~s`3y aaf any city rar town shall say vcate~ ar if
5 the pcaple by local in~ts~4>ve pr~~ceclure shall sa reaaire, tl~cs•e shall
t,{) appear c~ra the ballot for such city air town at a l~ic:a~r,iaal gen~•ral
fit election or Est an election which shall 1~c called far the first ~•uesday
a#'ter tl~e first faraday ire `c~vetnber in a year in which «~ bie~riat
~,3 election is t3ot held, the following aluestion:
Shall the present twc aid one-half percent car such aathc.r
~,~ pea~cent a4~ shall them be in effect purxuant t€~ this Scctioa~ lira~it an
fit, the a:ssessr~aent of real ~stat~:~ anti persc>nal prolserty t~~x~s with
°
~.,
_. ~. ~, _ ~ _. _ mot,
~.~~..~° KK. ~,
'bs~zary
~~~ -~ ~c~. X33 ~ r
fs7 r~~~~ct in t~i~ city csr tin ~ t~~crea~cd i:~ ~rc~nt a~~
fi tzs: ~~c;zt year ~~-~ ~
~~
~t~ If a ~rsajc~rity n~~ t~~~ s;rs~rs~ vczting ~n ih~ gz~~~tin shall vcsic
.~ # ~.~`~~'" ~17e limit can icst£sl ta~c~: a~~si~~' ~ as v€~ic ~ ta~f ~~Lal ys;ar~
72 ~atl ~ cl~cr~ascs9 icy i crccntaz, s
~ ~~~~l~ '~. ~ha~~ter s~ czl' il~~ ~;s~n~ral ~ ~ ~~ nca~ ~ ~rz~a~s-s~~
c~z ~sp,° iz~ ez`tin ait~°r ses~tinn 2~1~ ilze r~~l~~a
roc=~°tic:ts ~; ~:. lX~titl?~taazzciisz and, lzrt~vi~irz cif $ray s~c:~i~l ~~~
,~ ~,~,c~z2s^rtst lzsvv in the cc~r~irary:
la;~ any lavr ipr~sirz ;.szzy c~irs:s:t ~;s~rvi~se c~ c:~t rl~tss~;,~atszzsz }r~s~s~
~, ~s~sy ~it~' car is>v,~n ~zzafl ~a~ ~:#~f~~~ivc ~ rc~ 7r'3atinzs~3~rrscsr~c,y;fc~r s~zs~.h
`~ ~eibtr ~~; 4~C.~~?a:C~ y Vt3t~ r by ir4~~hC Ct.y ~f2t3t24',~~ Iii ,.°'~Ytii:~`t~~~ti~; n°, t~'~~~~
e~ ~,~is~~~~,~~s, in il~e ~; a~~ ~sf a city by
~~ its ~;z~aricr, anct iz~ ih~. case ~~' ~ to~~~z~ h~'~~Zi€;h ssl;~l~ Ss~~sl~~P~s~,
i{} ~~:~ssrrut. #°~s,zri, at tia~ sense ~.~~sz+~n zn
~P ~ ns:°ral la~° ar, ~y ar~riatiars, ~~r ttz~ asszzr ~~s~z`s
~ ~ r~z~~ Y icic~, ~y ~`~
S ~~ ~,~, t~~° ez~z°nc~nwe~zlih n~ ~n~c~Z le<; ~ the glen cal~s~~urt» ~?s~~~~d~~ ~y
~~sns=irtiz~n cxpens~s :sncl szs~ .~
~~ £~~~SS`s~~sri~zti~~n is~s cash sz,scs~e,siv~ ~'~ssr fszr s~smh a~,scz~zl~tic~rs-
5 {~~~ any lam ~rantira ~sr incc~"ar ~ n ~nly i#'itss: t„erts°sr~s! gar>~srt,~$~t
~ ~~ tid'~:1 ~;~<zli sv cf~ec.ti~re in as;y esty res~~i+~cs by ~rs~s~al
~ ~ it~~ ~~zrs~ ~~ssic~cs in which t;ts~h lavv zs et,zz~.t~d,
~~ la~~~ Eflrss~ y ar~>riaticsrs car ayst~crst by t:~c ctzmrsr~ntzrcalt$: tca
cactz city and t~vtirn of any less of taxes res~tltin rrsrz~ s~s;:l's e~s:rs~~
t? ticrrs,
~ ~ ~;~ tiny zsn3anisirativ~ rlc ne retAlatis~n whi~Z shall ~;s~zit in t'hc
~~ i f Y,'~,iticzn €~~ a~lc3iticsnat ~;n~is ~n any city r t~~~n shall nit be
'„~ ~ a `,~r'i~ ~ tzrstl the est~rzsl c;t~ssrt hzss l~resviccl uy en~~rs~l iz szz~cl by
~~t -,~rzz}~riati~~ra ~csr it~e ~ .~;rz~stis~n by the ~ni,~rnz~t~cazit'h es sts~:~s
?~; cc~~t, ;cls;siv~ ~f ~zrczt~= ~::~at incal at~.~tsat~,ts~~_ic~n ~~~r~~s, >-zrsd
~~~ arzs~~,~ ilt cncral cnnrt ~,rtsvis~cs by ar~~rizti~~ in cads ssczecs:s-
~~p ~i~~~ y~zsr sit' such zisscsst~l~ticsn.
~~ dray city ~r irsv~n, any cuz~$r~,itt~'w ~ ilt s~s~erz-1 cart, sisz
~ ~:ithcz° lzrsussr ~l't4-a~ ;s~r,+a~gz~a~al $c:~tz$r~tpgy98 .: +y~~ot~git¢pyryvc>¢tpe+*9c~t-~it~ sgz€it~At~ss°ar~~
,5ii 3~1 '. {~~ :i 8.i ~/§Bilt Val .~a~~ iJ~f&i~w Re i~~ t4A'i. a&Ae l1 ~ l4# ~.d +V XrK~~4 d5s6~Ta~,4~C ~.fv ~3p i..)~6~.i ~°
ttp , ~pp:a ~ ~:tac~t~ six. cl~atr ;,:.Y= ~a ~~~` yti~yy pm~s~~++~xxnz~ayyl~Wqq...~r~~r~~,pggp
`g4 ~. ~.. ~s8.s :-~ y~ ~ ~$ ~'9i ),may. tf¢1r \r x„at~ 15t1M1 $~S9WM
~"L'," .31a~~~.irt t~ n•. ~. ti°~~ i~i~~3:~1$~n $d ~,°,t~'.rr~a ~E l-'w 4. .> a.ie.
~ ,-...
.
~~ "aced Gray penalty required tta be rGised under t4ae pr~visitans cat
-~`~ Sectitara 3d aa~ Chapta:r 7l ."
~~ ~°calt~a in the prccca3ing yearend, ifras~t, the Grara~usat a°~f Gny a~c#~icien~
~6 cy in each ptayr;~crsts. The divisiaan shall rnGkc~ public its tlete3 rxainta-
~7 sixtymsiac dollars per ihcatrsand taf ~aluEation" and irasertin in place
:~~ (c) any city tar towrn, or env tare taxatala inhabatants otany city tar ~,,,,~.~..,~ 4.. . ~ ~.-.~
~,..~.
tasu+sa n~ssy in ~ c:isss asctitan sash petitiaars the staperiaar ctaasrt tsllai~irs
~~~ thaat ttrsaiar flee prtawi~icarss aa#' ~as~sss~a°tiarn~ (Aar, {#~j tarsal ta:~ as!' tPsi
4! aeatis-n writ#s r~rspcct tea zs s;cncrta! e'sr ~;l~caPitr! Mawr ear rcrlc ear rc~?atltati«:a
4? is#~ Aar~y tadnsini~irative agency eat the ctsmrTtcsnaa~°e~lth €araaier ~#aia;lr
«l3 tarry city tar ta~~=n i~ reyasireal ics e~pc~s~al ftana3s itr arit$eiptatiastrs a~f
44 reirnPaursa:ra~sa~nt by the corrarraon~aealtla, the arrataunt neecssary #°asr
45 such reirrabursernent has not been included in the arneral or Gray
~6 specie! appropriation bill for gray year. Any city or taae~n, car any ten.
