Topic

How Brookline's budget works

Where does the Town's money come from, what is it allowed to collect, and what does "sustainable" mean?

About 90% of Town money runs through the General Fund, most of it property tax capped by Proposition 2½, so the levy can grow only 2.5% a year plus new growth and overrides.

What a long-range forecast is for

A budget and a long-range forecast are different documents doing different jobs, and treating them as the same thing is one of the easier ways to misread a town's finances.

A budget is a commitment. It covers one year, it has to balance by law, and it is deliberately conservative, because the cost of being wrong in the optimistic direction is far higher than the cost of being wrong in the other. A town that overestimates revenue and comes up short in March has to cut services people are already relying on. A town that underestimates ends the year with a surplus and a much easier problem. Good budgeting builds that asymmetry in on purpose, and Brookline's Financial Plan does exactly that, as it should.

A long-range forecast has a different job. Nothing is appropriated from it and it commits the town to nothing. Its purpose is to show where the current path leads if nothing changes: far enough out that the structural forces have time to become visible, and early enough that there is still room to choose differently. It should use the best available estimate of what is actually likely to happen, not the most cautious one, because it exists to inform a choice rather than to guard against a shortfall.

That distinction is why these pages sometimes use different assumptions than the Town's own plan, and it is not a disagreement with the Town. A forecast built for planning and a forecast built for understanding should not look the same. The forecast: method and results shows both, side by side, and explains every place they differ.

How the money actually works

Before any of the history makes sense, it helps to know the machine: where the Town's money comes from, what it is allowed to collect, and why the answer to "our house is worth more, so the Town has more" is no.

Where every Town dollar comes from and goes

Start with the funds. Not all of Brookline's money is the same money. The Town keeps several separate pools, and knowing which one is in play makes it much easier to follow any conversation about Town finances. The General Fund, $450.7 million in the FY2027 budget, about 90% of everything the Town spends, is what pays for schools, police and fire, public works, libraries, and every other core Town service. It's also the subject of these pages. Two more funds, the Water & Sewer Enterprise Fund and the Golf Course Enterprise Fund, are entirely separate and paid for by the fees people using those services pay rather than by property tax. A Recreation Revolving Fund works along similar lines for recreation programs, though not quite to the same standard: program fees cover about 87% of its costs, with the remaining ~13% coming from the General Fund (the Town's own figures; see below).

Three qualifications, verified against the FY2027 Financial Plan and the FY2024 audit, that a strict "100% self-supporting, no subsidy" framing would miss:

1. Money flows from these funds to the General Fund, not the other way. All three reimburse the General Fund for staff benefits and overhead they consume: Water & Sewer $3,000,604, Recreation Revolving $709,574, Golf $309,320 in FY2027, about $4.0 million together. The General Fund transfers nothing into any of them. Recreation's other ~13% is paid directly from the General Fund's own Recreation Department budget, not transferred into the fund.
2. Golf is not covering FY2027 costs from fees alone. Its budget draws $450,000 from its own accumulated retained earnings for a one-time landscape capital project, against $3,150,250 of fee revenue and $3,600,250 of spending. That's a drawdown of golf's own past surpluses, not a taxpayer subsidy, but "fees cover 100% of costs" is not literally true in FY2027. (The FY2024 audit shows Golf ran an $82,191 operating loss that year, too.)
3. One small, real General Fund subsidy to Golf does exist: an interest-free $500,000 note issued in 2012 for a maintenance shed, repaid at $25,000/yr, with $225,000 still outstanding at 6/30/2024 (FY2024 audit, Note 15). The principal repayment sits inside Golf's overhead reimbursement, but the foregone interest is a genuine, if modest, transfer of value from the tax levy.

And since 2021, Brookline has also collected a Community Preservation Act surcharge, an extra 1% added to property tax bills, legally restricted by state law to open space, historic preservation, community housing, and recreation projects. It cannot be spent on schools, salaries, or anything else in the General Fund, no matter how large a gap the General Fund is running. When someone says "the Town has a surplus" or "the Town needs more money," it matters a great deal which of these five pools they mean. These pages are about the General Fund specifically.

Inside the General Fund

The General Fund is about 90% of the Town's total financial activity and essentially all of what people mean by "the Town budget." It is worth seeing on its own.

Where the General Fund's money comes from. About 80% of it is property taxes, $359.3 million of the $450.7 million in the FY2027 budget Town Meeting adopted. The rest comes from state aid ($26.7 million, mostly Chapter 70 school funding and other formula grants Brookline has limited control over), local receipts ($37.6 million, motor vehicle excise, building permits, meals and rooms taxes, and similar fees), and free cash ($18.3 million) and other available funds ($8.8 million). Because property tax is so dominant, and because it is the one major revenue source almost entirely within local control, it's the piece this project focuses on.

