Frequently Asked Questions

What is Proposition 2 1/2?

Proposition 2 ½ is a Massachusetts law enacted in 1980 that strictly limits the amount of property tax revenue a municipality can raise through real and personal property taxes. This revenue is called the “tax levy.” 

Prop 2 ½ limits how much the tax levy can be increased from year-to-year. The maximum amount a community can levy in any given year is called the “levy limit.”

Under Proposition 2 ½, a community’s levy limit increases automatically by two factors:  

• An incremental increase of 2.5% of the prior year’s levy limit, and
• A dollar amount derived from the value of new construction, additions, renovations, and other growth in the local tax base since the previous year, called “new growth.”

The 2.5% increase and the new growth number are both added to the prior year’s levy limit to reach the current year’s levy limit.

A community can exceed its levy limit with voter approval to permanently increase the levy limit through overrides to support municipal and school operations.

What is an override?

An override is a voter-approved, permanent property tax increase.  It is designed to provide a community with the ability to generate sufficient revenues to fund recurring costs that are likely to continue into the future, such as annual operating expenses for educational and municipal services.  

A “general override,” a “Proposition 2½ override,” or an “operating override” are all different names for the same thing.

By passing an override, the Town can assess taxes beyond the automatic annual 2.5% increase plus new growth.  An override results in a permanent increase in the levy limit. Since this is a permanent increase, the amount of an approved override becomes part of the tax levy each subsequent year. 

What is the difference between an override and a debt exclusion?

While an override results in a permanent tax increase to fund recurring operational expenses, debt exclusions result in a temporary tax increase to pay the debt service from bonding for a specific capital project, such as building a new school.  

Debt exclusions do not become part of the base used to calculate future years’ levy limits. In Middleton, recent debt exclusions include the Middleton Municipal Campus (approved in 2021 and 2023), Howe-Manning construction (2009), the library project (2005), and anticipated projects next year for the Fuller Meadow roof and the Masco capital plan.

What is the role of the voters and the Town Meeting in relation to an override vote? 

An override is a two-step process, a vote at an Annual Town Election (Ballot Vote) and a vote at the Annual Town Meeting, but the two steps can occur in either order. 

In Middleton, the Annual Town Meeting occurs first (on May 13, 2025). Here voters will be asked to appropriate (or approve spending) the additional tax dollars, along with the annual budget appropriations. This will be contingent on approval on the Town Election ballot. 

The Select Board has put ballot questions for an override on the May 20, 2025 Annual Town Election ballot. Voters will be asked to approve an increase in how much the Town may levy in property taxes. 

In other words, voters are authorizing an increase to how much can be raised in property taxes, but it is up to the Town Meeting to approve actual expenditures of this additional property tax revenue. 

What are the ballot questions that voters will be voting on? 

The ballot questions will read as follows: 

Shall the Town of Middleton be allowed to assess an additional $975,000 in real estate and personal property taxes for the purposes of funding Public Safety expenses for the fiscal year beginning July 1, 2025?

Shall the Town of Middleton be allowed to assess an additional $537,276 in real estate and personal property taxes for the purposes of funding Middleton Elementary School expenses for the fiscal year beginning July 1, 2025?

Shall the Town of Middleton be allowed to assess an additional $467,194 in real estate and personal property taxes for the purposes of funding the Masconomet Regional School District assessment for the fiscal year beginning July 1, 2025.

What are the factors that determine whether an override is needed for the Town’s Fiscal Year 2026 Budget? 

Initial forecasts indicated that a Proposition 2 ½ Override would be required in Fiscal Year 2026. This need was first proposed in the FY 2025 Operating Override. The need for additional capacity will not decrease and thus another series of Operating Overrides are proposed this year due to revenue constraints of Proposition 2 ½ as well as limited alternative revenue sources. In addition, budgetary demands have grown due to inflation, higher utility costs, and employee benefits; particularly health insurance. Combined, the Town’s property tax levy, state aid, and other revenue sources do not provide enough capacity to fully fund town budget requests for critical service needs and to fully fund school budget requests without significant cuts to School departments.  

How much will the override increase my taxes? 

In Middleton, the average single-family home is valued at $962,949. The tax impacts are anticipated to be as follows: 

Average Single Family

Without the override, the average single-family home, which (assessed at $962,949) would have an estimated Fiscal Year 2026 tax bill of $11,863, an increase of $414. 

If all three override questions passed, the average single-family home's Fiscal Year 2026’s estimated tax bill would be increased by an additional $578 for a total estimated tax bill of $12,441. Since this is an operating override, this increase is permanent and would continue each subsequent year under the limits of Proposition 2 1/2. The individual cost of each override question for an average single family home breaks down as follows:

Public Safety Override:            $289

Elementary School Override: $154

Masconomet Override:           $135

Total if all three passed:        $578

Property and assessed value can be found here: https://www.axisgis.com/MiddletonMA/ 

How much do tax bills typically increase annually?

