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The Levy Limit

Later in the week I'll be posting a comparison of taxes and other socioeconomic data between Quincy and similar communities in the 2000's. One of the points of comparison will be the levy limit, so I figured I'd write a short post first that offered a refresher on the basics first.

What is the Levy Limit?

The levy limit is one of the basic caps on how much a municipality can tax its property owners - it prevents property taxes from increasing too drastically year over year. For almost three decades, Proposition 2½ has imposed this limit on communities, which sets the maximum property tax that can be levied at 2.5% higher than the previous year's levy limit, plus exceptions.

As expected with government, there are many exceptions.

The first is new growth. If a developer comes into a city and adds millions of dollars of value to an empty lot, the city can tax it - new growth adds to the limit each year.

The second is actually a whole class of exceptions - Proposition 2½ Overrides. For a small class of expenses, such as servicing debt, a community may temporarily override their level limit. We mostly see overrides in the news in the context of a vote, but not all overides need voter approval.

Last, there is the levy ceiling. Where the levy limit caps tax growth, the levy ceiling caps total taxes. Set at 2.5% of the total full and fair cash value of all taxable property in the community. If the levy limit, though the normal 2.5% increase and new growth, would go over the levy ceiling, it is brought back down to the ceiling for that fiscal year.

The normal increase, new growth, and overrides are added up to get the new limit:

This Year's Limit = (Last Year's Limit) x 1.025 + New Growth + Overrides

If that result would put the limit over the levy ceiling, though, the limit gets set to the ceiling.

Where Can I Find These Data?

The Division of Local Services at the state Department of Revenue. From there, navigate to "MDM/TAB" which brings you to the Municipal Data and Financial Management homepage, where there is a huge variety of data on communities, their taxes, and their aid.

Later in the week I'll post some comparison numbers, both historic and from different South Shore communities.