Two of those terms are worth defining, because they appear throughout these pages and in every Town budget discussion.

Local receipts are everything the Town collects that is neither property tax nor state aid. Motor vehicle excise is the largest piece, and its rate is set by the state. Meals and rooms taxes were a local decision to adopt, at rates the state caps. The rest, building permit fees, parking, licences, ambulance charges, investment income, and similar service charges, Brookline sets for itself. Local receipts are recurring revenue: they arrive every year and are budgeted for in advance, deliberately conservatively, since a shortfall against an over-optimistic estimate has to be absorbed mid-year.

Free cash is the opposite. It is a one-time figure: what was left over when a fiscal year closed on June 30, meaning budgeted money that went unspent, plus receipts that came in above estimate, less unpaid receivables and any deficits. Nothing can be spent from it until the state's Division of Local Services certifies the amount. Once certified, state law lets a town appropriate it for anything, but Brookline's own Fiscal Policies, approved by the Select Board in September 2024, are stricter: free cash "shall not be used for Operating Budget purposes." It goes, in order, to the budget reserve; to keeping reserves at or above 20% of revenue; to the liability fund; to the capital plan, until total capital funding reaches 8% of the prior year's net revenue; to the Affordable Housing Trust Fund when its balance is below $5 million; and then to one-time uses such as the trusts for retiree benefits. The timing matters: free cash usually funds the budget two years after the year that produced it, not the next one. By the time a year's surplus is certified, the following year's budget has already been adopted. The surplus at the end of FY2024 (June 30, 2024) was certified at $25.1 million as of July 1, 2024, and $21.3 million of it went into the FY2026 budget. Some free cash can be spent sooner, at a fall Special Town Meeting, but the annual budget runs two years behind. Brookline's certification has run between $12 million and $25 million a year since FY2019, the highest in the two most recent years. One labeling note worth carrying: DLS labels free cash by the fiscal year that begins on that July 1, while Town budget documents label the same dollars a year later, so a DLS "FY2024" figure and a Town "FY2025" figure can be the same money. The distinction between free cash and local receipts matters because free cash is a result rather than a revenue source: a large certification means the prior year ended better than budgeted, and using it to fund recurring costs would convert a one-year surplus into a permanent obligation, which is what the Town's policy is written to prevent. Liabilities, reserves and the credit rating returns to this when it looks at reserves.

Proposition 2½: what the Town is allowed to collect

What actually limits how much property tax Brookline can collect: Prop 2½. Massachusetts voters passed a law in 1980, known as Proposition 2½, that caps how much a town's property tax collections can grow in a given year, regardless of what happens to individual property values. This is the single most important mechanic in this entire story, so it's worth laying out carefully.

The cap applies to a number called the levy limit, the maximum total dollar amount the Town is allowed to raise from property taxes townwide. Each year, that limit is allowed to grow by exactly three things added together:

1. 2.5% of last year's levy limit, automatically, every year, no vote required. This is where "Proposition 2½" gets its name.
2. "New growth", the tax value added by anything genuinely new since last year: a newly built house, an addition, a converted commercial space, a subdivided lot, or new taxable business equipment and utility property (what assessors call personal property). New growth is measured in dollars (the newly added assessed value, taxed at last year's tax rate) and gets added to the levy limit permanently, on top of the 2.5%.
3. Any override voters have approved that year, a permanent increase to the levy limit that requires a townwide ballot vote. Brookline voters have approved five of these since 2005: $6.2 million (FY2009), $7.7 million (FY2016), $6.6 million (FY2019), $12.0 million (FY2024), and $23.25 million (approved May 2026, phased in over FY2027-2029).

There is a fourth category of property tax dollars, debt exclusions, that sits entirely outside this cap. When Brookline borrows to pay for a specific capital project (a new school building, for example) and voters approve that specific borrowing at the ballot, the resulting bond payments are added to everyone's tax bill dollar-for-dollar, on top of the levy limit, for as long as that bond is being paid off, and then they disappear when the bond is retired. Debt exclusions are about $35.4 million of Brookline's FY2027 property tax; they don't compound, they don't count against the 2.5% cap, and they're tied to a specific, voter-approved project with a defined end date.

The Community Preservation Act surcharge described above is also on the tax bill and also outside the levy limit, but state law restricts it to open space, historic preservation, community housing and recreation, and it never reaches the General Fund. The General Fund property tax in the FY2027 budget, $359.3 million, includes debt exclusions and leaves the CPA surcharge out. The forecast's revenue leaves out both, since debt exclusions pay only for their own bonds. So overrides and new growth remain the only ways to grow what the General Fund can spend on services.