7 ta~ablc iaahaiait~antY aaf any city or town rraay in to clGSs actiorA suit
4~ pttititan the stspa°rior court allein t~aat tina~er the prtawisicans #`
fig) ~u5ca:iiauas its), #b~ tarsd {c) eat ibis sectiaan sith ra°spe~' t~:a' A€ray
Sfl crsa.ral ear spacial ltitw, ear rarla ear ra:~aaiatiaass eat any ad *ssr;°,s ratg~~e
i acrscy ta#" the Corttrnonwa:talth ~~hia;h iptases at#ciitics~~ :l ;;;?•t~9 pan
? tsray city car taat~rn tar ~laicla casts ear increases cxensptita~,:; !'rAarra
~ ltst;Aal taxtstiaan, the arrataunt nccc€,sary ita reirrsburse saacia city or
~ towrn has not been iAaclaaaled in the ~a:raeral tar gray spaACial tapprcapri~
~ Haan hill car arsy y~:ar. "the deterArair,atitan aatihcarnount tsfdeticira~
t'~ a:~~ lartas~ia!a;tl ~y the alia~isiaara eat !facts! rra;araclastc : t~ : ` ala~ccti~ara ~d~ '
ca# this; ~~a:tiaan she!! ~aa° priraats #'gac:ie e~ria#eracc aai ..-:t .~rrst~s~n# races-
~#~ sASry. "i.hc ssslaeritsr cc>asrt sh.al! daAta:rrsairac the Aar >arrat, cr° the cle~~
"~`,~ a°ie;s~-~~, il' Aarty, Lsnt# shah tardar that ~aaL stial city car tt>wr€a lay, c:~enspt
r:tl Cr~arra s~sch ~;eascr~si car slaca~ia! lawn, csr rule: tar refit+alatit3sa oaf €srs}'
t~! tatla°asiraistrtativc acrsc}~ urstil ilea ct3rn;s+acsnwcath shad A•eirnbur~e
t,~ ~;axela city tar ttas~~ra the tama;t~rai taf said do#~icient;y tar aaalt#ititaratal crests
(~,~ tar shill ra~pasa! such ext;mptiaan irapaaaa lascsal ttaatatiaara.
g„ t#°~ ,any taf tlst; pt3rtie~ parr°:~sitteal tea ~ularssit r~vrittess naatice t~ the
f,~ ali~~`s~ie~r; a~fi l.:~cs! ~astsal.at~s asncl4•r yg~~`}?~~;r,~riiin lal~ of ttsi:~ a;c:aaiass~ rrs;ty
€,~ stslaraait =ritta<n naatia:a ita the di~i~ia~ra reyuc:~tsn~ that rise. tli~°isiaan
t,~ dcterrrai~aar flee ttat:a! annual (inarscial el"f~ct #tar a paAri~Sd sal resat less
X3#1 than three yaWars tat any prcaptascd Mawr tar rule ter re;aalatia°ars tat eery
adinisirati~e agency caf tine ctarrrtratan~vealtl-a.' ~'°he di~.isitan shell
1{ rasae paablic its dtcrminatitarr writhira sixty day=~, tat ~s~ca riatice.
li t~~'~tr~ _- loo. 9~3 ~l°e@ar~~ary
? 1 'i he pr~avisic~ns of this sectic~sa shall not apply to and casts tea €itics
~~? a~~<l t~jwr~s car e~ertapticsns trs loc~~l taxaticata rest~ltin~ frorrta ~tc:ci-
?~ si~~~a ~~i ar~y s:c~t~a~t cif ~:~~srp~:trnt .lt~riss~c:ticsn. r t <~~a laua, rt~1~ sir
?~ re~~<laticss~ ers.:ct€~d sir firor~ault;ated :as a dir€:ct result of st~eh
i~ decisiotY.
1 ~EC°TtU~+i 3. chapter 21 ofthet.~eneral I.,awsisla~:refSyarY:er~d-
~ ed by striking rsut sectiota fs arad inserting ir: place thereof the
3 fc:rllowing seetican. ---
.~c~~~tar~~a °T`lae st~~te aud'ator may appoint a~ad rcr~o~;e snh
~ cr~aplc~yecs as the wc~rl4 of thy: dcpartrr-cnt may require. paid c:na-
(: lal«yces xhall he c~r~a~raira:d ire five divisions, ta<~r~ae'~~, thc~ di~~i~i~~r4 €;f
~ ;~t.ete ats~lits, the. divisisan ofauth~~rity eaudits, tktc dig=isionof#`ed~ra~l
at~~lits, the diviaic~n ~~f c~ar~tract audits and the di~~isican ~t. lcx~al
~~ rt~ar~datcs. `I`he ,rate auditcar shall establish the. s~aldaries, d~dties ~.r~~l
Itt personnel re~;ttlations of all officers and er~pls~yces within the
! 1 dcpartrnent of the si~~te auditor; provided, haa~~e~~er, that the salar-
I ? ies of said officers and t:caaplc~yees shall riot exceed the aunt artnual?~=
6 ~ ~~p~ar~alariated tl~ercfot ray flee ,cn~°ral court. ~"he provisions of
i=l sc;:~ticans niric~ a~, and forty-fine e~f chapter thirty, ch~~pter th:?~t~,~-~~~n~;
1 ~ a;~~l chapter ores lau~ad~~cd and fifty shall ndt :tplaly tc~ offis~rrs aaad
It`i cra'lalc~yrc:s within the depmirt~aaerat f the state auditor.
l ">'[~`.°I 1t~N d. chapter 11 ral'the C~ctaeral i.awvs is hereby aaaaersc3-
? ed lay inserting after sectic3n 6A the following; neu~ sei:ticaei: .
'r>•rir~rr 7, `f'he diuisiora of Racal mandates, as proviided for i~a
scctiora six. e~f this chapter, shall have the respcansit~ility c~l'detertnira-
ir~~=, tka the la4st cif its ability and i€t a iisnely tta,tnnc~- tl~e cstis~~aiccl
f= Ks~a~l act~s:~l lirtat~acial cffect~; ~~n ea4h cityand to~~°n of i~t~ats, ar~d rules
7 ar~d re~;ul~~ti~~ns cif adraaisaistrativc ttt;c°n€:ies of the (.'t~taa~~a~aat~~e;ltla
Wither propos~:d or in effect, as reyttired under sccticaratwenty-seven
~ ' cif chapter twenty-nine cif the Getaeral Laws.
I(3 `Tta~: division shall have the power tv require the chief officrr csf
I 1 arty o~ppresp~°i:~te aa~miniwtratia•e ati:.ney ref the ec~rrarrtor~~°alth trs
I? supply in ~s timely to{saner t~tay i~afcarnaati~an tlctc°rrnir~ecl by the
i ~ ~tivi~i~~sa t~~ he saecessxas°~ isa flee slctWrtsain.atisasa saf local fisaa~°as~ssl
l rfl~°a~ta t~iaci~r ~4si~l sreti~~~a twettty~§e~'ctt C', '1hc ciairi c~itircr al3;~ll
f ~ ca+sa~r°y flee rep-lucstt=cl ital`ca~~saa~atitan to the divi:~i~an with a sif;sae:d
1 fa statctent to tht. effect thaat the infortntic+n i accurate anc~ scscra-
17 piste tra the lest saf his abilaty,
# `$~$~~ t~iWisican, ~vlaert t-et~trested a.trader tiac ar'cavisitat~s c~#'subsetnp
'.~ #~ titans ~d) arad ($'} taf scald sectitara tr~'craty~sevra , ~h~11 uf±datc; its
~:? det;:rr~tirtatiatt of ~naraci~l eff•~cis hirsed ata cit~r citaral cast ~a~
$ ures ar irr~ara~=ed estiraaates ar Math.
# ~f~~"7~1~ti S. ~'h~a$ater tafthe ~:ratrraal 1.~v~ is hcrc°#ay tata~tetat~e
~ by irasertin~ $after sectiara 4 tlac* falltawin~ se~titara e.-_
~ig•t~r~,rr x`13: t any t'srrtcz saftc:r the c$airkatitar: taftlarcc ~•t*ur k'rarra
4 flat: ~#;iie tan ~vhic}a =tray tataticaraatl $arasisic~ra tafttae ta;etaerea$ $.aai~as h:a*~
. f,~~tz <:ct°+•$~tc~d ira kan~~ city tar tt~~~•ra, r~•$at•thcr by taffici:tl :t#lfat, $ay
t3 #aiaa», by c~~eli~a;~4a~.°~; car #ay vr.~t+~: Est tltc° #r~.igi;tts°~•e $~~s~9y° c~i titc~c~it~'$3t'
~ t•~~~-a, car hr;~ `~cate c$ tlae $at~arcf cxg s~ #a~ctraac ra c~r;~c,atacal caaraataaitta:e ~~$=
t$v,~ra, the. rc;ejacatiart of such ~acce#at~tr'tc~ taf gray aptitar~~al ~ ravtsiart
9 of the ~er~eral LEavrs mrty lac tf~fected ire the saraatr ~raner as v~•~s the
#~ ari~in~l r~°ate tca accept t?=e said ra~uis~atas, a~:i stash re~ac~tia
# B shal# be subject t® the falla~~ira~ restrictians:
!? (~) 7°hi~; set;tiart shah rttat a~3y if the a~atitara~l ~Sravisitart catt~
# 3 taigas, ah•ithin itself, anather rraarrraer of revactrtiart.
#~~ (f~) `Tail sct`titan slafsll na>t :~ f~faly tta part}~ ca~atitara:at aravisicart which
#~ earth«ri~~s, $aut dc>c~; tatat r¢~°tluirc, tlac° city ca,° Mara to act.
