Proposition 2 ½ is a State law that places constraints on the amount of real and personal property taxes that the Town is allowed to raise in any given Fiscal Year. The amount of tax dollars, or levy, allowed under Proposition 2 ½ is called the “levy limit”. The levy limit is determined by multiplying the previous year’s limit by 2 ½ per cent, and adding to that the tax dollars generated from any new construction within the Town that is not the result of property revaluation. The levy limit under Proposition 2 ½ may be exceeded only by the Town’s approval of a debt exclusion or override. A debt exclusion allows the Town to exceed the levy limit only for the life of the debt, i.e., the terms of the borrowing, while an override is a permanent increase in the levy limit.