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More than a few heads turned this spring when two different state representatives floated the idea of doing away with or amending Proposition 2 1/2, the state’s landmark property tax law. There was far less surprise at the hailstorm of criticism that quickly followed–and the lawmakers’ hasty retreat from the idea of even tinkering with the tax-cap law.
Prop. 2 1/2 has been “baked into the political landscape,” says Geoffrey Beckwith, director of the Massachusetts Municipal Association, which represents the state’s cities and towns. And after 20 years on the books, there appears to be little appetite for digging into the Bay State bedrock where the law now seems firmly anchored.
The statute, which was passed overwhelmingly in a 1980 referendum–and took effect two years later–caps municipal tax levies at 2.5 percent of the value of all property, and limits tax increases to 2.5 percent per year plus adjustment for new growth. Communities can exceed the ceilings, but only with voter approval of a tax override.
Everyone agrees that one key to the law’s success has been dramatic growth in state aid to cities and towns, money that has helped offset the restraint on property taxes. The proportion of municipal revenues derived from state aid has increased by one-third since 1981, while local property taxes have gone from 59 percent of municipal budgets in 1981 to 50 percent last year.
But with the days of hefty state aid increases seemingly over and municipal managers squeezed by fast-rising costs for health insurance and salaries, override attempts have been on the rise. The number of override votes has more than doubled over three years, from 33 in 1999 to 81 in 2001. Figures are incomplete for this year, but the trend seems to be continuing. And there are signs of an increasingly divided citizenry, with override votes this spring marked by particularly caustic campaigns and close vote margins.
In Framingham, what started as a feisty campaign sign war degenerated into a literal turf battle, with supporters of both sides reporting lawn signs being ripped from their grassy moorings. “It has been a very nasty fight,” says Duncan Fuller, an opponent of the $7.1 million override, which passed in June by just 358 votes out of more than 13,000 cast.
In Newton, the days leading up to a late April override vote were marred by a mystery mailing to thousands of residents urging voters to defeat the ballot question and “say no to the gay liberal Jewish elite.” Override opponents allege that the incendiary missive was actually a dirty trick by pro-override forces designed to produce a “yes” -vote backlash, but they have yet to produce evidence to back the charge.
The $11.5 million tax increase, earmarked largely for school costs, passed by only 751 votes out of nearly 28,000 cast. But far from viewing the result as evidence of a deep fissure, Newton Mayor David Cohen, who led the campaign for the override, calls the override approval a testament to civic connectedness. “I think it shows that even in a community as large as Newton, a tremendous number of people feel connected to municipal government,” says Cohen.
That rosy view is hardly shared by all. “This city is absolutely divided now along class lines,” says Len Mead, president of the Newton Taxpayers Association, which opposed the tax increase. The override, says Mead, will “chase the most vulnerable people out of their lifelong homes.”
Property taxes are among the most regressive means of raising public dollars, since property values don’t always bear a relationship to owners’ income, particularly for senior citizens. That point was a driving force behind the campaign for the tax cap 22 years ago, led by Citizens for Limited Taxation and its outspoken leader, Barbara Anderson.
But Beckwith, the municipal association director, who has learned to live with, if not necessarily love, Prop. 2 1/2, says if Anderson and her CLT cohorts look like visionary heroes of the hoi polloi, it has more to do with good fortune than good forecasting. He says that declining school enrollment in the 1980s, the low-inflation and tax-generating new growth from two big economic booms, and generous increases in state aid have combined in such a way that the law has “caused pain in a number of communities, but it hasn’t caused strangulation.”
“In other words,” Beckwith says of the Prop. 2 1/2 architects, “they were saved by blind luck.”
Maybe so. But even officials who have to cope with its rigors say the law has brought discipline to municipal budgets and a new level of accountability to local government by requiring the direct consent of voters for tax increases beyond the law’s limits.
Northampton Mayor Claire Higgins says Prop. 2 1/2 unquestionably has made municipal leaders “run their towns much more efficiently than they used to.” Despite fiscal pressures, Higgins has thus far resisted any urge to seek an override for the coming year, opting instead to trim personnel everywhere from the schools to the police in her budget. Municipal health insurance costs in the western Massachusetts city of 28,000 have risen 62 percent over the past five years, and city officials project a further increase of 23 percent for the coming year alone. Higgins has successfully bargained with municipal unions to get employees to pay a bigger share of premiums, from 10 percent two years ago to 20 percent today, but such cost shifting is hardly keeping pace with soaring insurance rates.
She worries that any adjustments to Prop. 2 1/2 “could create some real hardship for people who’ve owned their homes for a long time and whose wages have not kept up.” At the same time, Higgins frets over the structural imbalances in local budgets that only seem likely to grow worse over the next few years. “We need to examine how we’re funding municipal government,” she says, but that should include consideration of “broad-based taxes based on people’s ability to pay.”
Many seem to share Higgins’s aversion to higher property taxes as the way to fill growing municipal budget gaps. But there has thus far been little talk of radical restructuring, such as shifting school funding fully to the state, as several other states have done, a move that would require agreement on a new state revenue stream. For now, that leaves Prop. 2 1/2 in the crosshairs–even though there is little political will to pull the trigger.
State Rep. Susan Pope, a Wayland Republican, drew headlines in March when she declared at a local meeting on state and municipal finances that Prop. 2 1/2 “has outlived its time.”
“I personally think the time has come to do away with 2 1/2,” Pope said, according The MetroWest Daily News. But when asked several weeks later about her comments, Pope insisted they had been “taken out of context,” and pronounced the matter of revisiting Prop. 2 1/2 “a dead issue,” adding, “It’s not going to be looked at.”
“She heard from people,” says a self-satisfied Barbara Anderson, whose group issued a quick e-mail alert to members following Pope’s published comments.
Also hearing from people was state Rep. Deborah Blumer, a Framingham Democrat, who filed an amendment to the House budget that would have scrapped the 2.5 percent limit on annual tax increases and instead allowed municipalities to increase taxes according to a “government services inflation index,” a benchmark she says would be a “real reflection of the cost of delivering services.”
When Blumer’s plan met with a firestorm of opposition, she dropped the amendment and instead called for a special commission to evaluate Prop. 2 1/2. But her House colleagues weren’t even in a studying mood, rejecting the commission on a voice vote. “There was more heat than light going on at that point,” says Blumer. Still, she adds, “it’s a huge issue, and I don’t want to walk away from it.”
“I wouldn’t mess with 2 1/2,” Anderson says in typical make-my-day fashion. “This is an issue you can defeat legislators on without a whole lot of explanation or campaigning.”
To Blumer, that set-in-stone attitude is exactly why Prop. 2 1/2 deserves a look. “It’s a 20-year-old law,” she says. “Two and a half is a very arbitrary number. It’s time we open the doors and spread some light and look at what’s going on. I don’t believe in sacred cows.”
Look all you want. But this seems like one heifer with plenty of life left in it.