1 ~, ~c~) '$ $ais sea:tiara shall racjt a$aply tta any actiara t{acrr undct° c.h;xfitcr
#7 thirty-t,~~ta aat' thirtygtwta i~ ta$~ tl:t: Gera~ral $.,av:s. },~~,----~,,,._.. Mt .~.,~
$ f~ `his seetiart shall nat a~$aly tca any aetitan ta~e~a tacstaEa#isha
# re:Ticarasl district, autharity tar tither t:ntity s~hich irava$va:s~ aracathc:r
{} iity, tsr~•ra, district tar cathtr cavernrrterattt! tWratity,
1 (t') .$~#ais :~t'ctiara sFa:t## nai ~ffe`t atny caratrtacttral or civi# service
?~ rig.,lats ~v$aich Taarve ccirrar: ;watts exi~tc=rite t~eta~eera ths: eit~' ~~r tcavvr~ $ea~3
.y
aw=ay ta$i-ice= tar erai#rayee t3ac r€~~,f tts ,t result taf ih~: tariira:al ~at°ceTr..
~ t:tracc ts$~ ;gray alaticaraal farca~-isicara taf tht* Cat:ri~r~:tl .;~r.;, fsrtavitlec!®
?S $acarut~,°~ r, ~~uch revtacatitara shall a#~ly tta the st~ccsstar ita the ia~cut~aa~=
Taerat ta$ficer tar erra~altaya:e.
:.'7 ~~} #$` .t fat°titirara si~rat:d by $`i~fe #arrcerat tar raacart~ taf the re,°iat~°c#
"t~ vatt:r:~ saf a city tar ttawrt is filt:d ra tlae af$`icta of the city tar tta~°ta cap r~
~~~ within wi:sty drays falla~vira az vitate tat#aer ila.rrr {°t vcate taakeat #~y vtat~: rs
eft t':n =tr- c~f$`it°i;a# fatal#caf tta rt•vc~c t#a aactet,aract. caf taray tzjatitara~a$
;~ # $artr~~i~irira ta$ t$ac (ierarral l.atusa ~:c$ucstira~ th<at the rc;u+a~; tiff; ca$'~tuch
a
~~~ act=c:Tatrancr e submitted ~s tt trestion ita the vtaters,,t ~~ `•:a city car
~~ tta~~rt, sxaid vats to revtae s:{all e strs$at:rted f=a=rt ta$:ir eff'etrt
~ uratit ;~ut:h u`stitan is dt:terrriraed by vatt° caf the rs.istertd vtatcr3
~~ ~•ati a~ the.retata at the next regular ~°ity r~r tart ~ lecti~art, tar i> ttae. city
_. _ _ _ --,.. „n~~,.~
'€:t~r~arary
3fti cc~uracil or t~a~ard of selcctrs~a:a~ +~r cathc:r aaathority aYtaar~ed ~°ith
~' calling elections shalt era dira::ct, at a special c~lectian call~:d far trsrat
~~t purpa~s~. petitions filed reykar:~tin~;thc plaa~crraent c~fthe: axe:~tirsn air
;sa) revr~catir9rs a~rr the ballet fcsr dr:terrxainratian by the vc~tcrs shall
fit) sarl~,tar~ai.rlly° ire ca~rafczrr~raity ~4°itl~ the ra~visic3r~s cif flee lcr a~v~r~~°
~ 1 inl flee siraira~ of ntarrainatirsra prefects fear city ar tc~avra aaflicer~s ~.°~ to
~~ thy: "a~leratil`icratic~rz ;end ccrtif~i~:<rticirr ref n~res tl~creurr.:}r°cl ~~a~?~i~"
sissr~ t€~ the rcistrrrrs thert:caf. !! brir,:f rtrn~rnrary of flee relevrarat
~:~ secti~art ar seC°tic~3ns of the ~it:earal l,.`a~is shall alsca appear can the
~~ afficial ballot, tf such revocation is favored ley a rraa~ority of ~~+-
~~+ ureters ~c~tira thereon, the acceptance of said aptianal lra~v shall lse
~7 revc,~.erl ~arld it shrall bccr~r~c mall rand void bciraraitt With tl~e t`iryt
;~ dtay a>l tier. rncrratb rae~t fcallcav,~inl sreid vote cif rvr>cratia~rt. `l tae
ai) €t~rstic~r~ tc~ be pi:rced ~~n a ~irallot slarall lee ~,sserati.rlly ras laall~aa~~s:
€; ~hasll the raccr:ptaracr by ~.~-. ____{:aty, "F'is~vn~ c~fsct:tiraaa~s}
l - - _ of cb:apter -.,~.,.. __._ cif tlge C~erseral ~a~v5 bw re-
~2 vokcd~? Yl l~'C4
5~
~:~ if on tha~ sixty-first day falla~~in the date a vats has baaen taken
5~ ta, revoke the ~ccclatrrnce cs4° arz r~fstia~nal prrsvisiara of the general
;f~ f.a~~s, ar~d ngr petition ds raforc~aid leas been filed the vote to revtalte
*, sh<~11 hecr~~e effective fr~rth~~ith.
1 ~~~',t"116. ~hapter7lafthe~cneratL.avusisherebyarraended
by atril;ira~ o+at ire ~~:cti~~n 16I~, as rrarsst recently ar~~acn~eel by
ctarptcr ~3 of the acts of 17fi, the. last tvva srrrta:nces.
1 l~f.t.'"! ICON 7. Cla4apter 71 of the <"acnr:rat t,ativs is aoreb}'=trr~encl-
~cl bye ~trikir~ oajt ~a~ctic~ra ~, xas t~o~t rec~Antly atx~eradcd by °1°~apter
a~<} of flee acts caf ly~~, rend itr~er'tire; in pl:r~:e tlactcr~f`tlrc la3ltcr~~iar:
~~*~°ti~, .~d, every tit y grad travrn shalt annually prcavide an
ar~oaant sal" rrraraey sa~fcient'°{; ~ tt~; stapcsrt of tyre a~blic schc~tals xis
f} rerlatireti y this chapter, pra~~idaad havaever, that na city'or tt~n
7 shall lie recaa.aired to pravidrr nnaa~re rraanegY fret tfae support of the
~ paa'blic schr~ats than is apprr~priatect by vats €rof the legislative bas~y of
~ thr city ar tavtn, '
1 ~sl~:t:""t 1t31~ ll. cctiott ref te:'h:aptrr aaf ttte fieaer€at l.ra~a~:a is
2 hereby :arracnded y stri~ira aaat in the third ara~rralah flee ~rr~r°ds
gt~€1~~ ~ ~~d ~93~
"any arxy penalty required tsa be raised under the pr~visir~n ~f
ectit~n 34 of Chapter 7l,"
l ~ C°l°Ii*I ~. ~eetion l raf Chapter btl~ ref the C~raeral Laws, as
mr~~t rec~•a~tty tarrientled by eetirsn f37 of Chaapter Sl4 taftlae ~c~s cif
3 l t)T~, i~; heresy further amended by stri~in cast Irs the first sentence
the wards *`txcept Cheat n~ rate #~xed hereunder shall lte in excess rrt°
sixty-six dr~llaars goer th~susarad e~f ~aPalatati~n'° anc! inserting in xttce
6 tcac rer~f the fallnwin: ~- except that n~ rate fixed hereunder shalt
7 he in excess; cif twenty-five dollars per thtausand ~€' valuatiaan as
d~terrrin~d lsy the valuation farmula in effect in the year nineteen
9 hundred and e~~enty-nine. n
1 SC7'lC~~' 1f3, :vection ~ rsf Chapter If17~ of the acts of 1q7,
as nest recently amended by Ci~aaptcr l54 of the ~.cts of 1~7, is
3 hereby repealed.
~p~'~lC~~d 11. ~ectiara ~ of Chap;c:r ~2 of the Ceraerai T.~t~c, ras
2 rratsst ree~°ntly arnended by Chapter X99 c+f the acts of 1977, is
;~ hercl~y further amended by adding a#`ter dart B(13;t the f€~llc~win~
-.~
new ~,aa~-t~ar<araph: ;,.~`" °;.,"~"
S !~~ In the case of an individtowti who rents his princip~:tl lalacc° of
~~ residence in the Ct~rramonwealth, an arnourrt equal tt~ fifty percent
of such rent.
