Before Proposition 2 1/2 went into effect in Massachusetts in fiscal year 1982, the amount to be raised by the property tax in each community was essentially determined by what the community decided to spend in the coming year, either through its Annual Town Meeting and Town Council. In brief, budgets were determined, and then tax rates were set to raise that amount.
With proposition 2 1/2 in effect, the process is reversed. The tax limitation law sets the maximum amount a community may collect from the property tax; budgets must be made to fit within that limit (or within the increased limits of any overrides adopted by the voters).
The Town meeting adopts a budget that reflects the funds to be raised through the levy and the additional funds from other sources, such as state aid and local receipts from fees and user charges. The amount to be collected from the property tax (called the "levy") is divided among the local taxpayers in proportion to the value of their property.
Appears in: Property Tax FAQs