Town finances are explained here
Since 1980 Falmouth, like every other community in Massachusetts, has been constrained by a state law known as Proposition 2 1/2, which limits both the tax rate a community may charge and the amount of money which can be raised by property taxes. Those limits can be exceeded only if a favorable Town Meeting vote is then approved by referendum.
The town's fiscal year runs from July 1 to June 30; thus most financial planning takes place in the winter and most budget decisions are made at the April Town Meeting. The tax rate is set in the fall. Tax bills are sent out semi-annually, usually in October and April. Half the tax is billed each time; payment is due one month later. Major roles in the town's financial affairs are played by assessors, who evaluate all the taxable property in town and set the tax rate; the treasurer, who oversees the town's cash position and is responsible for bonding; the collector, who collects all taxes and other local revenues; and the accountant, who keeps running accounts and makes sure the money is spent as directed by Town Meeting.
Treasurer/Collector.The Town Treasurer has custody of all of the town's money. The treasurer's office receives all funds coming into the town treasury and processes all payments of town monies. The Treasurer negotiates interest rates, investment terms and rates while ensuring sufficient cash availability to meet accounts payable warrants, and tracks department expenditures against loan proceeds to ensure compliance with SEC regulations. The Treasurer reconciles cash quarterly and annually, reporting to the Massachusetts Department of Revenue, and provides a copy to the Town Accountant and information to the Director of Assessing for use in tax levy calculation. The Treasurer prepares warrants for payment of payroll agency funds including taxes, deferred compensation, school annuity plans, union dues, and health, life and long-term disability insurance premiums. The Treasurer takes custody of and manages the inventory of deeds to municipal property, including land owned by the town; receives and takes charge of liens placed on properties for non-payment of real estate taxes; manages tax title cases and negotiates payment agreements; forecloses owners' rights of redemption, and is responsible for the sale of municipal owned property through the tax foreclosure process. The Treasurer/Collector is responsible for the billing and collection of all real estate and personal property taxes, excise taxes for vehicles and boats, as well as water and sewer charges, dock and mooring fees, permit fees, parking ticket collection, Municipal Lien Certificates, shellfish permits, and betterment charges.
Town Accountant. The Town Accountant, appointed by the Selectmen, is responsible for keeping all town financial records and prepares all required financial reports. The Town Accountant monitors all town budgets, processes all payables for the town and the schools, and processes the weekly payroll. The Town Accountant approves vouchers signed by department heads, approves payments to be made by the treasurer, and prepares a weekly list of town expenditures to be approved by the Manager and Selectmen. The Accountant is responsible for auditing all expenditures. A detailed record of the town's financial transactions, prepared by the accountant, is published annually in the Town Report. The accountant's records are audited every three years by the state.
Once Spring Town Meeting has approved spending for the following fiscal year, department heads may negotiate authorized purchases and recruit candidates for new positions, but no money may be spent before July 1. Department heads may not exceed the amount in any starred line item in the budget without approval of a fund transfer from the Manager and the Finance Committee. Town Meeting may approve transfers from the Stabilization Fund, Certified Free Cash or the overlay surplus.
The Stabilization Fund is usually augmented in the fall, when the financial picture is clearer. It is, in effect, the town's savings account and may be spent at any subsequent meeting for any bondable purpose, generally capital projects. The Overlay Reserve is a cushion to cover tax abatements; any surplus is available for spending. Free Cash is any year-end surplus which results from unspent appropriations and from revenues in excess of estimates and fees. Free cash cannot be spent until the amount has been certified by the state Department of Revenue.
Another reserve, the Finance Committee Reserve Fund, is voted by Town Meeting as a budget line item, usually $300,000. It is to be used by the Finance Committee to deal with extraordinary or unforeseen needs.
There are four ways to exceed the tax levy limit: growth, override, and debt or capital exclusions. Growth is a measure of additions to the tax base, generally through new construction. The levy limit is automatically increased each year by the amount the new growth would have been taxed at the previous year's tax rate. An override is a referendum vote to spend for specified purposes; it results in a permanent addition to the tax levy limit. Exclusion is a temporary increase in the levy limit, also voted by referendum. Debt exclusion can be used only for debt service, usually for major capital improvements. Capital exclusion is for the direct purchase of capital equipment. Override and exclusion referenda must first be approved by Town Meeting, then by the voters. They are normally voted at the annual town election in May.
The three-member Board of Assessors, appointed by the Selectmen, is responsible for determining the tax base, which is the total value of taxable land and personal property in Falmouth. The actual assessing is done by paid town employees or a consulting firm using a formula based on location, area, floor space, number of bathrooms and special features like hot tubs and fireplaces. By state law, property must be assessed at its fair market value, and town-wide revaluation is required every three years. Appeals from individual assessments may be made to the Board of Assessors; special exemptions are allowed for the blind, elderly, veterans, widows, widowers, and hardship cases.
Local Receipts. Revenue from other taxes and fees for town services are included in local receipts and usually go into the general fund.
State Aid is paid annually by the Commonwealth to the cities and towns to help offset the constraints of Proposition 2 1/2 and equalize the differences between rich and poor communities. Each town's share is determined by a formula approved by the state legislature. The total amount available depends on the state of the economy. Falmouth also receives funding from the state for other purposes, such as partial reimbursement for school construction, school bus transportation, highway construction and extended library services.
The Town Treasurer has authority to borrow as needed to meet obligations for which taxes or other anticipated revenues have not been received. Long-term borrowing may be voted by Town Meeting. Such borrowing goes first through Town Meeting and then to a referendum. Once the additional debt is approved, the Treasurer may negotiate and schedule the actual borrowing.
The twenty year Land Bank Assessment is a 3% surcharge on real estate property tax bills that was adopted in 1998 when voters in every town on Cape Cod approved the question on their ballots. Additionally, the Town receives a state match generated by a transaction fee at the Registries of Deeds throughout the Commonwealth. The money is assigned to the Community Preservation Committee (CPA) specifically for use in acquiring open space, community housing, historic resource preservation and recreation space. The estimate for fiscal year 2010 is $2.1 million from the local surcharge and $634,621 from the state match. Since voters passed the Community Preservation Act for Falmouth in 2005, the Town has received more than $18.8 million.