Government budgets can be tough to understand, but now the Town of Lexington, Massachusetts is providing the next generation of accessibility in financial information that allows citizens to view, engage with, and discuss.
AbatementAn Abatement is a reduction of a tax liability. The Board of Assessors grants abatements for real estate and personal property taxes in cases where an individual's assessed valuation is determined to be in excess of fair market value.
Capital (Includes Debt Service)The Town's capital improvements program policies call for the allocation of approximately 5% of the general fund revenues to the capital budget. This is exclusive of dedicated funding sources such as enterprise funds, grants, and Proposition 2 1/2 debt exclusion projects.
Cherry SheetCherry-colored form showing state and county charges and reimbursement to the Town as certified by the State Director of Accounts.
CPAThe Community Preservation Act (CPA) is a Massachusetts state law (M.G.L. Chapter 44B) passed in 2000. It enables adopting communities to raise funds to create a local dedicated fund for open space preservation, preservation of historic resources, development of affordable housing, and the acquisition and development of outdoor recreational facilities. The CPA tax is calculated as a 3% surcharge to property taxes.
Debt ExclusionThe amount of taxes assessed in excess of the Proposition 2.5 levy limit for the payment of debt service costs, subject to a popular referendum. Two-thirds of the Selectmen and a majority of citizens voting must approve the exclusion. These funds are raised to retire the debt service for the project. They are not added to the tax levy limit for the following fiscal year.
Debt ServicePayment of interest and principal on an obligation resulting from the issuance of bonds.
Enterprise FundAn account supported by user fees for a specific service that the Town operates as a separate business (e.g. Water, Sewer, Recreation). Enterprise funds do not depend on taxes for operating revenue as user fee revenue and expenses are balanced over the long run. Budgeting for all Enterprise Funds is done on a Generally Accepted Accounting Practices (GAAP) basis.
Fines and ForfeituresRevenue collected from court fines, penalty charges for overdue taxes along with non-criminal fines are included in this category.
Fiscal YearJuly 1 through June 31.
General FundRevenues derived from the tax levy, state aid, local receipts and available funds are considered General Fund revenues. The General Fund is distinguished from Enterprise Funds and Special Revenue Funds.
Local ReceiptsA category of revenue sources including school department charges for services, investment income, fines and forfeitures, building permits and excise taxes. These revenues are not considered part of the Proposition 2.5 Tax Levy.
MWRAMassachusetts Water Resources Authority, from which the Town purchases water at a wholesale rate in the form of annual assessments to the Water and Wastewater (Sewer) departments.
OPEBOther Post Employment Benefits. These are benefits that an employee will begin to receive at the start of retirement. This does not include pension benefits paid to the retired employee. Other post-employment benefits that a retiree can be compensated for are life insurance premiums, healthcare premiums and deferred-compensation arrangements.
OverlayThe amount reserved for funding property tax abatements and exemptions granted by the Board of Assessors.
OverrideAn action taken by the voters of the town to exceed the limit placed on tax revenue growth by the State tax limitation law known as Proposition 2.5. The tax levy limit can be exceeded only if a majority of residents voting approve an override. This sum is then added to the base levy for the next fiscal year and becomes a permanent addition to the tax levy limit.
Personal ServicesA line on the program, subprogram and element sheets which refers to the total of the following objects of expenditure: Wages, Overtime, and Other Compensation.
Proposition 2.5A tax limitation measure passed by Massachusetts voters in 1980 which limits the growth of the total property tax levy to 2.5% per year. In other words, the total revenue allowed to be raised through real estate and personal property taxes cannot increase by more than 2.5% from one fiscal year to the next. New construction values are in addition to this limit. Two provisions within Proposition 2.5 allow the citizens of a community by popular vote to authorize the Town to raise taxes above the tax levy limit: an operating override or a debt exclusion.
Reserve FundAn amount set aside annually within the budget of a city or town to provide a funding source for "extraordinary and unforeseen" expenditures. In a town, the Finance (or Appropriation) Committee can authorize transfers from this fund.
Stabilization FundMassachusetts General Law Ch.40, Sec. 5B, allows a municipality to appropriate in any year an amount not exceeding ten percent of the amount raised in the preceding fiscal year; the aggregate amount in the fund shall not exceed ten percent of the equalized valuation of the municipality. The treasurer shall be custodian of the fund and may invest the proceeds legally; any interest earned shall remain with the fund. Money from the Stabilization Fund may be appropriated for any lawful purpose by two-thirds vote of Town Meeting. In addition to the General Stabilization Fund, the town has stabilization funds for specific purposes, including the Transportation Demand Management Fund, Traffic Mitigation Fund, Special Education Fund, Other Post Employment Benefits (OPEB) Fund, and the Capital Projects/Debt Service/Building Renewal Fund.
Tax LevyThe total amount to be raised through real estate and personal property taxes. Lexington property owners pay taxes to the Town based on the assessed value of their real and/or personal property. Each year the Board of Selectmen conducts a tax classification hearing to determine a tax rate. The Town Assessor makes adjustments to real estate values in order to properly reflect fair market value. In addition to real estate, businesses may also pay a personal property tax (set at the commercial rate) based on the value of their professional equipment, furniture and fixtures. The amount of taxes a property owner pays is determined by multiplying the applicable tax rate by the valuation. For example, if the tax rate is $10 and a property's assessed value is $100,000, the property owner will pay $10 times $100,000/1,000, or $1,000. Tax levy revenues are the largest source of funding for the Town.
Tax Levy LimitThe maximum amount that can be raised by a municipality within Proposition 2.5.
Tax RateThe amount of tax levied for each $1,000 of assessed valuation.