TOWN FINANCE 

The cost of government in Orange, as elsewhere, has mounted gradually in recent years reflecting the higher costs of living that show up in all town departments.  Under “Proposition 2 ½”, enacted in 1980, the amount raised by taxes may increase each year by a maximum of 2 ½% of the previous year’s total, plus “new growth” – unless over-ridden by a Town referendum voted to held by the Selectmen.  Formulation of financial policies and procedures is the concern of many people, but it is Orange citizens at Town Meeting who vote the appropriations necessary to operate the Town.

 ADMINISTRATION

The ultimate financial responsibility for the Town services lies with the Selectmen.  They are the top administrative officers of the Town, and are aided in their work by the Administrator and a number of other elected and appointed officials with whom they keep in close touch.  Every dollar spent must be accounted for against a specific department budget, originally approved by the voters at the previous Town Meeting.

 FINANCE COMMITTEE – The seven member Finance Committee is appointed by the Moderator.  By an act of State Legislature every town whose valuation exceeds $1,000,000 must have a Finance Committee.  They oversee and set budget guidelines that can affect the extent to which services can be provided, present the Town budget at Town Meeting with their recommendations, and approve or disapprove all departmental requests for unbudgeted expense.  The Finance Committee serves as an advisory body responsible for recommending a budget to the Annual Town Meeting.  The Committee formulates budget guidelines and has meetings to review and discuss budgetary needs for all departments.

 TOWN BUDGET – Each department draws up its budget annually.  In addition to this, there are certain capital expenditures that do not fairly reflect the yearly operating costs of the department if included in the regular budget.  These unusual expenditures are placed in the Warrant as separate articles and are not included in the general appropriation’s article that covers all operating budgets.

 TOWN INCOME – Real estate taxes are the primary single source of income.  However, there is also money received from the Commonwealth as our share of state income tax, sales tax, corporation tax, gasoline tax and state lottery as well as money for school aid and school building assistance.  Orange also collects from the motor vehicle excise tax and charges made by departments for various licenses, fees, and permits.

 FINANCIAL TERMS – There are a number of technical terms involved with taxation in Commonwealth town.  Among the most important are:

Overlay – an account established annually to fund anticipated property tax abatements and exemptions in that year.  The overlay reserve is not established by the normal appropriation process, but rather is raised on the tax rate recapitulation sheet.

Reserve Fund – an account set aside annually within the budget of a city or town to provide a funding source for “extraordinary and unforeseen” expenditures.  Uses of other funds require budgetary transfers by town meeting.

Stabilization Fund – An account from which amounts may be appropriated for any lawful purpose.  A two-thirds vote of town meeting is required to appropriate money from this fund.

Free Cash – funds remaining from the operations of the previous fiscal year that are certified by the Director of Accounts as available for appropriation.

Cherry Sheet – (named for the color of paper on which it was formerly issued) is sent annually by the state to each town listing the estimated charges for the town’s share in county and state government.  It also gives estimated receipts to the town from state aid through the various funds.  The Board of Assessors use these figures to compute the tax rate.

General Fund – this fund is used to account for most financial resources and activity governed by the normal Town Meeting appropriation process.

 TOWN BORROWING AND DEBT LIMIT