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.

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.

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 and allows the Town to fund services and programs we believe the community expects and desires. 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. 

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.

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. 

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?”

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.  

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. 

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

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.

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. 

If approved, the override would go into effect for Fiscal Year 2026, which runs from July 1, 2025 to June 30, 2026. 

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