This is the final in a six-part series examining Marblehead’s budget challenges and possible paths forward. To read more in the series, MarbleheadCurrent.org.
Over the past several weeks, Marblehead officials have laid out the numbers behind the town’s three-year, tiered override proposal, driven by rising costs, constrained state aid and the limits of Proposition 2 1⁄2.
But beyond an override, are there any other ways to raise revenue locally that can meaningfully help close the $7.7 million gap?
The answer, based on local data, state law and interviews with officials and policy experts, is that few options remain — and those that do are unlikely to significantly change the town’s financial outlook.
A structure that hasn’t changed
Over the past decade, Marblehead’s revenue structure has remained largely unchanged.
Property taxes continue to make up the overwhelming majority of the town’s operating revenue, accounting for roughly 75% to 80% each year, according to state Department of Revenue data.
In fiscal year 2017, property taxes accounted for 77.7% of the town’s revenue. By fiscal year 2026, that share had declined only slightly, to 75.1%.
Other revenue sources have grown in dollar terms, but remain a small share of the total.
Local receipts — which include motor vehicle excise taxes, fees, permits and local option taxes — have increased by more than $5 million over the same period.
But even after that growth, they account for just under 8% of total revenue.
Finance Director Aleesha Benjamin said that even if Marblehead were to fully maximize all available and proposed local revenue options, those sources would not be enough to substantially reduce the town’s reliance on property taxes or avoid the need for overrides.
Policy experts echo that conclusion.
“Property taxes are the overwhelming way that municipalities raise money,” said Phineas Baxandall of the Massachusetts Budget and Policy Center. “There can be small opportunities from things like hotels and rental cars and cannabis shops, or things like fines and fees, but property taxes is king when it comes to revenue in Massachusetts.”
Local options exist, but remain limited
Massachusetts cities and towns operate under a narrow set of revenue tools. Local income taxes are prohibited, and local sales taxes are largely restricted to narrow categories such as meals and lodging.
Even within those categories, Marblehead has already reached its limits.
The town adopted the maximum local meals tax of 0.75% and lodging tax of 6% in 2024. In subsequent fiscal years, those taxes have generated roughly $400,000 to $500,000 annually from lodging and about $275,000 to $300,000 from meals based on state data, with fiscal year 2026 figures reflecting collections through the third quarter.
Combined, they amount to less than $800,000 annually — a small portion of the town’s roughly $7 million to $9 million in local receipts in recent years, and well under 1% of its overall budget.
“[These] are a few other small-bore items that don’t really have a large impact,” said John Ouellette of the Massachusetts Municipal Association.
One of the largest components of local receipts — the motor vehicle excise tax — is not a local option but a state-authorized revenue source in place since the early 1980s.
In Marblehead, it generates roughly $3.5 million to $4 million annually, accounting for about 40 to 50% of local receipts. Despite the scale, it represents only a small share of the town’s overall budget.
Other potential tools, such as a local-option surcharge on motor vehicle excise bills or a real estate transfer fee, would require state approval.
New growth offers little relief
Another potential source of revenue — new growth from development — has also been limited.
Under Proposition 2 1/2, communities can increase their property tax levy beyond the 2.5% annual cap through new construction and property improvements. But in Marblehead, that growth has remained minimal.
Over the past decade, new growth has typically added less than 1% to the town’s tax base each year. In fiscal year 2026, it contributed just 0.39%.
The composition of that growth also helps explain its limited impact. State data shows that the majority of new growth in Marblehead comes from residential properties, particularly single-family homes, with smaller contributions from condominiums and other housing types.
Commercial and industrial development — which can generate larger increases in the tax base — has remained small and inconsistent.
Benjamin has previously described new growth in Marblehead as limited, a result of the town’s built-out nature and lack of large-scale development opportunities.
Statewide, experts say that trend has also slowed in recent years.
“We’ve also seen new growth, on a broad scale, slipping,” Ouellette said. “That is money that has helped to offset the cost drivers cities and towns have been experiencing and trying to battle their way through.”
Cannabis revenue uncertain and limited
Some communities have turned to cannabis-related revenue as a new funding source.
Under Massachusetts law, municipalities can collect a local excise tax of up to 3% on recreational cannabis sales. They can also charge Community Impact Fees through host community agreements to offset costs such as increased traffic or public safety demands, though those fees cannot be used for general municipal operations.
Statewide, the local cannabis excise has generated more than $217 million for cities and towns between fiscal year 2019 and March 2025, according to the Cannabis Control Commission.
In Marblehead, however, that revenue stream has yet to materialize.
Although the town adopted a cannabis Social Equity Policy in October 2025, it has not set a local marijuana tax rate and has no active marijuana retailer licenses at present, according to state data.
Local bylaws limit the number of marijuana retailers to 20% of the town’s off-premise alcohol licenses, which currently allows for up to two dispensaries.
Benjamin said the potential impact would depend heavily on the size, location and performance of any future establishments.
In neighboring Swampscott, which has two dispensaries, cannabis excise revenue totaled about $138,000 in fiscal year 2024 and had exceeded $200,000 by the third quarter of fiscal year 2025, according to town financial reports.
In Belmont — one of 17 comparable communities identified earlier in the series, with one dispensary — cannabis excise revenue totaled about $39,000 in fiscal year 2024 and $91,000 in fiscal year 2025.
Taken together, those figures suggest that while cannabis can provide a new source of revenue, it would likely remain a relatively small addition to the overall budget.
The state question
At the state level, lawmakers have debated expanding local revenue options through the Municipal Empowerment Act, which includes proposals to raise the meals and lodging tax caps and introduce a motor vehicle excise surcharge.
The bill, first filed by Gov. Maura Healey in 2024 and refiled in early 2025, was intended to give municipalities additional tools to generate revenue in response to increasing local needs and reliance on property taxes. However, the tax-related provisions did not advance during the 2024 legislative session.
In the current session, those proposals remain under consideration after the bill was split across multiple committees and has not yet advanced in full.
State Sen. Brendan Crighton, whose district includes Marblehead, said additional tools could help municipalities meet rising costs, but he emphasized that any changes would require careful consideration of competing priorities between local needs and affordability for residents.
“We’re always looking for additional ways to provide the services that we believe our community needs and deserves,” Crighton said. “But we also are very concerned about affordability here … it’s a hard balancing act.”
Asked what options remain if no new tools are adopted, Crighton pointed to existing mechanisms such as overrides and debt exclusions, along with continued reliance on state aid.
“The tools before municipalities are debt exclusions and Proposition 2 1/2 overrides,” he said, adding that legislators are also focused on increasing local aid through programs such as Unrestricted General Government Aid (UGGA) and Chapter 70 to navigate short-term uncertainties.
That reliance on state aid reflects broader funding challenges facing municipalities, as examined in a previous installment in this series.
“The big priority is unrestricted local aid,” Ouellette said. “[Restoring UGGA] would solve the biggest chunk of the (statewide) problem.”
The bottom line
All in all, the data and policy landscape point to the same conclusion: each potential alternative offers some relief, but none offers a solution.
Massachusetts municipalities operate under strict rules that constrain revenue growth, while costs continue to rise.
As a result, experts say overrides — once considered exceptional — have increasingly become a routine tool for balancing budgets, and local officials say that even fully maximizing remaining and proposed local revenue options would not be sufficient to reduce Marblehead’s reliance on them.
As town residents prepare to cast their votes, that reality leaves residents facing a familiar choice: whether to approve higher taxes through an override or accept reductions in services.
