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Override Capacity
The difference between the tax levy ceiling and the tax levy. It represents the amount of property tax revenue available to the Town through the override process.

Proposition 2½ 
A State law that limits the increase in Town-wide property taxes to 2½%  per year, unless this limitation is exceeded by a Town-wide vote (also known as an Override). The law also places a cap, known as the tax levy limit, on the total allowable property taxes at 2½% of the total assessed value of all taxable property.

Reserve Fund
A fund established by the Annual Town Meeting which is under the control of the Finance Committee and from which transfers may be made for extraordinary or unforeseen expenditures (unplanned snow removal costs in an unusually snowy winter, for example). When this fund is appropriated, it may not exceed 5% of the tax levy for the preceding year, and is typically less than 1% in Arlington.

Revolving Funds
Funds that are set up by Town Meeting for specific purposes, and report annually on their activities. These funds are limited in various ways, and are administered by Town departments.

Special Revenue Fund
An accounting for revenues that are legally restricted to specific purposes. For example, state grants for Special Education.

Stabilization Fund
A special account created to provide a reserve for municipal expenditures.

State Aid
The amount of revenue received from the State by the Town. This revenue consists of money that must be used for particular purposes, as well as money that can be appropriated by the Annual Town Meeting for any purpose. Also known as Local Aid.

Surplus Revenue
The amount by which Cash, Accounts Receivable, and other Current Assets exceed liabilities and reserves.

Tax Levy
The total amount of real estate and personal property tax revenue raised by the Town.

Tax Rate
The amount of property tax revenue that is due to the Town for every $1000 of assessed value. For example, the tax rate in Fiscal Year 1999 was $17.17 per $1000; a home assessed at $200,000 would owe $17.17 x 200 = $3,434. The tax rate is calculated by dividing the tax levy by the total assessed value of all taxable properties, and multiplying the result by 1000.

Trust Funds
Funds given to the Town by individuals or groups, often for strictly defined purposes. Interest income is added to the funds, and often only the interest can be spent. The trustees of the fund, not the voters, decide how the fund will be invested and spent.

Unencumbered Funds
The amount of Surplus Revenue minus uncollected taxes of prior years. This amount must be certified by the State Bureau of Accounts before it can be used. These funds are also known as Free Cash or Available Funds.