The below table shows how the average single-family value and tax bill has changed over the past ten years. In this time span, the average annual increase is approximately 5.15%, including the override that was approved for Fiscal Year 2017 and the debt exclusions for the Middleton Municipal Campus in 2021 and 2023. In addition, the Town has seen substantial growth in the average single family value, as have many communities throughout the region. The tax rate is determined as a direct result of the Town budget and the total valuation of the Town. More data and information on this topic can be found at the MA Department of Revenue: https://www.mass.gov/orgs/division-of-local-services. 

When would the override go into effect? 

If approved, the override would go into effect for Fiscal Year 2026, which runs from July 1, 2025 to June 30, 2026. 

How often does Middleton have an operating override?

Middleton has had one successful operating override in the last 20 years, which was in 2017. Override questions failed in 2025, 2016, and 2005. This data is based on operational overrides and not debt exclusions for municipal or school purposes.  

Where can I find more information about the School Department Budget? What would the impact be if the override is not approved? 

The Middleton Elementary Schools and Masconomet Regional School District have created Budget Information pages with extensive information about their Fiscal Year 2026 Budget as well as details about the impact if the override were to fail. 

Here is a link to the Middleton Elementary Schools budget information page: https://school_union-tri_town-ma-cleardoc.cleargov.com/8448/236019/d 

Here is a link to the Masconomet Regional School District budget information page: https://www.masconomet.org/mascoplanning 

Health insurance costs are increasing significantly in Massachusetts. How has the Town been affected by health insurance cost increases? 

Like private employers and other cities and towns in Massachusetts, Middleton is experiencing significant cost escalation due to health care costs. 

The Fiscal Year 2026 health insurance budget is an approximately $696,000 increase over Fiscal Year 2025 driven by a few factors: 

• Increased number of employees opting to take the Town's health insurance plans. So far in Fiscal Year 2025, there are 27 more employees enrolled in the Town's plans than when the budget was set last year. The Fiscal Year 2026 was increased to account for this new, higher enrollment. 
• Health care cost trends are leading to more expensive claims, resulting in higher health insurance premiums. The Town's health insurance plans are expected to have premium increases of 17.62% in Fiscal Year 2026. This is similar to many other cities and towns in Massachusetts, including the Group Insurance Commission which provides coverage to state and municipal employees and will have a 13% premium increase. All data available indicates that this trend will continue for the next several fiscal years. 

The budgeted figure and enrollment numbers includes both Town of Middleton and Middleton Elementary Schools full-time, benefit eligible employees and retirees. 

What is Free Cash? 

During discussions about municipal budgets, you will offer hear the term "Free Cash" being used. 

The Division of Local Services describes Free Cash as follows: 

Free cash is a revenue source that results from the calculation, as of July 1, of a community's remaining, unrestricted funds from its operations of the previous fiscal year based on the balance sheet as of June 30. It typically includes actual receipts in excess of revenue estimates and unspent amounts in departmental budget line items for the year just ended, plus unexpended free cash from the previous year. Free cash is offset by property tax receivables and certain deficits, and as a result, can be a negative number. Free Cash can be a source of funding used to fund expenses, but since it's not a recurring revenue source (i.e. unlike property tax which can be increased each year), cities and towns are advised to be prudent in how they use Free Cash.

DLS writes: 

As a nonrecurring revenue source, free cash should be restricted to paying one-time expenditures, funding capital projects, or replenishing other reserves. If a community incorporates free cash into revenue source projections for next-year operational expenses, it is prudent to place a percentage restriction on the total free cash to be used. 

In recent years, the Town has had higher Free Cash than the historical trend largely due to the high interest rate environment that enabled the Town to earn more than in the previous low-interest rate era. This will stabilize over the coming years. 

The Town has used Free Cash for one-time capital expenses, as well as contributions to Middleton OPEB and contributions to Stabilization Funds. 

Additional Information

Additional Information regarding Proposition 2 1/2, overrides, and municipal finance are available from the Massachusetts Department of Revenue, such as: 

• DOR's Division of Local Services Guide: Levy Limits: A Primer on Proposition 2 ½
• DOR's Division of Local Services Guide: Proposition 2 ½ Ballot Questions: Requirements and Procedures
• DOR's Division of Local Services  Municipal Finance Training and Resource Center: Proposition 2 ½ Overrides & Exclusions
• MGL Chapter 59, Section 21C
• The Division of Local Services publishes a municipal databank of comparative municipal finance and demographic information: https://www.mass.gov/info-details/division-of-local-services-municipal-databank