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 Overview of Harvard Town Finances
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Not
sure what “free cash” means? “stabilization fund?”
“overlay?” See the Glossary
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In Massachusetts, local governments must finance most
basic services — education, police and fire protection, and
local roads. Other programs, including conservation, libraries, recreation,
ambulance, and health and sanitation, are also financed, although
they are not mandated by the state. |
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Harvard decides once a year how much to spend by a series
of votes at annual town meeting, after which the Board of Assessors
establishes a tax rate sufficient to cover the amount to be raised
less estimated revenue and less amounts transferred from free cash
or from borrowing. Special town meetings held after the annual meeting
can fine tune the spending so long as the tax rate has not yet been
approved by the state. |
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Finance
Personnel Roles
| Finance Committee |
| The Finance Committee consists of seven citizen
volunteers appointed for three-year terms by the Town Moderator.
To carry out its primary function, which is to advise town meeting,
the committee |
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Reviews each budget request and warrant article. |
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Publishes and distributes a report of recommendations on each
proposed expenditure. This report accompanies the annual town
meeting warrant. |
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Analyzes trends in the town’s finances, predicts capital
needs, makes recommendations for the future operation of the
town, and alerts voters to possible fiscal problems. |
| The Finance Committee also authorizes transfers
of money from the town’s reserve fund. |
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| Finance Department |
Harvard’s Finance Deparment is a full-time
paid staff with offices on the first floor of Town Hall. It
carries out the day to day financial business of the town,
including property assessment, tax collection, data processing,
accounts payable and receivable, payroll, borrowing, investing,
and compilation of department budgets. Finance Department
personnel include |
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The Finance Director (who also serves as the school
system’s business manager) |
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The Principal Assessor and an assistant |
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The Treasurer/Tax Collector and an assistant |
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The Town Accountant. |
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| Board of Assessors |
The Board of Assessors consists of three citizen
volunteers, appointed by the Board of Selectmen for three-year
terms. The board is responsible for |
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Assessing the value of all taxable real and personal
property |
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Calculating the tax rate |
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Recommending the classification rate of different types of
property (residential, agricultural, commercial, industrial) |
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Deciding all questions relating to tax abatements, exemptions,
and deferrals |
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Estimating revenue available from taxes. |
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Town
Expenditures
| Omnibus Budget
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The omnibus budget groups together all proposed appropriations
for the operating expenses of town departments in one
article of the annual town meeting warrant. Fringe benefits
for town employees, principal and interest payments
on debt, and certain recurring capital expenses are
also included in the omnibus budget. Each line item
of the budget is numbered and may be amended (increased
or decreased) by a majority vote. The period covered
by the omnibus budget is the following fiscal year,
July 1 to June 30. |
| By custom, the omnibus budget is presented in three
columns — the previous year’s actual expenditures,
the current year’s budget, and the figure recommended
by the Finance Committee for the coming year. |
| The omnibus budget is prepared by the Finance Committee
after reviewing the budget requests of all town boards
and committees. |
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| Capital Outlays |
Capital expenditures (not including recurring capital
expenses) are presented as separate warrant articles
and are not included in the omnibus budget line items.
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| Other Financial Warrant Articles |
The warrant may also include requests for non-capital
expenditures (e.g. fees for consultants, minor repairs,
etc). |
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| Reserve Fund |
By custom, the Finance Committee inserts a warrant
article following the omnibus budget article to request
a specific amount of money to be placed in the town's
reserve fund. |
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| Cherry Sheet Expenses |
The state’s “cherry sheet” (named
for its original pink color) is sent to the town annually
detailing certain assessments, including a portion of
retired school employee health care costs, various regional
costs, and adjustments to previous years figures. |
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| Overlay |
| The Board of Assessors determines the
overlay, which offsets the estimated amount of tax abatements
and exemptions. After all taxes for a year have been
paid or abated, the unused overlay balance is held in
an account called the overlay surplus. |
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Town
Income
| Property Taxes
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| Property taxes, based on the assessed valuation of local
property, currently account for about 70 percent of all
town income. |
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| Cherry Sheet Income |
The state’s “cherry sheet” (named
for its original pink color) is sent to the town annually
detailing certain income, including state aid for schools,
lottery proceeds, reimbursements for state-owned lands,
and minor grants reserved for various programs (e.g.
