Milton FY2026 Override

Frequently Asked Questions

What is Proposition  2 ½?

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. Prop 2 ½ gives communities flexibility 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.

How does an override work? 

By passing an override, the Town can assess taxes in excess of the automatic annual 2.5% increase and any increase due to 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 that can be increased by 2.5% each subsequent year. 

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

While an override results in a permanent tax increase that is used 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.  

For debt exclusions, the debt service costs are added to the levy limit for the life of the debt only (typically between 10-30 years). Thus, unlike overrides, debt exclusions do not become part of the base used to calculate future years’ levy limits. In Milton, recent debt exclusions include the fire station projects, the library project, and the school projects/renovations from the early 2000s.

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

An override is a two-step process, but the two steps can occur in either order. The  Select Board has put a ballot question for an override on the April 29, 2025 Annual Town Election ballot. Voters will be asked to approve an increase in how much the Town may levy in property taxes. 

Town Meeting will be able to then appropriate (or approve spending) the additional tax dollars approved by voters, along with the annual budget appropriations. 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 is the ballot questions that voters will be voting on? 

The ballot question will read as follows: 

“Shall the Town of Milton be allowed to assess an additional $8,800,000.00 in real estate and personal property taxes for the purpose of funding the operating budgets of the Town and the Public Schools and an additional $700,000.00 in real estate and personal property taxes for the purpose of funding an Operating Budget Stabilization Fund 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 and expectations were that a Proposition 2 ½ Override would be required in Fiscal Year 2026 because of the revenue constraints of Proposition 2 ½, limited alternative revenue sources, and the drawdown in federal funds that had supported budgets in prior fiscal years. In addition, budgetary demands have grown in recent years due to inflation, higher utility costs, more expensive equipment, 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 and school budget requests without significant cuts to Town and School departments.  

What is the amount of the proposed override? 

On March 11, 2025 the Select Board voted to include a ballot question on the April 29, 2025 Annual Town Election Ballot for a $9.5 million override of which $8.8 million would fund town and school operating budgets and $700,000 would fund an operating budget stabilization fund. 

How much will the override increase my taxes? 

In Milton, the average single-family home is valued at $1,028,457 and the median single-family home is valued at $889,400. The tax impacts are anticipated to be as follows: 

Average Single Family

Without the override, the average single-family home, which is currently assessed at $1,028,457 would have an estimated Fiscal Year 2026 tax bill of $11,794, an increase of $389. 

With the override, the average single-family home's Fiscal Year 2026’s estimated tax bill would be increased by an additional $1,063 for a total estimated tax bill of $12,857. Since this is an operating override, this increase is permanent and would increase each subsequent year under the limits of Proposition 2 1/2. 

Median Single Family 

Without the override, the median single-family home, which is currently assessed at $889,400 would have an estimated Fiscal Year 2026 tax bill of $10,199, an increase of $336.

With the override, the median single family home’s Fiscal Year 2026’s estimated tax bill would be increased by an additional $920 for a total estimated tax bill of $11,119. Since this is a an operating override, this increase is permanent and would increase each subsequent year under the limits of Proposition 2 1/2. 

In addition, the Town has created a calculator that residents may use to see how the override would impact their property, using Fiscal Year 2025 assessed values. The calculator is available here: 

https://www.mapsonline.net/miltonma/forms/tablet.html?id=246718285 

Additional information regarding property values is available on the Town's Assessors webpage: https://milton.patriotproperties.com/default.asp 

How much do tax bills typically increase annually?

As noted above, under Proposition 2 1/2, the total tax levy that Milton can assess against property owners may increase 2.5% per year, plus New Growth (additions, renovations, new construction). 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 3.8%, including the override that was approved for Fiscal Year 2018.  

The override includes funding for an Operating Budget Stabilization Fund. What is that? 

The override includes $700,000 for an Operating Budget Stabilization Fund which means those tax revenues would be dedicated to a stabilization fund to be used in future years to support the Town-wide budget. The Town may only withdraw funding from a stabilization fund with 2/3 approval of Town Meeting. Since property tax growth is limited by Proposition 2 1/2, as noted above, setting aside additional funding for use in budget years following FY26 means that the Town will have more resources to support level service budget requests in future years and help reduce the likelihood of needing an operating override in the near-term. Many communities utilize override stabilization funds in this manner, including Braintree which established one through its override in 2024. 

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 Milton have an operating override?

Milton has had three operating overrides in the last 20 years, which were in 2017, 2009, and 2006. 