~rC'~`lt)N l2, Chapter 9 of the Cseraeral ~~vs is hereby
ar~aended by adding after se+~tion t3 the f€~lttawin section: _~-
1' e~~tg~~s ~A. Adc~ cot~nty* district, pudic authority o other
c~veraarraes~atal entity authc~rix b taw tee ar ,es costs, ~:h;res or
l'eesupc~neitiesr~rtc~wr~srnaayiracreaseth~:tt~t;xlc~f~uchearsts,cl~aarlte~
~t or fees with resfrecttoanyeityc~rttawatiraanyl'i~;b~,iearhyrnc~retar~
f=our percent aver the tc~~al is such ct~sis, ch*R r;d ur fees fc~r suchcity
~~ gar town fair the preceding fiscal years No city,town,coranty,istrict,
~ 'pbl~czathc~rityorothergt~veraentalentityshallrnakeanycharge
~sr irnps~se aa~y fee fc~r gc~r~ds prcavi.ded ter services rendered in excess
f the cost e~f` furnishing such goads or presviding such services. F
z
~c r~c~scd lair ~~uld lirtzit crtai~ taxes, tad char~~ 1av~rs relt~~
try sh~cst l~a~sdets aztd cc~rr~~utsc~ry hi~dirs arbitrate. ~,tu~c~ttld irrts
~ lirr~it r~ state ar~dlc~catitrxs:s€>ttrcalc:;to~tcarad ~~ Nr - ~l ~ ~~~;rty~~ltsw~l
tip ~°~=','c. ~~i' the full end fair ~:~~~ v;~l~st~ a~f the rise: , P~ lacir~l; taxcd.lt'
1c~LE~lity ctsrrerstly im~~ses ~ tax greater tharg sf~c~>n c~ftl~..~tc.asla valor, the
tai ~~scsld lave tt.~ ~ disreas~: by 15~I~ rash year until thr ~t~,a7r~, le~¢el iS
rrachmsl. if a lracality ctsrresatly irts~,oses ~ tax cs~ less Chars !~~~~, at cold
nest he alit>~~ed to increase the tax rate. In tither situations, ~~ city ortrs~r,
could raise its limit by a ~/ 3 lt}cal vrste at a enteral eleeticsn.
°1°h ~,rrs~~cedlawc~uldprc~vicl~ttthctut~l~~xcsta~r~;=gle~ttatr~
crsca~sal nrtslsrrty irn~osrd h}~ the stag or by ?ocaiitirs crsuld n~~~er e
irs~.rcasrd by rrsort:than 2'ii~~,o= thetataalst ~~ t ~ rte~r s ~t ~ r
year, unless t€~ thirds of ih vc~tcr
elrctior~.
l~fl~ 1'1~~~~ ~ fact.
It w~:~ald further grovide that no law ar regulatican wlticlt irr~poses
additional costs art a city or to~vr~, or a law ranting; ctr increasirt tax
cxcrr4}~tions, would be effective taxless the stag a,~re~s ttt assume floe
~aclcle~; cast, A division crf the Mate fisuditor'S ~epartrr~~;nt wc~arld
dc:t~:rr~~i~t~: the: financial effect oaf law: ttnd reulatirtrts on flee ~faricaras
li~cl~ties.
.l..hc pr~~frc~s~il would li~t°tit thy: an~c>tsrtt of rtrs~ttey rc~raircd tr, l
al~p~°~rgria~t~°cl f~~r public sclscsc~ls t4~ th~~t ~a~rt~>t~~~t ~}~rtec4 ttprsn icy the 1~~~°:~t
agprssgrittin~authority, It w~ruld also rcge~tlthelawwichprovidesf~~r
cart~pr~ls~ry binding arbitraticsrt when labor. neotiatioras ~;c~nccrxrir~
police arsci fire personnel carrtc to an irt3gasse. In ~.dditicsr~, the l~etiti~tn
~a~ould provide that no ccsunty, district, car authority ec~uld ir~tgose any
anniu l increase incostsonaloc.alityaf~reatertttan~afthctatalol`tl~e
year before.
~"he prop~rseci law would also reduce the rrtaxirr~urtwi excise tax rate on
rr~cst~sr vehicles fresm $b6 per thousand to ~ perthactsand,and t w€:r,ld
allow a state incorrte tax deduction equal `ct one half afthe a•erat pain for
the taxf~ayer`s principal place ctf residence.
a
;CZ IrIUIv --~ ~io> 594~:~
CFIL'IFICATI~ CF `T'HE A~'I'C~It~' CFNEt~AI.;
~~pterrtber 5, I~7~
Ileane~rable ichacl Jcascph Ccaranoll
~ccrctE~ry nf' the C;ornmonwcalth
Statc:.llc~use
~ I3~astc~rt, R~Iassachusetts a213~
gear Seeretary Connally:
I hereby certify that the accompanying "Initiative: I'etitieart", ~~<ts
submittcel to rne; neat l€etcr than August 1, 179, which was the first
V~ednesday of August this year, 'I'hc: petition is entitled, "initiative
I'etitian For A Law Limiting Mate And Leacal `l~axatian ,end
Expenditures", and was signed by at least ten persons certified tea
{ lie qualified voters of the Corrtrrtanwealth. 'Yhe preap€~sal wauld
place limits can local and state taxes.
I lwiereby certify that this measure is in proper farrrt fear suntis~
sion tea the people, that the rtleasure is not, either affirrnatively° or
negatively, substantially the saute as any measure which has laeen
qualified ferr sul'Srnissirsn ear subrraitted tcs the pc:taple at either cif the .
preccdir~g biennial state elcctieans; and that its subjects are related
car are mutually dependent. I further certify, under tlae standards
estalalished by the l~tasachusetts~'anstitutitartandhytheStapretne
3udicial Court, that the petition contains only subjects not ex-
eluded from the popular initiative. k
In accordance with the prcavisions of ~rticte 4g of the Amend- ~
rrtents to the Constitution, I !rave enclosed a fair and cottcisto
sutntrtary of the proposal.
Very truly yours,
APPENDIX B
The Component A3ethod Forecast
The Appendix to the Lexington Five-Year Financial History and Budgetary Forecast
listed some of the problems associated with the average annual increase method. The
forecasting approach used in this analysis is explained belows
1} Lexington population levels will not change significantly during the forecast period.
Therefore, msanicipal service levels should remain close to where they are now. These
assumptions permit the use of 1981 town workforce and service levels for the forecast
years. Budgetary increases will reflect inflation.
2} The component method provides a superior forecasting tool over the average annual
increase method, since various components within a budgetary category experience
differing inflation rates. Far example, the Pol~.ce Expense category should not be
projected as a whole category. Budgetary itetas within that category, such as auto-
mobiles, automobile repairs, fuel, administrative supplies, etc., all have differing
inflation rates. The components are projected, then added up to give the projected
category. The projected categories are then added up to give the Total Apgropriatians.
3} :1986 capital items forecasts are guesstimates.
4} The tax rate is derived from the net amount to be raised. by taxes and the property
valuation. There were many methodological problems associated with projecting state
and county assessments and tawn~revenues. In many cases, there were no definite
patterns or trends to which statistical techniques could be applied. Review of track
years revealed a strong historical correlation betkreen the net amount to be raised by
taxes and total appropriations. This relationship is expressed as a ratio, where net
amount to be raised by taxes is roughly $0$ of total appropriations. This ratio is
applied to the total appropriations far each forecasted year, giving the forecasted
net azrount to be raised by taxes.
Appendix A gives a category'by category explanation of haw the forecasted numbers
were derived. Appendix 8 shows the calculations used an the fozecasts.
r Compo nent Method Forecast and Tax Rate
Tentn of Lexin gton
.Fiscal Yeaz Fiscal Year Fiscal Year Fiscal Ysar Fiscal Year
Aparapriation 1975-76: 19.76-77 .. 19.77-?!~ 1978-79 194980
~~~
A. Police Fersanal 963,052 1,044,704 1,123,996 1,16?,974 1,20b,839
8xpenses 149x925 121,644 123,765 168,1.25 144,540
Capital 0 0 0 4 0
B. Firs Personal $78x5.18 945,616 928,423 1,0?4,426 1,176,144
Facpenses 55,264 62,275 b0,I25 71,4.75 ?9,750
Capital 5,000 0 60,400 20,044 60,000
C. DPrt Person$1 1,431,130 1,487,485 - 1,498,344 1,576,,046 1,607,41?
Expenses 954,765 1,033,810 1,112,495 1,144,?04 1,194,838
Capital 927,544 991,3.40 747,545. 461,700 289,050
D. Othez Personal $44,634 1,117,632 1,088,541- 1,246,35.2 1,129,275
ExPenSe$ 544,330 569,205 572,168 625,612 651,417
Capital 136,388 .211,398 156,570 346,947 504,853
E. Ae'at Service 2,392,.244 2,424,615 2,963,051 1,906,435- 1,905,361
F. Fe::sions' 522,425 656,542 666,275 1,004,264 1,10$,122
Waalovee 9enetits
~. Grp.Ins. 260,500 577,004 709,000 792,004 762,000
H. tlnempl.Cornp. - - - 60,-400 60,000
I. Muni~.Prap. d
;~'kntn's Comp. 21Q,470 235,000 293,661 291,203 306,503
J. 5ehaol Bucket 14,156,244 15,136,971 15,746,245 16,209,840 16,505,087
~. :ro-tech 501,047 505,952 512,305 517,364 442,571
~. P.eserve Fund - - - 200, 000 150, x;00
*i. .ibtal Approp. 25,003,024 27,120,905 28,382,504 28,842,479 29,283,327
2;. Set A.^tt.to raise 17,979,419 20,375,051 22,808,614 23,746,408 23,513,684
t ,
Fiscal Year Fiscal Year ,Fiscal Year Fiscal Year Fiscal Year Fiscal Year
1980-81 ~ 3981-82 1982-83 1983-84 1984-85 1985-86
1,212,982 1,297,892 1,388,743 1,485,955 1,589,972 1,701,270
161,9[5 190,256 212,145 237,122 26.5,705 298,493
125, 000 0 0 0 0 0
1,265,446 1,354x027 1+448,809 1,550,226 1,658:,742 1,774,854
98,900 109,726 123,880 140,082 158,655 279,97?
