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Proposition 2 ½ refers to a Massachusetts law enacted in 1980 that limits the amount of property tax revenue a community can raise through real and personal property taxes. The amount actually raised is technically called the “Tax Levy.” The maximum amount a community can levy in any given year is called the “Levy Limit.” Proposition 2 ½ limits how much the Levy Limit can be increased from year to year.
Under Proposition 2 ½, a community’s levy limit increases annually by two factors:
1) an incremental increase of 2.5% of the prior year’s Levy Limit (hence the name “Proposition 2 ½”), and
2) a dollar amount derived from the value of new construction and other growth in the local tax base since the previous year, referred to as “New Growth.”
Notably, the restriction on raising taxes more than 2.5% is based upon the prior year’s Levy Limit, rather than on the prior year’s Tax Levy. Thus, if in a particular year the Town assesses taxes below the Levy Limit, the next year, the Levy Limit will still rise by 2.5% and new growth over the prior year. In that case, it is possible that taxes may increase more than 2.5 %. A common misconception is that Proposition 2 ½ restricts the amount an individual’s property tax bill can increase.
A community can exceed its Levy Limit for limited reasons and only with voter approval. One such reason, called a Debt Exclusion, allows a municipality to raise funds outside the Levy Limit for the limited period of time needed to repay the debt and interest on a loan for a particular capital purpose.
In our case, the Debt Exclusion would allow funds to be used to repay a loan for the costs of constructing a new elementary school to replace two older schools. The additional amount would be raised outside of the Levy Limit for the life of the debt only. Stated differently, Debt Exclusions do not become part of the base used to calculate the annual 2.5 % increase in the Town’s Levy Limit. Instead, the increase is temporary and lasts only for the life of the bonds.
In essence, a new elementary school. Technically, we are voting on whether to authorize the Town to raise the amount needed, outside of the Levy Limit, to make principal and interest payments on a 30 year loan. Each year, the Town would add to the total amount of the Tax Levy the specific amounts needed for that year to pay the annual principal and interest payment. If no debt exclusion were used, the Town would need to absorb the costs of those annual payments within the Levy Limit. Based upon the size of the project, it is the Town’s position that raising such funds within the Levy would limit the availability of funds for Town operations and other projects.
A “YES” vote would allow the Town to levy the additional taxes needed to repay the money it borrows to construct a new elementary school.
A “NO” vote would not allow the Town to levy additional taxes to construct a new elementary school.
The election date is Tuesday, May 2, 2023, with voting hours from 7:00 AM to 8:00 PM at all of the Town’s voting locations.
Please visit the Elections page or contact the Town Clerk's office for more information about the election.
The estimated annual impact of the debt exclusion is $1.01 per $1,000 of assessed property value. It is estimated that the annual impact of the debt exclusion on the FY 2023 average single family residence in Amherst, valued at $446,953, is $451 ($446,953 / $1,000 X $1.01). These estimates are based on current economic conditions and are, of course, subject to change if economic conditions, such as interest rates, change.
NOTE: The estimated impact above is for a property assessed at $446,953. Properties with lower assessed value will see a lower impact while properties with a higher assessed value will see a higher impact. Please use the tool above to find your specific property.
The increase to taxes is estimated to begin in 2025 and terminate by 2056. The increase in the first few years will be lower as the building is under construction and will reach its peak level in 2029.
The Town will not be able to proceed with building a new elementary school as trying to fund the cost of the project within the Levy Limit will significantly reduce the amounts available for Town operations and other projects. In addition, the plan to renovate or replace the Fire Station, Jones Library, and Public Works facility will need to be reevaluated. One potential outcome is that the Town will need to invest in temporary repairs to the existing buildings which are aging and in poor condition.
No, the Town can only levy additional taxes to repay the debt for the new elementary school.