As Annual Town Meeting approaches, the jargon of municipal government fills the air, bewildering newcomers as well as many longtime residents who have forgotten what they learned during budget season the previous year. Here is a guide to the terms you will be hearing from Town Meeting speakers in the Cronin Auditorium Tuesday and Wednesday, April 5 and 6.
Articles: Items of business to be voted on at Town Meeting. The Town Meeting warrant consists of articles, each of which is given a number.
Available funds (often referred to as “free cash”): Typically money that has been raised and appropriated in a previous year but not spent for its intended purpose. By a town meeting vote, these funds are generally placed in one of the town’s “savings accounts,” such as the Stabilization Fund or the Capital Planning and Investment Fund, where they are available to be appropriated for a new purpose. Available funds can also come from one of the town’s trust funds.
Calculator: The calculator, which appears on page 13 of this year’s warrant booklet, is a forecast of town budgets through FY2021. Though it includes future spending requests that may be revised or never approved, it can help planners anticipate future surpluses or deficits and take appropriate action. The assumptions used to create the forecasts are listed on page 12 of the warrant booklet.
Capital budget: Capital projects, including land purchases, are those that cost more than $20,000 and have a useful life of more than five years. Capital expenditures are projected for five years in Harvard.
CPA fund: The Community Preservation Act, adopted by Harvard in 2001, permits Harvard to levy a real estate surtax of 1.1 percent on Harvard properties with the possibility of matching funds provided by the state. The fund can be spent on conservation, historic preservation, and affordable housing. A minimum 10 percent of the annual income must be spent or reserved for each area.
Debt exclusion (also known as excluded debt): An action to exclude the debt service costs for a particular project, such as the elementary school feasibility study, from the levy limit. By approving a debt exclusion, a community calculates its annual levy limit under Proposition 2½ and then adds the excluded debt service cost. The addition is reflected in a higher tax rate and requires a two-thirds vote at Town Meeting and a majority vote at an election.
Fiscal year: Fiscal 2017 begins July 1, 2016, and ends June 30, 2017.
Free cash: Funds remaining from line items in Harvard’s previous year’s budget, plus revenue received in excess of budget, less any unpaid back taxes, and reduced by any fund deficits. These funds are certified each year by the Department of Revenue and are then available to the town.
General Fund: This term refers to the accounting location for money taken in or paid out by the town, including federal and state reimbursements. The money may be appropriated only by a majority vote of Town Meeting.
Home-rule petition: A petition to the state Legislature to enact special legislation pertaining to Harvard.
Levy: The amount of money that Harvard can raise through real and personal property taxes. The levy for fiscal 2017 is $18,848,784.
Levy ceiling: The maximum amount Harvard can raise through real and personal property taxes. The levy ceiling is determined by calculating 2.5 percent of the total full and fair cash value of taxable property in a city or town.
Levy limit: The dollars Harvard can raise by taxation under Proposition 2½ as certified by the Department of Revenue. This is the maximum the tax levy can be in a given year.
Local receipts: Income derived by the town from motor vehicle excise taxes, Transfer Station fees, licenses and permits, penalties and interest on taxes, and so on.
New growth: The additional tax revenue generated by new construction, renovations, and other increases in the property tax base during a calendar year. It does not include value increases caused by normal market forces or by revaluations. The amount is added to the levy limit in addition to the 2.5 percent inflation increase allowed under Proposition 2½.
Omnibus budget: For convenience, all recommended appropriations for operating expenses of Harvard’s various town departments are gathered in one multipage article for the Annual Town Meeting. The period covered by the omnibus budget is the upcoming fiscal year.
Override: A vote by the town to increase the levy limit allowed under Proposition 2½. Such an increase requires a majority vote at both a town meeting and an election. Since 1980, towns have been limited in the amount of property tax they may levy without an override vote by Proposition 2½. This limitation requires an increase in the property tax to be held to no more than 2.5 percent of the previous year’s tax levy plus the value of taxable property added by new construction (new growth). Harvard’s last override was in 2009.
Recap: A projection of all revenue and spending expected in the coming fiscal year. A recap will also include actual figures from prior years as well as the anticipated figures for the current year. This year’s recap appears on page 4 of the warrant booklet.
Reserve Fund: An annual fund established by a town meeting warrant article to cover extraordinary or unforeseen expenses during each fiscal year. Any department needing to spend more than its budget on a particular line item must request that the Finance Committee make a transfer from the Reserve Fund. Sums not transferred by June 30 revert to the overlay reserve. The two largest items in any given year that require Reserve Fund transfers are typically extra money for snow removal and unexpected spending for special education students.
Stabilization Fund: A permanent fund used to smooth out annual increases in planned or unplanned expenses or capital projects. Harvard has two such funds: One is known as the Stabilization Fund to cover increases in the town budget, and a second is called the Capital Planning and Investment Fund for capital projects.
Town Meeting: The legislative branch of local government. A meeting at which registered voters conduct the business of governing Harvard, including making laws and expending money.
Transfers: Money appropriated for use in a line item of Harvard’s omnibus budget and later proposed to be moved to another line item or to be expended for another purpose. It is also the money from any designated fund proposed for use in a warrant article. Must be approved by a majority vote of Town Meeting.
Sources:
Harvard League of Women Voters, “Guide to Local Government” (Glossary)
Harvard 2014 Annual Town Meeting warrant booklet, “A Town Meeting Vocabulary”
Massachusetts Department of Revenue, Department of Local Services, “Municipal Finance Glossary” (May 2008)
