University of New Hampshire Law Review


Trevor J. Brown


Strict property tax caps are statutory measures that limit municipalities from raising property taxes by more than a certain percentage each fiscal year. In addition, they place a ceiling on the total amount of real and personal property tax revenue a municipality can raise annually. Often spearheaded by voter initiative, strict property tax caps are championed by proponents as a way to limit taxes and increase civic participation. Conversely, detractors frame caps as artificial barriers that improperly constrain local governments in their taxing powers.

Massachusetts voters approved a strict property tax cap, Proposition 2 1⁄2, in 1980. Proposition 2 1⁄2 provides that communities may increase taxes on real and personal property annually by no more than 2.5% of the total fair cash value of such property. Further, it states that the total annual property tax revenue raised by municipalities cannot surpass 2.5% of the assessed value of all taxable property in each community.

In the three-and-a-half decades since Proposition 2 1⁄2 was adopted, many cities and towns have found that they cannot raise sufficient revenue to meet their communities’ needs because of the restrictions imposed by the cap. However, the statute does contain a side-step maneuver: a community can override its levy limit with a majority vote.

This Note examines the total number of override votes—attempted and successful—from 1980 through 2010. In doing so, it assesses the impact Proposition 2 1⁄2 has had and is continuing to have on municipalities, namely the services local governments provide to their residents. The data indicates that the number of proposed override votes has increased over time, as communities have found that they are unable to meet their needs under the 2.5% increase limit. Further, the vote totals make clear that successful override votes happen more frequently in wealthier communities versus poorer communities.

Based on this data, this Note argues that Proposition 2 1⁄2’s 2.5% levy cap is an unrealistic and artificial barrier. Strict property tax caps place arbitrary limits on the amounts municipalities can raise taxes, without regard to changes in inflation, the cost of providing services, or community needs. The Note concludes by suggesting potential alternatives moving forward.

Repository Citation

Trevor J. Brown, Strict Property Tax Caps: A Case Study of Massachusetts's Proposition 2 1/2, its Shortcomings, and the Path Forward, 16 U.N.H. L. Rev. 359 (2018)