27,000 185,200 30,250 ?9,860 21,961 100,000
2,6?3,925 1,791,100 1,916,47? 2,050,630 2,194,174 2,34?,766
1,391,451 1,553,524 1,?36,680 - 1,94.3,421 .2,178,355 2,444,111
1,054,450 1r?49,000 1,183,380 1,309,?04 1,4401674 1,5001000
2,419,353 1,518,708 1,625,018 1,738,769 1,860,483 1,990,717
65?,57? 694,401 ?33,28? ??4,352 817,715 863,50?
883,910 192,500 291,930- 201,780 350,000 400.000
2,2571103 1,935,050 1,636,114 1,534,152 Z,41?,485 1,23?,~45
1,102,101 1,5$2,793 1,881,729 1,983,690 2,100,358 2,280x098
800,000 920,000 1.,058,000 1,216,700 1,399,205 1,609,086
331,203 363,661 399,300 438,431 481,39? 528,5?4
16,989,262 37,55?,000 18,449,000 19,381,000 20,464-,000 '22,660,000
396,265 349,205 346,840 342,895 337,230 333,648
150,000 200,000 200,000 200,000 200,000 200,000
31/99?,853 :33,643,94° 34;,661,/52 36,,608,768 38,.936,111 411449,846
25,210,348 2?x237,258 f.28,051,37Q 29,719,668 31~42i,?03 33,b86,331
Appendix A: Component Forecast Methodology
A. Police: The grojected 1986 Police budget is $1,999,7b3, which is 34~s higher
than the 19&1 budget.
1. Personal - Police personnel and service levels should not be affected by any
crime ixicreasers attributable to the current recession, because_o€ Lexington's
---- __ __
affluence. The. resources are. nat available to predict how the recession
will affect outside crime coming. into Lexington.
The average annual rate of growth method gives an annual personal growth
factor of 4.7%, but this is probably too low, considering inflation. The
adjusted annual growth factor is 7X.
2. Expenses - have been divided into six major components:
a. fuel - 36,000 gallons (wholesale prices), 20X aiu~ual growth factar.
b. veh3.cle maintenance - $2fl00/vehicle, 13 vehicles, 7% annual growth
factor.
c. new vehicles - $6000/vehicle, 7 new vehicles/yr., 10% annual growth
factor.
d. tires - $28.85/tire, 3 sets tires/vehicle/yr., 13 vehicles, lOX annual
growth factor.
e. parking meters - $6.00/meter, 250 meters, 7X annual growth factor.
f. other expenses - {admin. supplies, clothing, communications, education,
etc.} 7X annual growth factor.
3. Capital - Except. far patrol-cars, whose purchase falls. under the expense
budget, there should be no major capital requests from the Police Dept.
during the forecast period. The 1981 purchase of communications equipment
was the last major capital expense required by the department to conduct
its present level of services. Therefore, the capital category of the
forecasted budget shows no entries,
B. Fire: The projected .1985 Fire budget is $1,839,358, which is 32% higher than
the 14$1 Fire budget.
1. Personal - a 7% annual growth factor was applied to 1981 figure.
2. Expenses - have been divided into three major components:
a. fuel - is broken down into gasoline for vehicles (945 gallons, wholesale
prices}, lubricants for vehicles ( $40U expenditure in 1981;, and building
fuel (15,343 gallons). AlI fuel prices incorporate a 20% annual growth
factor.
b. vehicle maintenance - $1196/vehicle, 12 vehicles, 10% annual growth
factor.
c. other expenses - 7% annual grow*_h factor
3. Capital - The capital requests came from the Fire Chief's office and Ward
annualized at a 10% inflation rate.
C. D.P.W.: The projected 1985 D.P.W. budget is $5,813,203, which is 41% higher than
the 1981 budget.
1. Personal - a 7% annual growth factor was applied to the 1981 budget.
2. Expenses - was divided into three major components:
a. building utilities - is broken down according to per ft.2 use of
oil and gas, and KWH use of electricity, for the Police, D.P.W., Town
flffi.cejCary buildings, and the Visitors' Center. A 20$ annual growth
factor is applied to current consumption.
b. vehicle .fuel - includes gasoline, diesel, oils, greases, antifreezes,
etc. A 2®$ annual growth factor is applied to current consumption.
c. other expenses - have a 1Q$ annual growth factor.
3. Capital - The capital requests came from the capital requests budget, from
the Town Manager's. Office. All items were annualized at a 10~ inflation
rate.
D. tither: Includes all other town departments and offices, such as the Town Manager's,
Comptroller's, Tcswn Clerks; Treasurer°s, Assessor's Offices, and the Planning,
Recreation, Veteran's and Health departments, etc.
I. Personal - a 7$ annual growth factor was applied to the 1981 budget.
2. Expenses - no change. was executed from the average annual rate of growth
method, since it tracks well with the expected inflation rate:
3. Capital - The capital requests for. '82 - '84 came from the capital request
budget, from the Town Manager°s office. AlI items were annualized at a
10~ inflation rate. The 1985 figure is an estiri-ated capi:t~l request
based upon the '82 - '84 projected track.
E. Debt Service: The actual debt service Ebonded debt plus interest} will
decline in the eighties. The adjusted budgetary forecast shows the known
banded debt and interest, plus an allowance for authorizedjunissued and
unforseen bonded capital projects. The 1981 debt service level was used as
a base figure for the allowance. One-half of the difference between the 1981
base figure and the projected year's debt service, equals the allowance.
~'. Pensions: fiver file past five years, pension costs have increased dramatically, and
have contributed to increases in the budget. In the early eighties, pension costs
should continue to rise, although at a slower rate, as 1} no major changes are
forecasted in the town's workforce size, 2) as the number of non-contributory
and high-risk recipients stabilizes, and 3) as inflation makes more retirement
age employees reluctant to retire early.
- With Pfopositien 2~, the city's ability to raise revenues from property taxes
will be reduced, creating conservation efforts to cut costs. Pensions, however, is
one area where cost increases cannot be avoided. Many factors will push costs up,
such as 1) increases in the number of recipients, 2) continued inflation, 3) rising
salary scales, coupled with continued collective- bargaining efforts{ 4). a decline
in the number of contributors, and 5) federal/state regulations,
Pension cast increases have averaged around 20~ annually, meaning that-the
1981 estimate is 300~s higher than the expenditure level of 1975. The number of
recipients during that same period, however, only rose by roughly 150€. Thus,
increases in the number of recipients is only one factor in determining higher
pension costs.
Rising costs per recipient is another factor, and this is due to inflation,
rising salaries, collective bargaining efforts, and increased federalfstate
pension regulations. Changes in these variab3es are extremely hard to predict,
but most. economists feel fast'the~cental'one.inflation,'will grow at~slower
rates in the early eighties than it grew in the seventies. A lower inflation
rate ~auld help to lower future increases in pension costs.
A third factor in rising pension costs is the declining number of employee
contributors. There were 568 contributors in 1976, but only 535 by 1979. In
the past, losses in total.contzbutors were compensated through higher.charges
per contributor. This method is .limited by the realistic number of increases
the town can levy upon its employees.. Even with the predicted stable employment
of the early eighties, employee contributions are not expected to keep pace with
increases in pension costs.
Zf a forecast of future pension outlays were based so3ely upon past trends,
the impression. would be of soaring costs. There are, however,. many reasons to
believe that past trends alone, do not provide enough information to forecast
future costs.
-First of all, the decline in contributors should become less important in
the early eighties as the town's workforce size stabilizes, The town's population
is expected to remain close to where it is now, and this translates into a stable
town workforce.
