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In 1980, a tax revolt that reshaped how every city and town in Massachusetts raises revenue was driven in part by Barbara Anderson, a Marblehead resident and one of the leading figures behind the campaign.
More than four decades later, in the town closely associated with Proposition 2 1/2, local officials say the law is increasingly at odds with the financial reality facing the town today.
The law limits how much a community can raise in property taxes each year, generally capping annual increases at 2.5% plus new growth.
But the cost of running a town no longer follows that same trajectory — and hasn’t for years.
A constraint that compounds over time
In Marblehead, where new development has remained limited, that formula has produced a steady but constrained increase in revenue.
For much of the period from 2008 through 2017, the town’s levy limit — the maximum amount it can raise in property taxes — and overall spending remained closely aligned, with revenue growth modestly outpacing spending in the earlier years before the two converged by the mid-2010s.
Indexed to a common baseline with 2008 set at 100, the data allows changes in costs and revenue growth to be compared on the same scale. By 2017, both rose to the mid-130s, or roughly 36% above their 2008 levels, reflecting a period when the constraints of Proposition 2 1/2 were more manageable within the town’s budget.
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“A lot of towns are finding the constraints of Proposition 2 1/2 really difficult these days,” said Phineas Baxandall of the Massachusetts Budget and Policy Center, adding that the override process “is onerous and creates uncertainty.”
Over time, he said, the law has become familiar and reassuring to many residents, but has not been meaningfully revisited in decades.
He also pointed to broader changes in municipal cost pressures since the law was adopted, including rising health care costs, expanding infrastructure, higher expectations for public services and increased demands on school systems.
“Most of these things are completely out of control of towns, but all of which create cost pressures,” he said.
