Override basics: history, meaning, cost

In two months, Newton voters will vote on – increasing their taxes? Paying for school improvements? Funding new city programs? All of the above? None of the above?

The simple version is that three questions and nearly $15 million are at stake on the ballot on March 14, as officials are calling for an “override” of limits on what the city can raise in taxes. But nothing is that simple, including whether voters will ultimately approve the override questions put forward by Mayor Ruthanne Fuller.

In the coming weeks, the Beacon will drill down into what officials say override funds will be used for, and how various groups are supporting or opposing the override. But here’s a quick primer on all things override.

The ballot questions

First, the actual questions on the ballot. Newton residents will be asked to support three separate measures: One to pay $2.3 million a year for 30 years to repair the Countryside School, one to pay $3.5 million a year over 30 years to repair the Franklin School, and one to add $9.2 million to the city’s general budget. That last amount would remain on the books in perpetuity.

The median single family home value in Newton is assessed at $1.2 million, and the $9.2 million override would add $290 to that family’s tax bill beginning in July. That will increase year over year as overall home values increase.

If the debt exclusions are passed, those will also begin to increase tax bills, with officials estimating increases starting in 2025 and rising to an additional $183 for the median single family tax bill starting in 2030. But that $183 figure will remain stable, officials said, and will ultimately go away once the bonds are paid after 30 years.

Residents can approve all, some or none of these proposals, and city officials say approval of all is necessary to fund services. How will the city get this money? Approval would let officials raise resident and business taxes. How that works – the override – is a bit more complicated to explain.

Overrides and exclusions

Like all cities and towns in Massachusetts, Newton gets most of its budget from property taxes. And like all cities and towns in Massachusetts, Newton has been restricted since 1982 in how much it can raise from those property taxes. Under state law generally known as Prop. 2 ½ , the city can increase its levy – the amount it raises from property taxes, not the tax rate itself – by a maximum of 2.5 percent over the previous year’s levy, plus new growth.

Because property taxes drive Newton’s budget, the city is restricted in how much it can spend. But if officials and residents decide they want to spend more money than Prop. 2 ½  allows, they can approve an increase in the levy that’s larger than 2.5 percent. Newton voters have  approved overrides like this in the past, most recently in 2013. Once the levy has been increased, officials can then increase property taxes.

One kind of override is called a debt exclusion, and is used to pay off bonds for capital projects. This is what would fund the Countryside and Franklin school projects. A debt exclusion raises the levy a set amount for a set period of time – in this case, the combined $5.8 million a year over 30 years. But once those projects are paid off, that money is taken off the levy and taxpayers are off the hook.

But “override” generally refers to what the third question describes – a permanent increase in funds to a city’s operating budget. Operating budgets contain recurring costs like salaries and programs, so the amount added to a levy – $9.2 million in this case – and to future property tax bills is permanent. Fuller’s override proposal spreads that $9.2 million through several departments: $1.4 million for streets, $4.5 million for education, another $775,000 for the Horace Mann School, $1 million for parks and playgrounds, $500,000 for senior programming, $500,000 for climate resilience and $500,000 for tree planting. 

Budget gaps, one-time costs and future funding

Fuller administration officials say they need the money raised through the debt exclusions and override because they can’t pay for city services through the taxes generated by the standard 2.5 percent levy increase. In an online override explainer, they cite major capital projects and unexpected economic changes as contributors, but also a general discrepancy between budget inflation and tax collection.

“Across all City departments, inflation rates for costs have repeatedly exceeded 2.5 percent per year,” the explainer reads. “Construction materials, equipment, healthcare, internal and external labor costs are all examples of cost centers which have historically risen at a rate far greater than 2.5 percent a year.”

Newton voters approved overrides for $11.5 million and $8.4 million in 2002 and 2013, respectively. But they voted down a $5 million override in 1991 and a $12 million override in 2008. Fuller said she viewed overrides as a routine part of bringing more money in for city services, and did not expect them to stop in the future.

“One of the important mechanisms is to periodically have overrides to be able to address either ongoing initiatives that cost more or new initiatives that become important to people who live and work here in Newton,” Fuller said. “It feels absolutely normal to me to expect that overrides are part of the life of the city of Newton … it is expected to do these periodically.”

The $9.2 million brought in by the override could potentially be spent in other areas in future years. While state law requires city officials to spend that money along the breakdowns outlined in Fuller’s proposal during the first year after the override, there are no restrictions on spending in future years. 

Fuller said she would hold to that spending plan and not use override money in different areas.

“As mayor I will always follow the will of the voters and distribute funds as they are allocated in the override,” Fuller said in a statement. “By state law there is no absolute guarantee past the first year that funds in the operating override must be allocated as they were presented to voters. But, that is why we have checks and balances. The City Council will hold future mayors accountable through the annual budget approval process.”

What’s next?

Fuller has scheduled a Virtual Town Hall to discuss the override and debt exclusions for Jan. 26 from 7 – 8 p.m. Numerous public meetings were held in the fall and Fuller said she was “looking forward” to more meetings. Her administration is working on a schedule, and election officials are finalizing a plan for early voting.

Fuller said she understands residents’ concerns about increased taxes and said the city has doubled tax relief assistance for seven programs and is expanding access to tax deferral and water/sewer discount programs.

“My focus is to ensure that every resident has plenty of information to make an informed decision on the override proposal,” Fuller said when asked how she planned to convince residents to support the overrides.

A pro-override advocacy group, Vote Yes For Newton, has registered as a committee with the city’s elections department but no anti-override groups have officially formed yet. Josh Norman, who co-chaired the anti-override campaign in 2013, said he was not in a position to comment on organized opposition now, but that he was opposed to the new override plans and that he knew other residents who are also against the proposals.

“People who would write us off, they do that at their own peril,” Norman said.

CORRECTION: This article was corrected to change the period and increased value of debt exclusion tax payments.