Secondly, the increase in accidental disabilities under the high risk category.
has remained at around one a year., and the number of noncontributory recipients
has stayed around 19-20. The Comptroller's office does not feel that .there should
b~ any significant change in t7ae number of non-contributory recipients, and with a
stable workforce size, the increase of high risk recipients should also stay at
current levels,
tr'ith the high-risk and noncontributory= classifications accounted for, the
unknown becomes the remaining bulk of contributory recipients {excluding high-
risk). This group has traditionally increased the most; from .147 in 1975, to
227 in 1980, However, there is strong reason to believe that this increase will
slow down in the early eighties. Thy high cost of living has created~a reluctancy
to retire early, forcing more retirement age employees to work longer.
The Adjusted Budgetary Forecast_gives the 1982 forecasted pension figure
as a base {$3,260,740). Recall that an allowance was made to the debt service
which reflected 50~ of the difference between the 1981. debt service bases and
the projected year's debt service.. The other 50~; of this difference is a
stabilization allowance which is added to the 19f32 pension base figure in
anticipation of increased pension costs
Appendix B, section F {1°3} shows the forecasted pension fund, which
reflects an estimate of what the. town a=ill need to finance future pension costs.
The figures shown in the ~-+usted Budgetary Forecast reflect the '82 base. plus
a stabilization allowance. The two sets of fiaures can be compared as expected
costs vs. expected revenues.. Any surplus is applied to future pension costs.
G. Group Ynsurance: R'he average annual rate of growth method shows a 31.5+E
annual growth factor, but this is too high. Large increases were recorded from
1377-19?8, but smaller .increases were recorded after that. The early increases
refleet~palicy.changss,`anc! they are high enough to skew the average. Using a
15~ annual inflationary factor on the 1981 base figure assumes a stabilized
workforce, and gives a n~re realistic forecasting approach to group insurance.
H> Unemployment Compensation: This category is impossible to project, and is a
very small portion of the budget. While it is better not to attempt a forecast
on unemployment compensation, it is important to note that past appropriations
have been around 560,000, but much of this was never used. If Proposition 2~
cuts deeply into the budget, the town will be forced to make some layoffs, but this
is only one. scenario. No entries were made in this category.
Y. Municipal Property and. Workmen's Cotapensatan: This category was not changed,
since the 9.8~ annual increase very closely parallels the projected inflation rate.
J. Schaal Hudget: The school budget for 1982-1985 comes from Superintendent
Lawson's office. fide 1486 school budget is a guesstimate
X. Vo-Tech; The enrollment and budget of this school have bean on a downward
turn which is expected to continue. From `?9-'80, the average decline in enroll-
ment was ?e. This ~ decline was projected into the eighties, Per pupil costs,
however, are expected. to increase at 6~ annually. The overall effect on the
budget will be negative.
L. Reserve Fund: The 5200,000 figure was provided by the Town Manager's Office.
M. Total A~x~zo~riations: This figure is the sum of A-L fir each respective year.
N. Net Amount to be Raised b~ Taxes; The ratio explained in~the introduction
(ur3dez 4) was used as a base for the net amount to be raised by taxes. with the
completion of several school construction projects, the state aid for such projects
will terminate. Loss- of this aid will decrease revenues, driving up the net
amount to be raised by tZtxes. This increase is reflected in the forecast.
APPENDIX B: Calculations Used In The
Component Method Forecast
A. POLICE:
1. Personal - 7$ annual growth factor, using 1981 base figure.
2. Expenses
a) fuel - 36,000 gallons (wholesale prices), 20$ annual growth factor
'79 '80 '81 '82 '83 '84 '85 '86
$/gal. .87 1.04 1.25 1.50 1.80 2.16 2.60 3.12
$!36,000 gal. 31,320 37,584 45,101 54,121 64,945 77,934 93,521 112,225
b} vehicle maintenance - 52000/vehicle, 13 vehicles, 7~ an.,ual growth factor
'81 '82 `83 '84 '85 '86
S/vehicle 2,000 2,140 2.,.290 2,450 2,621 2,804
S/13 vehicles 26,000 27,820 29,770 31,850 34,0?3 36,452
c) new vehicles - $6000ivehicle, 7 new vehicles/yr., 10~ annual growth factor
'81 `82 '83 '84 '85 '86
$/vehicle 6,000 6,600 7,260 7,986 8,785 9,663•
$j7 vehicles 42,000 46,200 50,820 55,902 61,495 67,641
d) tires- $28.85ftire, 3 sets tires/vehicle/year, 10$ annual growth factor
'8I `S2 '83 '84 '8b '86
$/tire 28.85 31.73 34.90 38.3Q 42.23 46.45
$/156 tires 4;500- 4,950 5,444 5,989 6,588 7,246
e} parking meters - $6.00/meter, 250 meters, ?$ annual growth factor
'81 '82 '83 '84 '85 '86
$/meter 6.
$f250 meters 1,500 6.42
1,605 6.87
1,717 7.35
1,837 7.86
1,965 8.41
2,102
f} other expenses - 7~ annual growth factor
'8I '82 '83 '84 `85 '86
$ 51,925 55,560 59,448 63,610 68,063 72,827
* All regressions use time (FY) as the independent variable.
B. FIRE:
1. Personal - ?$ annual growth factor
2 Expenses
a} fuel
'82 '83 '84 '85 '86
$/gal. 1.278 1.534 1.841 2.209 2.651 gasoline for vehicles
$/9450 gal. 12,077 14,496 17,397 20,875 25,052 gasoline for vehicles
$ of lubs 480 576 691 829 995 lubricant for vehicles
$jga 1.25 i.50 1.80 2.16 .2.59 building fuel
$/15,343 gal. 19,179 23,014 27,617 33,141 39,738 building fuel
total fuel $ 31,736 38,086 45,705 54,845 65{785
b) vehicle maintenance - 12 vehicles, 10~ annual growth factor
auto supplies $4500
tires 2350
MJR auto 7500
$14,350 ~ 12 vehicles= $1196jvehicle
'82 '83 '84 '85 '86
$jvehicle 1,316 1,448 1,593 1,752 1,927
$j12 vehicles 15,792 17,376 19,116 21,024 23,127
c} other expenses - 7$ annual growth factor
'81 '82 '83 '84 '85 '86
$ 58,129° 62,198 68,418 75,260 82,786 91,065
3. Capital. - capital requests from the Fire Chief's office were annualized
at l0~jyr., then applied to category.
C. D.P.W.:
1. Personal - 7$ annual growth factor
2. Expenses - 20$ annual growth factor for all fuels
a) Building Utilities - Police Building -
'79 `80 '81 '82 '83 '84 '85 '86
Oil, $jft.2
2 .28 .34 .41 .49 .59 .71 .85 1.02
Sj12,500 ft. 3,590 4,250 5,125 6,125 7,375 8,875 10,625 12,750
Gas, $jft.2
2 .04 .048-~ .058' .069 :083 .1 .12 .14
$j12,500 ft. 503 600 ?25 862 1;037 1,250 1,500 1,750
Elec., $jKWH ,068 .082 .098 .118 .141 ..169 .203 .244.
$j89,194 Kt~?H 6,102 ?,314 8,741 10,525 12,576 1.5,074 18,106 21,763
Total Util.$ 10,196 12,164 14,591 17,512 20,988 25,199 30,231 36,263
- D.P.W. Building -
'79 '80 '81 '62 `83 '84 '85 '86
Oii, $jft.2 .088 .106 .127 .152 :.182 .218 .262 314
$j34,600 ft.2 3,053 3,668 4,394 5,259 6,297 7,543 9,065 .
10,864
Gas, $jft.2 2 .34 .41 .49 .59 .71 .85 1.02 1.22
$f34,60Q ft. 11.665 14,186 16,954 20,414 24,5b6 29,410 35,292. 42,212
Elec. $jKWH .058 .07 .084 .10 .12 .144 .173 ..208
$/210,970 KWH 12,244 14,76$ 17,721 21,097 25,316 30,380 36,498 43,882
Total Util. $ 26,962 32,62.2 39,069 46,??0 56,179 67,333 80,855 96,958
Town Offiee/Gary Buildings
'79 '80 '8I '82 '83 '84 `85 '86
Oil, $jft.2 ..208 ~ .250 .30 .36 .432 .518 .
622 .746
$j54,000 ft2 11,213 13,500 16,200 19,440 23,328 27,972 .
