Posted Apr. 9, 2014 at 6:00 AM
HOPKINTON – It’s a rare move: A town or city voting to reduce the amount of money that can be raised by property taxes, according to state data.
This is known as an underride of Proposition 2-1/2, which permanently reduces a community’s tax levy limit. Many cities and towns pitch overrides, which raise the tax threshold for operating and capital expenses.
Hopkinton could be the next to join 13 towns – of the 351 communities in the state – to pass an underride since 1988, according to the state Division of Local Services.
Selectmen voted 4-1 last week to bring a $1.25 million underride before voters at the annual town election on May 19. It will require a majority vote to pass.
However, property owners should not expect to see lower tax bills if the underride passes. Those bills might not rise as much if the underride vote is successful.
The maximum amount of taxes Hopkinton is allowed to raise under Proposition 2 1/2 – the levy limit – is about $55.6 million for next fiscal year. The town is using only $53.9 million of that amount, meaning the town has an excess levy amount of $1.7 million.
The board has proposed to draw the underride from that excess levy amount, not the town’s operating budget.
Proposition 2 1/2 was enacted in 1980. The town's most recent override was in 2006 for $1.9 million, according to the data.
The largest underride amount in the state was in Plymouth in 1995 for $2 million, and the smallest amount of $10,833 in Gill in 2004.
The most recent underride vote was in West Newbury in 2012 reducing real estate and personal property taxes by $180,000. The town also approved another underride for $170,000 in 2011, according to the data.
Williamsburg has also passed two underrides, the first in 1997 ($51,580) and again in 2001 ($35,407).
Other towns that have adoped underrides: Ayer, Dennis, Groveland, Holland, Lancaster, Orleans, Sandwich, Shelbourne and Upton.
Hopkinton’s proposed $1.25 million amount would be the second highest if approved by voters next month, according to the data. The next highest was just over $1 million in Lancaster in 2003.
Hopkinton Selectman Chairman John Mosher voted against the $1.25 million figure, but supports the concept. He recommended an underride of $800,000.
"Over the past four years, we’ve taken a methodical approach to ensure responsible long-term planning while making sure immediate needs are met," he said. "I would have liked to see an $800,000 underride because it reduced our excess levy capacity in half and then spend the next year looking at a policy regarding our excess levy capacity."
The Appropriation Committee recommended the underride be between $800,000 to $1 million, said Mike Manning, chairman of Appropriation Committee. There were concerns about the possible need for an override in fiscal 2016 if the amount were too high, he said.
"We weighed the different options," he said. "It is what we were comfortable with. It gave us a cushion."Manning cautioned that the underride does not mean there will be lower taxes for homeowners, but rather reduces the amount in which taxes can be raised in the future.
Details on the underride will be presented at Town Meeting as a non-binding measure.
Selectman Brian Herr said the $1.25 million figure is a significant reduction of the excess levy, but gives the town some flexibility.
"From my seat on the board we didn’t save the money to spend it at a future date," he said. "We saved the money to keep it in the pockets of the taxpayers."
He said he believes the Appropriation Committee is being conservative based on assumptions of budget projections.
Jonathan Phelps can be reached at 508-626-4338 or jphelps@wickedlocal.com. Follow him on Twitter @JPhelps_MW.
posted for informational purposes only
Jeff Bennett
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