A $12 residential tax rate or a $7,500 average single family tax bill tells a story, but that story is incomplete without context. Is that tax rate or average single family tax bill reasonable for the region? Is the community’s reliance on one revenue source over another typical for communities similar in size?
This is where peer analysis becomes a critical tool for local officials. By benchmarking your community against comparable municipalities, you can identify trends, set realistic goals, and communicate complex financial realities to residents and stakeholders with greater clarity.
Fortunately, you don’t need expensive consultants to start this process. The Division of Local Services (DLS) Municipal Databank offers powerful, free tools that allow any local official to build robust peer analyses in minutes. Here is how you can leverage these resources to gain a new perspective on your community’s finances.
First, identify your peers with the Community Comparison Report. The foundation of any good analysis is a valid peer group. Comparing a small rural town to a Gateway City will yield little insight. Using the Community Comparison Report as your primary tool, you can filter through Massachusetts’ 351 cities and towns to find your distinct “financial siblings.” Instead of manually picking towns you think are similar, use the data filters to let the peers reveal themselves. Start with population and total budget. A good rule of thumb is to look for communities within +/- 20 percent of your population and total budget, excluding those that don’t share a similarly structured school district or enterprise funds. Next, add measures of property wealth and income. Filtering by Equalized Valuation (EQV) ensures you are comparing communities with a similar tax base strength, while DOR Income Per Capita aligns you with communities that have similar resident purchasing power. Once you generate the report, you can export the data directly to Excel. This allows you to create your own charts or break data down into state, county and peer group averages to create benchmarks to compare against your own community.
The second step is to visualize trends with the Municipal Finance Trend Dashboard. While the Community Comparison Report is excellent for a single snapshot in time, financial health is a moving picture. The Municipal Finance Trend Dashboard allows you to see how your community compares to others over a five-year period. Key indicators to watch include free cash as percent of budget. Is your reserve generation consistent with your peers, or is it volatile? Tax levy growth, especially new growth from additional tax revenue generated by new construction, for example. Are you growing your levy at a similar pace to your neighbors?
This dashboard is particularly effective for budget presentations. Visualizing a trend line where your community diverges sharply from the peer average often highlights a specific policy decision or structural challenge that needs to be addressed.
Lastly, taking a deeper dive using the financial forecasting template. For those looking for a more granular “fiscal health checkup,” the Financial Forecasting Template (an Excel-based template available for download on the DLS website) is the gold standard.
This template doesn't just display data; it contextualizes it. It prompts you to look at the tax levy, state aid, local receipts and other available funds against operating expenses not just as raw dollars, but as indicators of efficiency and structural sustainability. What does the operating budget look like one, two or five years out? Are there major capital expenses on the horizon? Is an override necessary?
A municipal financial forecast is important because it is a critical tool for long-term strategic planning, effective budgeting, and managing risks. By projecting revenues, expenses, and other financial trends over several years, municipalities can make informed decisions and avoid financial instability.
As you dive into the data, keep these “rules of the road” in mind to ensure your analysis is fair and credible. Don't “cherry pick,” it’s tempting to pick those who might be wealthier or lower-taxed towns to make a point, but this undermines the credibility of the analysis. Use objective criteria (like the demographic, socioeconomic and financial indicators mentioned previously) to select your group and stick to it. Look beyond geography, as your closest neighbors might not be your best financial peers. A resort town on the Cape might have more in common fiscally with a resort town in the Berkshires than with a nearby suburb. Context is important—if your data looks like an outlier, ask “Why?” High debt service as percent of budget might look bad on a chart, but if it is due to a recent, voter-approved high school project that peers haven't undertaken yet, that context changes the narrative entirely.
Data is only as useful as the questions you ask of it. We encourage all local officials—from City Council, Select Board, and finance committee members to mayors, town managers, administrators, accountants, treasurers and assessors alike—to visit the Municipal Databank this month. Run a report, find your peers, and start asking the questions that will drive your community’s financial future.
Need help developing a financial forecast? Reach out to the Financial Management Resource Bureau to attend one of our upcoming regional training workshops for hands-on help.
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City & Town is brought to you by:
Editor: Dan Bertrand
Editorial Board: Tracy Callahan, Sean Cronin, Janie Dretler, Jessica Ferry, Christopher Ketchen, Paula King, Jen McAllister, Brianna Ortiz and Tony Rassias
| Date published: | March 19, 2026 |
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