33,588 40,284
Gas, $jft.2 ..006 .007 .008 .010 ,012 .014 .017 .020
$j54,000 ft2 352 378 432 540 648 756 918 1080
Elec. $jKwx .063 .076 .091 .109 .131 .157 .188 .226
$j298,980 KWH 18,988 22,722 27,207 3.2,589 39,166 46,940 56-208 67,569
Total Util. $ 30,553 36,600 43,839 52,569 63,142 75,668 90,714 108,933
- Visitors Center - '
'79 '80 '81 `82 '83 '84 '85 '86
Oil, $/ft.2 - - - - - - - -
$/4500 ft.2 - - - - - - - -
Gas, $/f t.2 .225 .2? .32 .38 .46 .5S .66 .79
$/4500 ft.2 1,014 1,215 1,440 1,710 2,070 2,475 2,970 3,555
Elec. $JxwH ..095 .114 .137 .164 .197 .236 .283 .340
$j6,480 KWH 613 739 888 1,063 1,277 1,529 1,834 2,203
Total Util. $ 1,62.? 1,954 2,328 2,773 3,347 4,004 4,804 5.,758
b) vehicle fuel
'79 '80 '81 `82 '83 '84 '85 '86
Gasoline,$/gall. .87 1:04 1.25- 2.50 1.80. 2.16 2,60 3.12
$/65,154 ga11.56,684 67,760 81,442 97,731 117,277 140,.733 169,400 203,280
Diesel,Sjgall. .87 1.04 1.25 1.50 1.80 2.16 2.60 3.12.
S/28,505 gall. 24,799 29,645 35,631 42,757 51,309 611571 74,113 88,936
Hydraulic Oil,
$/gall. 3 3.6 4.32 '5.28 6.22 7.4.6 8.95 10.74
$/770 gall. 2,310 2,772 3,326 3,989 4,789 5,744 6,891 8,270
#30 ai2,$fgall. 2.9 3.48 9.18 5.01 6.01 7.21 8.65 20.38
$!660 gall. 1,914 2,297 2,759 3,307 3,967 4,759 5,709 6,851
#5 Diesel Lub.,
$/gall. 3..15 3.78 4.54 5.45 6.54 7.'85 9..42 11.30
$/660 gall. 2,079 2,495 2,996 3,597 4,316 5,181 6,217 7,458
near end Grease ,
$/lbs. .62 .74 .89 7-. 0? 1.28 1.54 1.85 2.22
$/1440 lbs. 832 1,066 1,282 1,541 1,843 2,218 2,664 3,19?
Chassis Grease,
$/lb .84 1.01 2.21 1-.45 1.74 2.09 2.51 3.01
$J460 lbs. 386 465 55? 667 800 961 1,155 1,385
Anti-freeze,
S/gall. 5 6 7.2 8.64 10.37 12.44 14.93 17.92
$!440 gall. 2,200 2,640 3,168 3,802 4,563 5,474 6,569 7,885
Total Fuel $ 9 1,264 109,140 131,161 15.7,3.91 188,864 226,641 272,718 327,262
c} other expenses - 10`~ annual growth factor
'81 '82 '83 '84' '85 '86
1,16 0,463 1,276,50 9 `I,40a ,160 1,544,576 ~ 1;699;033 1,868,937
3. Capital - annualized at 10~ growth factor
D . OTHER:
I. Personal - 7$ annual growth factor
2. Expenses - av,• annual rate of growth method used
3. Capital,- '82 - °84 annualized at 10$ growth factor. '85 estimate of
$350,000 from Town Manager's Office.
E. DEBT SERVICE: Is a c~ination of known debt and interest, banding, and the debt
allowance.
`81 '82 '83 '84 '85 '86
debt 1,855,000 1,IOO,d00 825,000 655,000 450,000 110,000
interest 204,652 _134,79? 90,125 56,202 :27,867. -~ 8,387
capital
bonding 948,90.0 37$,200 100;000 100,.000 100,000 100,000
total 2,257,203 1,612,997 1,015,225 811,202 577,867 218,387
allowance 0 322,053 620,989 722,950 839,618 1,019,358
adjusted
5
total 2,257,103 1,935,050 1,636,114 1,534,152 1,417,48 1,23?,745
* calculating the allowance:
1982 2,257,103 - 1:612,997 = 644,106 x (. 5) = 322,053
1983 2,257,103 - 1,015,125 = 1,241,978 x (.5) = 620,989
1984 2,257,103 - 811,202 = 1,445,901 x (.5) - 722,950
1985 2,257,103 - 577'867 = 1,679,236 x (.5} = 839,618
1.986 2,25?,103 - 218,387 = 2,038,716 x },5} =1,019,358
F. PENSIONS:
1) Projecting net add-ons: From 1975-1979, net add-ons averaged 10~, but because
of factorsexplained in App.A, this will be lower (around 4~ estimated). The
last two years have been around 2~.
FY '80 '81 '82 '83 '84 °85 '86
recipients 246 250 260 270 281 292 3G4
2) Projecting average cost/recipient: From '75-'80, per recipient cost increases
pretty much parallelled inflationary increases. This analysis assumes a
continuation of this pattern, and uses a 10~ inflatfionary factor.
FY I ' 75 I ' 76 ~ ' 7? ~ ` ' 78 ~ ' 79 -~ `'80 ~, ' 81 { ' 82 ~ ' 83 ~ ` 84 ~ ' 85 ( ' 86
$/recipient 2450 2813 3205 3027 3752 4505 4408 4849 5334 5867 6454. 7099
$ d ~ - 15 14 -6 24 20
inflation rate - 12 9 l0 20 20 10 10 I0 10 IO IO
3) Projecting. pension costs: Multiplying projected recipients x projected $/recip.
gives projected pension costs. This figure may be high, since it assumes a
continuation of the 8~s ratio of non-contributory recipients to contributory
recipients. Assuming I9-20 non-contributory recipients during the forecast
period, drops that ratio to 6$ by '86. Since many non-contrib. pensions are
higher than their contrib. counterparts, continuation of the 8$ ratio could
mean that the projections are a little high. .
FY '81 '82 '83 '84 '85 '86
Pension $ 1,102,101 1,260,740 1,440,180 1,648,627 1,884,568 2,158,096
4) Addition of allowance to 1982 pension base. Allowance equals debt service allowance.
'82 '83 '84 °85 '86
1,260,740 1,260,740 1,260,740 1,260,740 1,260,740 '82 base
322,053 62.0,989 722,950 839,618 1,019,358 allowance
1,582,793 1,881x729 1,983,690 2,100,358 2,280,098 total
G. GROUP INSI3RANCE: 1981 base figure, l5~ annual growth rate
H. t3NEMPLOYMENT COMPENSATION: No entries
I. MUNICIP.~L PROPERTY & WORKMEN'S COMPENSATION: no change from av. ann. rate of growth
_ method
J. SCHOOL BtIDGET:See 1981-84 Sciioal Budget Forecast from Jack Lawson's office (located
- ._____. _ immediately after Appendix B.)
K. VO-TECH: 1981 base year, 7~ annual enrolL^~ent declines, 6~/pupil $ increases
FY ' 75 " 76 ' ?7 ' 78 ' 79 '_ 80 _ --' 8l ' 82 _ .' 83 ' 84 '-85 _-----' 86
ger pupil ~ 2800 2,968 3,146- • 3,335 •'3,535 3;747 3,97;
enrollment -..125 246 192 l49 133 129- 120 ~ lII 104 97 ~ 90 X84
resulting _.
budget ~ 356,180 349,206 346,840 ~ 342,89'S 337,230 333,6
IS
L. Reserve- Fund; Ses App.A, section L
M. Total Appropriations; See App. A, ssctian M
K. filet Amount to be Raised by Taxes
1} net an~unt = .80 {Total Appropriations by F.Y.)
82 83 84 $5 86
.26,915,154 27,729,266 29,287,014 30,989,049 33,159,877
2) Reduction in School Aid - School aid equals .6? X {amount set aside for
school construction, by F.Y.l• The .8d ratio far net amount to be raised
by taxes assumes that net revenues will remain at .20 of total aggro-
priations. The amount of school aid in '8I was 526,454. Since school
aid will aecrease~, this will result in a drop in net revenues, pushing
ug the net amount to be raised by taxes.
82 83 84 85 86
'8i-aid 526,454 526,454 526,454 526,454 526,454
reduced
aid 204x350 204x350 93x800 93,800 0
net loss 32.2,104 ._322,104 432,654 ~ 432,654 526,454
3} Adjusted net amount to bs raised by taxes - calculated by adding loss
in school aid {representing net loss in revenues) to net amt. to be
raised by taxes.
__
M
' APPENDIX c
Lexington Public Schools '
Lexington, Masaachusstta
August 23, 1484
T0: Members of the Lexington Tax Policy ComraLttee
FRCM: Jack Lawson
RE: 1981-84 School Budget Forecast
The 1.97? .school year witnessed the start of ieaplementing the
computerized grogram budgeting format recoanaended by Peat, Mazwick, Mitchell
and Company is 2976. During that yeaz ail financial records were computerised
while maintaining the line item €ormst. Zn l97$ praggams were added to all
non personnel records. Tha #ollowing year {1979} was the first~yesr for full
scale implementation of the programffiatic budget format. Ths 2984 budget
is the second year of full scale implementation of the new format. Most of
the financial data compiled far this forecast for the 1977-St3 gears comes
from these ec~puterized records.