library, school lunch). |
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| Local Receipts |
Other town income comes from motor vehicle excise
tax, investment interest, fines received from the court
system, transfer station fees, beach stickers, permits,
licenses, certificates, filings, and gifts. |
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| Transfers |
Transfers may be voted at town meeting to offset
expenses. Transfers may be from free cash, from overlay,
or from stabilization fund. |
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Setting
the Tax Rate
The tax rate for
any fiscal year equals the tax levy (the amount of money to
be raised by taxation) divided by the total assessed valuation
of the town, as determined by the Board of Assessors.
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| Calculating the Tax
Levy |
The tax levy is the amount of money to be
raised by property taxation and is limited by Proposition
2 1/2. The levy may also be expressed as the amount required
to balance the difference between the town's expenses
and its projected income. |
| The levy limit (per Prop 2 1/2) may be increased by
the amount of debt principal and interest, to the extent
the town has voted to exclude that debt. The limit may
also be increased by a tax override vote. |
| Calculating the Total Assessed Valuation |
The Board of Assessors determines the value of all property
based on state formulas reflecting fair market values.
Revaluations are done every three years, and interim year
adjustments are made all other years. The figure must
be approved by the state’s Department of Revenue. |
| There are several property classifications, including
residential, agricultural, forest, and commercial. The
assessed valuation formulas differ per classification. |
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Tax
Bills
The Treasurer/Tax Collector prepares and sends tax bills
to all property owners at the beginning of each fiscal
year. Taxes are payable in quarterly installments due
at the beginning of August, November, February, and May.
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Preliminary vs
Actual Tax |
Because the amount of income coming from
the state is not known before June 30, the tax rate
can’t be finalized in time for property taxes
to be computed for the coming fiscal year. Therefore,
the tax bills for the first two quarters are estimated
based on the current year’s rate and are considered
“preliminary”. The actual tax amount is
computed after the tax rate is known, and adjustments
are made for the estimated taxes that were already paid. |
| Community Preservation Fund Surcharge |
A surcharge of 1.1% for the Community Preservation
Fund is added to the tax amount shown on each tax bill.
Harvard voted to adopt this surcharge in 2001. |
| Abatements |
Abatements are tax reductions granted when the Assessors
agree with the property owner that the assessed value
of the property has been overstated. |
| Exemptions |
State law provides for annual exemptions granted to
property owners who meet certain income and asset criteria.
Exemptions are granted on a year-by-year basis. |
| Deferrals |
Taxpayers aged 65 or older may defer some or all of
their property tax until they die or sell the property.
Interest is charged on the deferred taxes, and a lien
is placed on the property to ensure payment. |
| Tax Relief Work Program |
Taxpayers aged 65 or older may apply for a tax waiver
of up to $750 in exchange for time spent in service
to the community. |
| Delinquent Tax Payments |
Delinquent taxpayers are assessed interest. If the
interest and taxes are not eventually paid, the town
may assign a lien against the property. The owner has
the right of redemption for a period of several years
and may live on the property until the town forecloses. |
| Non-Taxable Properties |
Certain properties in Harvard are not taxed. These
include Fruitlands, the Harvard Observatory, the churches,
all town, state, and federal property, the Conservation
Trust land, and the portions of St. Benedict Center
used for school and religious purposes. |
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Harvard’s
Budget Calendar
(Fiscal year is July 1 through June 30)
| September - November
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Budgets are deliberated within
town committees and departments. |
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| December |
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Capital budgets are due. |
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Operating budgets are due. |
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| January-February |
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Warrant articles are submitted to the
Board of Selectmen. |
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Committees and departments meet with Finance
Committee to negotiate final budget amounts. |
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| March |
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Selectmen finalize and post warrant
for annual town meeting. |
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Finance Committee report (including Capital
Plan Committee report and Community Preservation Committee
report) is distributed. |
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Annual Town Meeting is held, usually on
the last Saturday in March. |
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| April |
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Town elections are held on the Tuesday
following Annual Town Meeting. The ballot may include
question(s) regarding capital exclusion, debt exclusion,
and/or levy limit override, for which a majority vote
is needed. |
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