Templeton — Deputy Assessor Justice Graves told the Templeton Advisory Committee on a discussion of the assessor overlay (rebate) account that the account exists only to cover property tax exemptions, abatements and uncollectible taxes and that only the Board of Assessors can raise money into or transfer funds out of it.
The overlay account “bridges” the gap when exemptions and abatements reduce taxes that were previously committed, Graves said, adding that towns may not use overlay funds for legal expenses or other operating costs. He said the account balance was about $742,897.15 and that exemptions and abatements granted in the most recent fiscal year totaled $117,982.88.
The explanation followed an audit recommendation from the town auditor (Roselli & Company) that the overlay was larger than needed. Graves cited Department of Revenue guidance (Informational Guideline Release 17‑23) that instructs assessors how to calculate “excess overlay” — the portion they may transfer to an overlay surplus account — and warned that the DOR can take corrective steps if towns make excessive transfers.
Why it matters: overlay is raised on the tax-rate recap by the Board of Assessors without a separate town‑meeting vote and is meant to make the tax levy whole when abatements or exemptions reduce tax receipts. If a town uses overlay as a general rainy‑day fund, the Department of Revenue can require remedies that affect the tax rate, certified free cash or local action.
Committee members pressed for specifics on whether Templeton’s overlay balance exceeds likely needs. Graves listed several figures used in the assessors’ calculation: a five‑year average of exemptions/abatements of approximately $108,567, potential future liabilities for fiscal 2024 around $266,000, and a historically larger exposure of about $348,000 in fiscal 2020. He said the assessors transferred $85,000 to overlay surplus after the FY24 calculation but did not vote to transfer surplus for FY25 after encountering a large discrepancy between the collector’s and the accountant’s figures (the accountant’s ledger briefly showed over $2 million in outstanding real‑estate receivables).
Graves said the reassessment of exemptions (including an increase in veteran exemptions following changes at the Veterans Affairs level and provisions in the HERO Act) and timing differences between the collector and town accountant can cause meaningful volatility in overlay calculations.
After discussion the Advisory Committee voted to table taking a recommendation until January 2026 so members can review reconciled numbers and, if needed, get input from the town auditor. Chair Noel Francis called for the committee to revisit the overlay balance before the next budget cycle.
“What the assessors raise on the recap sheet is part of the budget process, but the overlay account is only for exemptions, abatements and uncollectibles,” Justice Graves said. Committee member April said, “After Justice’s explanation, I’m less inclined to move money out; I think we should leave it alone,” reflecting the committee’s decision to delay any recommendation.
The committee requested reconciled reports from the tax collector and town accountant and asked staff to seek clarification from the auditor about the audit recommendation before making a formal transfer or a recommendation to the Select Board.