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

The Milton Public Schools has created a Budget Information page with extensive information about their Fiscal Year 2026 Budget as well as details about the impact if the override were to fail. There are 66 positions that are expected to be cut if the override were to fail. 

Here is a link to the school budget information page: https://www.miltonps.org/page/mps-fy26-budget-information 

The school department has also posted a FAQ document: MPS Budget FAQs 2025

What would the impact be on Town departments if the override is not approved? 

Both Town and School departments would have to significantly reduce their budgets if the override is not approved.  

The Town Administrator described the impacts at the Select Board's meeting on March 25, 2025, which included the following list of budget cuts: 

• Select Board: Town Planner vacant; Shared Housing Services Office; Wildcat Den rent ($124,000)
• Council on Aging: Supplies budget ($15,000)
• Master Plan Implementation Committee Studies/Projects ($30,000)
• Police: 2 patrol officer positions; overtime; cruiser replacement ($236,000)
• Fire: 2 firefighter positions; overtime; equipment ($245,000)
• Parks: Wildcat Den position ($26,500)
• Cemetery: Seasonal; maintenance ($35,000)
• Health: Professional Services ($8,000)
• Library: Sunday hours; Summer Saturdays; Books and Materials ($70,000)
• DPW: Traffic Engineering consultant; Engineering co-ops; seasonal staff; vehicle maintenance ($142,000)
• Veterans: Veterans benefits ($30,000)
• IT: Software support/upgrades ($20,000)
• Wage Set Aside: remove budgeted adjustment for vacant positions ($12,360)

What other expenses are impacting the Town's budget? 

The Town's budget can be roughly divided into three broad categories: Town departments like Police, Fire, and DPW, Schools, and shared expenses. Shared expenses is a broad category of budget appropriations that provide funding for expenses that are shared between the other departments. 

For example, the "Shared Expenses" budget category includes:

• Capital budget expenses 
• Debt service 
• Health insurance for all employees;
• The Town's Medicare tax payment 
• Contributions to the Milton Retirement system for eligible employees;
  • Eligible employees are those employees working 30 hours per work or more for town and schools, except teachers who are part of the state teachers retirement system
• Payments to the Other Post Employee Benefits Trust fund;
• General insurance, such as property and general liability and workers compensation for town and schools 
• Unemployment benefits 
• Contributions to stabilization funds

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, Milton is experiencing significant cost escalation due to health care costs. 

The Fiscal Year 2026 health insurance budget is an approximately $3.2 million 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 14 more employees enrolled in the Town's active 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 14% 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. 
• In addition, the Fiscal Year 2025 budget was offset by the use of one-time funding sources: a one pay-period premium holiday and the use of federal funds to offset health insurance costs.

If the override is not approved, when would Milton expect another override vote? 

In the Town Administrator's budget recommendation if an override is not approved, there is use of one-time funds (free cash) to support budgets to mitigate even deeper cuts. This use of one-time funds likely means that an override would be necessary Fiscal Year 2027 because there is no guarantee that the Town will have the funding available to support the non-override budget next year. 

If the override is approved, when would Milton expect another override vote? 

In the override ballot question and in the budget that is being submitted to Town Meeting, several steps are being taken to build greater fiscal sustainability in the years immediately following Fiscal Year 2026. 

First, the ballot question also includes an increase in property taxes to fund an "Operating Budget Stabilization Fund" (see explanation of this fund above), which would provide a source of recurring property tax revenue for future budget years. 

Second, the budget recommended by the Town Administrator includes $2 million in Free Cash being appropriated to the Operating Budget Stabilization Fund to further capitalize this account for use to support budgets in future years. 

Despite these steps being taken, there is no certainty that revenues will outpace expenditures, whether due to macroeconomic forces (i.e. a recession or some other economic impact) or due to cost trends, particularly for health insurance which could drive costs above anticipated revenues. 

In order to avoid another override in the near-term, both Town and School departmental budgets must increase as slowly as possible in the forthcoming fiscal years. 

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. 

In general terms, Free Cash is: (surplus revenues + unspent departmental budget funds) - outstanding liabilities. 

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 significantly higher Free Cash than the historical trend for a number of reasons, but largely due to (1) conservative revenue forecasts in the wake of the economic uncertainty of COVID-19 and (2) high interest rate environment that enabled the Town to earn much more on its money than in the previous low-interest rate era. 

The Town has used Free Cash for capital expenses (approx. $1 million per year), contributions to Milton Retirement/OPEB, contributions to Stabilization Funds, and to support operating budgets. 

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