Rising home values, on their own, do not give the Town more money to spend. Here's why: the 2.5% cap applies to the total levy limit, the town-wide pot, not to any individual property's tax bill. If every home in Brookline appreciated by exactly the same percentage in a given year, the total amount the Town is allowed to collect would still only grow by 2.5% (plus new growth, plus any override). Nothing else would change in that scenario, since everyone appreciated equally and everyone's share of the fixed pot stays the same. In the more realistic case where some properties appreciate faster than others, what happens is a redistribution, not new money: a property that appreciated faster than the town-wide average ends up paying a larger share of that same fixed levy limit, and a property that appreciated more slowly pays a smaller share, even though the total amount the Town collects didn't change at all. Rising values only change how the existing, capped amount gets divided up among property owners.

That single fact is the hinge this entire project turns on, and it's worth sitting with before moving on: since market appreciation alone can't grow what the Town is allowed to collect, there are really only two ways Brookline's property tax revenue can grow faster than 2.5% a year, asking voters directly for an override, or generating new growth through construction and renovation. Everything about "why does new growth matter" traces back to this one mechanic.

One more piece: how the tax bill splits between homeowners and businesses. Once the total levy limit is set, the Select Board decides each year how much of it falls on residential property versus commercial, industrial, and personal property (business equipment) combined, a combination the state calls "CIP." State law caps how far a town can shift the burden toward CIP: a commercial property's tax rate can be at most 175% of what a single, unclassified rate would be. Brookline's Select Board has, in practice, pushed this shift almost to its legal limit, the FY2026 shift factor is 1.746, just 0.4 percentage points shy of the 1.75 ceiling: meaning Brookline's commercial and industrial property owners are already paying close to the maximum share the state allows, and there is essentially no room left to shift more of the burden their way through this particular lever without a change in state law.

Where the money goes

Where the money goes. On the spending side, the FY2027 General Fund budget of $450.7 million breaks down as: schools, $149.8 million (33%, the single largest line); departmental services (police, fire, public works, libraries, and the rest of Town government), $103.5 million (23%); employee benefits, pensions, retiree health insurance (OPEB), and active-employee health insurance, $99.1 million (22%); debt service, $49.4 million (11%, the excluded, bond-matched $35.4 million described above and $14.0 million of regular borrowing funded like any other expense); and capital, reserves and other non-departmental costs, $48.8 million (11%). Two of these categories, benefits and schools, have been growing noticeably faster than the rest of the budget, which is exactly why the next section matters.

What "sustainable" actually means here

Everything on this page comes together in one chart, which is also the evidence for the definition below: twenty years of Brookline’s actual revenue and spending, against what the levy limit alone would have done.

It’s worth being precise about this, because two different comparisons are easy to conflate. Actual total revenue and actual total expenses don’t need a gap between their growth rates, they’re required to balance every single year, by law. Massachusetts towns must adopt a balanced budget every year; whatever a year’s appropriations are, that year’s revenue (property tax, state aid, local receipts, and any free cash drawn down) has to cover them. So the fact that the “total revenue” and “total expenses” lines in the chart above track each other fairly closely isn’t a target being hit, it’s a legal requirement being satisfied, year by year, using whatever levers (an override, a free cash draw, a mid-year cut) it takes to make it true.

The comparison that actually matters for “sustainable” is narrower: does the revenue the Town gets automatically, 2.5% plus new growth, with no override and no vote, grow fast enough to keep up with real cost growth on its own? If it does, the budget balances itself indefinitely without asking voters for more. If it doesn’t, the gap has to be closed some other way, year after year, and since free cash and reserves are finite, that eventually means either an override, cutting services, or generating more new growth. Over the twenty years already lived through, automatic revenue grew at 3.52% a year against operating costs at 3.65%: a shortfall of about a tenth of a percentage point, every year, which is what four overrides were for. Revenue, FY2005 to FY2025 takes that apart and finds most of it in one place. Whether the balance holds going forward depends heavily on whether new growth keeps pace with whichever expense categories are running hottest: over twenty years, that’s employee benefits at 5.5%/yr, well above the blended 20-year expense average, which is why Growth: renovation and what faster growth is worth treats “how much new growth” as a real, quantifiable lever rather than a vague aspiration.

Go deeper

• Where Brookline's money comes from and goes: What does the Town's budget pay for, and where does the money come from?
• Revenue, FY2005 to FY2025: Why did revenue fall behind spending, and which parts?
• Spending, FY2011 to FY2025: How was each dollar of spending growth assigned to a cause?
• Glossary: What do the budget terms on these pages mean?

Last updated 2026-10-08. What has changed.