[Courtesy of Northborough.org]
BUDGET
TERMS AND DEFINITIONS
Abatement
Surplus: Accumulation of the surplus
amounts of Abatements and Exemptions set aside by the Assessors each year to
cover abatements of (and exemptions from) real estate and personal property tax
assessments. The accumulated amount for previous years no longer committed for
abatements may be used by vote of the Town Meeting.
Cherrv
Sheet: An annual statement received
from the Department of Revenue detailing estimated receipts for the next fiscal
year fr6m the vari6us state aid accounts as well as estimated state and county
government charges payable to the state. The name "Cherry Sheet"
derives from the color of the paper used.
Debt
Exemption: An override to Proposition
2 Y2 for
the purpose of raising funds for debt service costs.
Enterprise
Fund: A separate fund, set up to
provide a specific Town service, whereby all direct and indirect/overhead costs
of providing the service are funded in total from user charges. An appropriation
for an enterprise fund is funded in total from enterprise fund revenue unless
otherwise noted. Enterprise fund revenue used to fund services provided by other
Town departments will be shown in the warrant after the appropriation total for
the department. An enterprise fund is required to fully disclose all costs and
all revenue sources needed to provide a service.
Free
Cash: Free cash is the available,
undesignated fund balance of the general fund and is generated when actual
revenue collections are in excess of estimates, when expenditures are less than
appropriated, or both. A free cash
balance is certified as of July 1 each year by the Department of Revenue and
once certified, any or all of the certified amount may be used to defray Town
expenses by a vote of the Town Meeting.
Funding
Sources for Expenditures:
Authorizations for the Town to expend monies are made in the form of a motion at
Town Meeting. The wording of the motions will specify the funding source; that
is, the place from where money is going to come or will be raised. When a motion
reads, "to appropriate a sum of money" without a source being
identified, that amount will be included in the tax calculation, whereby the
total of all sums to be appropriated will be reduced by an estimate of local and
state revenue. The balance needed will be provided by property taxes. When items
in the warrant are offset or raised from available funds, those items will also
appear as offsets in the determination of the tax rate.
Levy
Limit: The maximum amount a community
can levy in any given year.
Local
Receipts: This is the third largest source of revenue for the Town after property
taxes and Cherry Sheet receipts. While it is comprised of a number of different
items, the largest source is the auto excise tax.
New
Growth: Proposition 2 1/2
allows a community to increase its levy
limit annually by an amount based upon the valuation of certain new construction
and other growth in the tax base that is not the result of property revaluation.
New growth becomes part of the levy limit and thus increases at the rate of 2.5%
each year as the levy limit increases.
Override:
An override is passed by a majority vote at Town Meeting and at the
ballot. There are three types of overrides: An Operating Override, which
permanently increases the levy limit; a Debt Exclusion, which increases the levy
limit only for the life of the debt; and a Capital Project Override, which
increases the levy only for the year in which the project is undertaken.
Proposition
2 ½: A Massachusetts General Law enacted in 1980 to limit property
taxes.
Revolving
Fund: Funds that may be used without appropriation and that are
established for special uses. Recreation fees, for example, may be paid into a
revolving fund. Revolving funds are established by state law or Town bylaw.
Reserve
Fund: An amount appropriated by the Annual Town Meeting for
emergency or unforeseen purposes. The Finance Committee, by state law, is the
sole custodian of the Reserve Fund and approves transfers from the Fund into the
operating budgets throughout the year if: (1) the need for funds is of an
emergency and/or unforeseen nature, and (2) if, in the judgment of the Finance
Committee, the Town Meeting would approve such an expenditure if such a meeting
was held. The Reserve Fund is, therefore, a mechanism for avoiding the necessity
of frequent Special Town Meetings.
Stabilization
Fund: Similar to a "savings account", this account has
been used to fund large capital projects such as fire trucks and school roofs. A
recent amendment to state law allows the Stabilization Fund to be used for the
operating budget, as well as capital purchases. Placing money into this fund requires a majority vote of Town
Meeting while withdrawing from the Stabilization Fund requires a 2/3 vote of
Town Meeting.
Tax
Levy: The property tax levy is the
revenue a community can raise through real and personal property taxes. In
Massachusetts, municipal revenues to support local 5 pending for schools, public
safety, general government and other public services are raised through the
property tax levy, state aid, local receipts and other sources. The property tax
levy is the largest source of revenue for most cities and. towns.
Unclassified
Operating Expenses:
This account in the general government section of the budget is comprised
primarily of operating expenses such as postage, telephone and property
liability insurance, that support townwide operations and are not assigned to
any one department or cost center.
Unclassified
Employee Benefits: This account in the
shared expenses section of the budget is comprised primarily of benefits such as
health insurance and retirement for both school and general government
employees.
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Budget Terms
[Courtesy
of Northborough.org]