Where the money comes from

Most of what the town spends is paid by you, on the house you live in.

Marblehead's proposed FY27 budget totals $122.76M. Roughly four-fifths of that is paid by property owners through the twice-yearly tax bill. The remaining fifth is a mix of state aid and smaller sources.

This concentration is not a Marblehead choice. Massachusetts state law gives towns almost no other lever.

The four sources

In rough order of size:

Property tax (around 80% of the general fund). Every parcel in town pays a tax calculated as its assessed value times the tax rate. The Board of Assessors sets values annually. The dollar rate itself is not voted on directly: it is the total levy (set by the budget and any approved overrides) divided by total assessed value, times $1,000. For FY26 the rate worked out to $8.56 per $1,000 of assessed value.

State aid (around 6–8% net). The state sends Marblehead a check called the Cherry Sheet every year. Most of it is Chapter 70 (the school-funding formula) and Unrestricted General Government Aid. The state also charges the town back for a handful of regional and statutory obligations. After those charges, the net came to $6.68M in FY26.

Local receipts (around 10%). Motor vehicle excise tax, beach passes, harbor mooring fees, building permits, recreation fees, fines, investment income on town reserves. Each piece is small. Together they add up.

One-time funds (variable). When the town has unspent balance from a prior year ("free cash") or a one-time windfall, it can be used to balance the next year's budget. This is a bridge, not recurring revenue.

The four enterprise funds

Marblehead's sewer, water, and harbor operations are enterprise funds. They are budgeted separately from the general fund and paid for by user fees, not property tax. If sewer rates rise, that increase pays for sewer operations. It does not move money into schools or police.

When you see the $122.76M total budget, the general fund is $109.78M of that and the three enterprises make up the remaining $13M. The general fund is what residents typically argue about because it is what property tax funds.

Why property tax does the heavy lifting

Massachusetts cities and towns are creatures of the state. They have only the taxing powers the legislature grants them. The two largest revenue sources used by states and the federal government, income tax and sales tax, belong to Massachusetts, not its municipalities.

That leaves property tax. Predictable, hard to evade, and capped by law.

The Prop 2½ cap

Proposition 2½, passed by statewide ballot in 1980, caps how much the property-tax levy (the total dollars to be raised from property taxes in a given year) can grow. The levy can rise:

• 2.5% per year from the previous year's levy limit, plus
• New growth: assessed value of new construction (a new house, an addition, a new commercial building)

That is the entire mechanical answer. The levy ceiling rises at most 2.5% per year before new growth, regardless of what is happening to costs.

Anything beyond that requires a separate ballot vote: an override (permanent) or a debt exclusion (temporary, for one specific bonded project). Chapter 7 covers both in detail.

Why state aid is small for wealthy towns

The biggest piece of state aid is Chapter 70, which funds schools. The formula is designed to send more money to communities that the state determines cannot raise enough locally. Wealthy towns receive minimum aid; less wealthy communities receive more.

Marblehead's Chapter 70 came to $7.01M in FY26, or about $341 per resident. The statewide median is closer to $1,000 per resident. The state has determined that Marblehead can fund schools largely from its own tax base, so the support is small.

What this means at budget time

Roughly four out of every five dollars the town raises has to come from property tax. The other one out of five comes from sources that are mostly outside the town's control. When costs rise faster than 2.5%, the math has to be reconciled either by cutting expenses, drawing down reserves, or asking voters for an override.

Chapter 6 covers why this gap recurs.