A Primer on Proposition 2½

Submitted by Joshua Norman

Yesterday, Newton voters went to to the polls to vote on who will serve as Newton’s next mayor, as well as vote on who will serve on the Newton City Council and School Committee. In addition, the Newton Assessor’s Office will be holding its tax classification hearing this month to set the property tax rate and to mandate the Newton Treasurer/Collector the amount of taxes to be collected including sewer, street, and sidewalk betterments and water and sewer liens. As there will be many new faces that will begin serving in public office for the first time next year, we at the Newton Taxpayers Association will take the time to put together this Primer on Proposition 2½ to educate our public servants on proper fiscal stewardship of taxpayer assets.

Most people are aware that Massachusetts voters passed Proposition 2½ in 1980 via ballot referendum and that it limits tax assessments for real property and motor vehicles at no more than 2.5% of the assessed value of a community’s taxable property. The law also limits annual real property tax levy growth to 2.5% plus the amount attributable to taxes that are from new real property (new growth). If city government wants to increase property taxes at a rate higher than 2.5% plus new growth, it must go to the voters and ask for an operating override or debt exclusion in order to impose these new taxes. A majority of voters who vote on the override or debt exclusion must vote in favor of the override or debt exclusion in order to pass the override or debt exclusion.

While most people are aware of Proposition 2½’s revenue raising restrictions, most people (including many elected officials) are completely unaware that Proposition 2½ gave communities the tools to manage their own fiscal houses in a way that is respectful of taxpayer assets. For starters, it eliminated school board fiscal autonomy. Prior to Proposition 2½, city councils and town meetings had no ability to rein in the budgets of their local school boards. Once the voters passed Proposition 2½ in 1980, city councils and school boards had the necessary tools to serve as a check on fiscal waste, bloat and other lassitude in public school spending.

Unfortunately for Newton’s taxpayers, we don’t believe that many people in Newton government are aware of this provision as direct and indirect spending by the City of Newton on behalf of the Newton Public Schools system now accounts for ~65% of Newton’s total annual spending (up from 46% in 1992), which we expect to continue over the next 5 years. We believe that the newly elected School Board cannot repeat the mistakes of the 2015-18 labor contracts, which gave cash pay raises of up to 6% annually to the unions. We believe that cash pay raises in the 2018-2021 labor contracts should be limited to 1% annually, which will help avoid the targeted staffing reductions that took place earlier this year. This would also free up money to fund future school building infrastructure projects (like the new Lincoln-Eliot, Countryside and Ward Elementary School Building projects) without adding new burdensome tax increases on Newton’s taxpayers.

Proposition 2½ also eliminated the law which provides for compulsory binding arbitration when labor negotiations concerning police and fire personnel come to an impasse. Any arbitration award for public safety union contracts must now obtain approval from city council or town meeting in order to be effective; otherwise, it goes back to arbitration. We were disappointed that so many candidates (including many incumbents) claim on their Progressive Newton questionnaires that the city council has no role to collective bargaining. We at the Newton Taxpayers Association recognize that the council and the school committee play the most important role in the collective bargaining process and that role is voting to approve or reject labor contracts for the municipal and school department employees respectively.

Proposition 2½ also eliminated the ability of the Commonwealth of Massachusetts to impose unfunded mandates on municipalities and limited the aggregate increase in state assessments of municipalities to 2.5%, which is something we believe 99% of all Massachusetts residents should agree on regardless of their political worldview.

We at the Newton Taxpayers Association are happy to share this primer on Proposition 2½ with our fellow Newton residents, taxpayers and public servants, in the hopes of fostering stronger fiscal stewardship of taxpayer assets, while ensuring high standards in the delivery of municipal and educational services.