NEWS ITEM: Marblehead voters reject $2.47 million Proposition 2 1/2 tax-cap override, 53-47%, forcing cuts in school, police and public works budgets.
Whoa. By Prop. 2 1/2 override standards, that’s a landslide.
Double-whoa, it’s Marblehead, a fairly reliable tax-overriding town in the past, but also home for many years to the godmother of Prop. 2 1/2, the late Barbara Anderson and her longtime Citizens for Limited Taxation partner, Chip Ford.
“I’d lost count of the number and total amount of debt exclusion overrides that passed [in Marblehead] while the economy was solid,” recalls Ford, who fled the town for low-tax Kentucky several years ago. “Considering the hits to their retirement and investment accounts, along with the accumulated effects of Bidenflation, taxpayers are tapped out.”
(Are the 70 countries experiencing inflation in excess of ten percent naming their suffering after their head of state too? Probably.)
It’s hard to extrapolate a hot take off one town’s vote, or even from the entire 2023 override season. Few communities even try to lift the 43-year-old cap. But according to Geoff Beckwith, longtime CEO of the Massachusetts Municipal Association, “we might be in the early stages of seeing more.”
Why? COVID did a number on local budgets that counted on income from lodging and meals taxes. Tourism and dining out are back, but inflation is far outstripping local revenues. Soaring car prices and scarcity of supplies left a nasty dent in auto excise taxes. And just wait until the valuation process takes full account of the collapse of the commercial property market.
Fallout from the virus is just part of the picture. Beckwith notes state tax revenues are 50% higher than during the Great Recession of 2008, but local aid levels are 40% lower when adjusted for inflation. “We’re on the front end of a trend of significant budget stress,” says Beckwith.
Champions of statutory tax limitation like Ford have heard that lament before. Forecasts were dire when Proposition 2 1/2 passed in 1980, but with the exception of fragile sections of the coastline, Massachusetts is still here.
Thriving, in fact – but for how much longer?
The early 1980s fortuitously coincided with a spectacular run of low inflation; before COVID came calling, the US inflation rate topped five percent only once since 1982, during the 1990 recession. Good times never seemed so good to pols who signed off on generous contracts for public-employee unions. You get a gleaming new school, you get a new fire station, everyone into the new municipal pool! So good, so good, so good!
Good for the residents and good for property values, but not so great for the legions priced out of living in paradise and others grandfathered in but now facing the cost of living squeeze. Caught in the middle: citizens whose eyes were bigger than their mouths and short-sighted politicians who hosted the buffet. Notes Beckwith: “The general human impulse is to wish the problem away and hope it solves itself.”
Maybe we should have thought twice, but we didn’t. We wanted the best for our kids and ourselves, so we ordered liberally from the menu and didn’t worry too much about the tab.
Now it’s coming due, and thanks to Proposition 2 1/2, the voters are in charge. “Everyone of necessity is tightening their belts, and government is not an exception,” says Ford. “Bring on the overrides and see how that works out.”