The year 1984 was selected as the end year of the forecast because
it is the year that students born in i979 will arrive in kindergarten. Ziiese
data (Q-4 populatioa) came froaa the January, 19813 Town census. Extragolations
beyond this date are possible but more bate and a€fort would be necessary and
,they would be less reliable than those through 1984.
The backup data for this report has been arranged ao that different
assumptfvna could be inserted .and related to the variables and indicate .the
corresponding effect on the years 8i through 84. Ttie following assumptions
guided the development of this report.
Enrollment forecasting techniques will continue to be
reliable within 2-3 margins of error.
. Staffing ratios currently in place throughout the systean
-m will remain conffitant.
Muzzsy Juaior High will close in ~e81. ~ ,
T'he ratio of SPffi atuztents to the fatal student pogulation
gill remain conataxtt at 13~.
Budgeted dollars rather than expended dollars were used
throughout the study.
Negotiated salary increases for 1981-1984 will be 6..0x,,
6.5~, 7.0~, 7.5~ respectively.
Negotiated increases projected above will have the effect
of increasing dollars in the I981-1984 budgets for personnel
by the €oolowing percentages: 2.l%, 2.6Z, 3.2ti, 3,6 :.
Non personnel dollars fn the 1981-84 budgets will increase
at a eonstant rate of l3%.
a -_. _. ___...... -- --- ~._. _. _.__._-___ __.... _..
'Za
1981-84 Forecast of Projected Budget Rolla rs
By Student, Staff, Negotiated Increases, Personnel
and Non Personnel Dollars Using Negotiated Increases
of 6.0°1., 6.5%, 7.0% and 7.5% Respectively
ACTUAL PROJECTED
Year 1977 1978 1979 1980 1981 1982 1983 1984
No.
5tds. 7029 6748 6363 5992 5654 5320 5107 4953
No
Staff 759.4 730.3 684.2 650.6 614.0 585.7 r 568.6 555.9
Pers. $ 13,109 13,753 13,989 14,145 14,442 14,817 15,276 15,826
Non Pers. $ 2,301 2,45? 2,516 2,8452 3,215 3,632 4,105 4,b38
Total
Budgeted) 15,410 16,210 1b,505 I7,459~ 1~ 7,657 18,449- 19,381 2a,464J
' Budgeted, not expended Projected Budgets
)Expressed in millions of dollars.
21980-8I capital and energy improvement dollars not included.
. ~ .
Year
Na.
Stds.
No
S taf f
Neg.
Inc.
Pers. $
1}61-84 P'oreedst of Projee"ted Budget Dollars
Sy Student, Staff, Negotiated Increases, Personnel
and Non Personnel Dollars in Pereent
ACTUAL P~.~.r~cz~D
1977 1978 1979 1980 1981 1982 1983 1984
-6.8 -4.0 -5.7 -5.8 -5.6 -5.9 -4.0 -3.0
-3.4 -3.8 -5.6 -5.6 -5.6 -4.b -2.9 -2.2
5.5 5.0 5.5 5.5
6.0 6.5 7.0 7.5
.6 4.9 1.7 1.1
2.1 2.6 3.1 3.6
Non Pers. $ 9,0 6.8 2.4 13.11 13,0 13,Q 13.0 13.0
Iota 1.8 5.2 1.8 5.8 1.I 4.5 5.0 5.6
1198Q-81 capital and enerBY ircpravement collars titre included.
i
1 p .>.i
APPENF3IX D
,~...
~' AT'!.'ORNEY' S RE.5PtJ1ySE TC) THE TAX PG}LICY COMMITTEE' S
QuES~I~r~s ort g~poslT~au 2-1/2
l_ ~ ~ti
September l7, 1980
Mr. John F. McLaughlin, Chairman
flax Policy Committee
Town Office $uilding
Lexington, MA fl2I73
Dear Mr. McLaughlin:
Enclosed is a memorandum to me which was prepared by a law clerk in
my office in response to the questions raised in your letter to
Bob Hutchinson..
I agree that Proposition 2 l/2 is ambiguous in many respects. There
undoubtedly will be a number of court cases as a result of this poor
draftsmanship. Until these cases are decided, the exact meaning of
many sections of Proposition 2 112 caanot be known.
Very truly yours,
-~~
- ;~ ,,
`` '~
~7~7~JLte~: :~~ ~`~--- ..
~ 1 ~ --
Norman P. Cohen
Tow-a Counsel
npc/bmc
enc.
Jq M01ihl~.
Ot,4 QAC
q 4
4 g y
<' . +
t °+y ~" ~~
$E$ ~ ,'
Norman P. Co7+s,+, Toa'n Couna:I amaq'•
1625 MA$8A0 NU9ETT9 AYENUE • L@XINOTO N, MASSACHU8ETT8 02193 • •T ELE PiiONE (6T9~ 862-09:60 tP~tlt6t0~
~ t, 'r
To: Norman Cohen
From: Paul Saba
Re: Proposition t42 1/2n
Date 9!16!80
Norn.~an:
Here are brief responses to the questions raised by the Lexington
Tok-n 1`ianager concerning Proposition " 2 1/2".
Question 1 .
Does Proposition "2 1/2" - Mass H.R. 5933 ~I980} - apply to the
=oral town levy, or to each individual parcel of graperty2 If it applies
to each parcel individually, what effect will the passage of Proposition
"2 l/2" have on the higher assessments on certain kinds of property
permitted by "Progasitioa One" - the proposed constitutional amendment
approved in the 1978 general election which allows the legislature to
establish four different classes of property for tax purposes?
Answer:
According to the legal counsel to the legislature's Saint Committee
on Taxation, the proponeats of Proposition " 2 1/2" claim that it
applies to each individual parcel of property, rather than the total
town levy. The language of the bill itself, however, simply says that
the "total taxes assessed - - - upon real estate and personal property - -
shall not - - exceed twro and one-half percent of the full and fair cash
valuation thereof - - -." ~1 lines 3-8. Phis language is ambiguous on
Sts face, and could be interpreted to refer to a town's taxable property
ta'~en as a whole, rather than to individual parcels. If Proposition
,. ~.
"2 lf2" passes, this ambiguity will probably have to be resolved by the
courts.
question 2
~Inder Frogositioa 992 l12" the residents of a city or fawn may vote
is a referendum to increase or decrease the 2 1/2~ limit at which property
is supposed to be assessed. If such a referendum were held in November
1983, would its results apply to the fiscal year is which the referendum
occurred, or to the following fiscal year?
Answer
Again the answer is unclear. The warding of the referendum questions
which would change the assessment limit is contained in Proposition "2
3J2" itself, §1 Sines 13-18 and 52-57:
Shall the present [twa and one-half percents limit on the
assessment of zeal estate and personal groperty taxes with respect
to this city (or town) be increased to per cent for
the fiscal year ?
Shall the total taxes assessed on real estate and personal
property with respect to this city (or Iowa) in the fiscal year
be increased by percent of the total taxes
so assessed 3n the preceding fiscal year rather than by the present
two and one-half percent limit on such increase?
By leaving blank the date of the fiscal year to which these questions
refer, the wording of the questions is ambiguous and leaves open the
possibi3ty that an assessment rate changed by referendum vote could
apply to the fiscal year is which the vote occurred.
do the other hand, the legislative Joint Committee on Taxation has
indicated that if Proposition ''2 lI2" passes, it will not apply to zeal
estate and personal property assessments made in the present fiscal
year, but to those of fiscal year 1982. This interpretation is based
-2-
.~ ' 1~
.1
on the fact that property tax assessments for fiscal 1981 will have been
made and aaailed to taxpayers before Proposition "2 Ile" is voted upan. ~~~
Since property tax assessments in any future fiscal year ordinarily wtill
also have been a~sde and mailed before any November referendum vote to
change the assessment rate, there :are powerful practical reasons for
arguing that the effect of such a referendum should not apply to the
fiscal year in which it occurs. According to the Iegai counsel of the
Joint Co~aaittee on Taxatioa, this. is apparently the position taken by
propoacents of the bill, despite the ambiguity of the language noted
above,
~tuesti°n 3
Can the language of §I2 - "No county., district, public authority or
other governmental entity°' - be interpreted to apply to-the Commornaealth
of Massachusetts itself, as well as the MBTA, MDC, and other such creatures
of the Commonwealth?
Answer
The bill as drafted is wholly tacking in definitions, including
definitions of ,the terns "public authority" or "governmental entity."
In the absence of any definitions,. the scope of §I2 is unclear, and it
remains an opea question whether the Commonwealth, the MEifiA, the MI3C or
other bodies are embraced by the language of this section.
{1} But Proposition "2 I/2" will apparently apply to the excise tax
levies of the present fiscal year since these levies will be made as of
January L, I9$I.