WATERVILLE — The $38 million municipal and school budget the City Council passed earlier this week may have produced a new tax rate of $27.56 per $1,000 worth of valuation, but City Manager Michael Roy said Thursday that the actual tax rate is $24.50 because of the city’s recently completed revaluation.
Roy received a lot of calls this week after property owners received letters from Vision Government Solutions, the company that did the revaluation, informing them of the new values on their properties. In many cases, taxpayers’ property values increased significantly.
Roy said they multiplied the new value by $27.56 to calculate how much they will have to pay in taxes, but that is not an accurate calculation.
He said people who signed up for the homestead exemption deduction first should subtract $15,000 from their new property value and then multiply that new number by 0.0245 to calculate the correct amount of money they will pay in taxes.
To qualify for a homestead exemption, a building owner must live in the building being assessed, he said. The homestead exemption does not apply to commercial property. Allison Brochu, administrative assistant to the city assessor, said that of about 5,500 real estate owners in the city, including commercial and residential, roughly 3,400 took advantage of the homestead exemption.
To clarify how to calculate one’s taxes, Roy cited an example of someone who owns a property with a new value of $100,000, as designated on the letter from Vision Government Solutions.
To calculate the amount of taxes the person will pay, the taxpayer must subtract $15,000 from $100,000 and multiply that $85,000 by 0.0245 to get $2,082.50 — the final tax amount.
With the passage Tuesday of the $38 million municipal and school budget for 2016-17, officials said the tax rate decreased 24 cents — from $27.80 to $27.56 per $1,000 worth of valuation, but Roy said officials did not determine the final tax rate of $24.50 until Thursday after including information from the completed revaluation.
“People are taking their property value and multiplying by $27.56, and they’re in shock because of the increase,” he said.
Official tax bills are scheduled to be mailed to taxpayers in August, according to Roy.
He said the city’s last revaluation occurred 23 years ago, and a shift has occurred with the new valuation.
“In general, it appears that residential properties have appreciated faster than commercial properties,” he said.
The tax rate went from $27.56 to $24.50 because the city’s total property values increased from $650 million to $750 million, according to Roy.
Mayor Nick Isgro on Wednesday vetoed the council’s approval of the $38 million budget, which will go before councilors again on July 19. Isgro said in his veto message that property owners are being driven from their homes because of the city’s high tax rate, and elderly retirees and others will struggle to find the money to pay for their tax increase.
Isgro said Thursday that in 48 hours, more than 50 people had contacted him by email and Facebook to complain about the increase.
“The messages I’m getting are, ‘I don’t know how my family can absorb this kind of increase, and we’ll have to choose between paying taxes and what we spend on groceries and utilities. And how we even take care of this property?'” he said.
Citing a story from the Morning Sentinel from September 2014, Isgro said then-Mayor Karen Heck said after the revaluation is complete, there would be a huge difference in how people perceive the city’s tax rate, which people at the time were complaining was too high, at $27.40 per $1,000 of valuation. Then-Council Chairman Fred Stubbert said at the time the new valuation should cause the tax rate to decrease to around $20 per $1,000.
The city is paying Vision, of Northborough, Massachusetts, about $300,000 for the revaluation work.
Isgro said a lot of Waterville’s problems go back many years. Over a 10-year period, the municipal and school budget increased $5 million, not counting revenue; and of that, the school budget accounted for $3 million of the increase, he said.
“The budget just grows and grows and grows,” he said. “I’m still pretty firm on the veto. If anything, the revaluation is a little more of a wake-up call to people to get more engaged with councilors.”
He said that at this point in the process, making further cuts to the budget is going to be difficult and residents are encouraged to come to the meeting on July 19 to say what they need.
“I’ve encouraged people to come to all of our budget meetings for two years. This is a good indicator of why people should show up.”
Isgro said in his veto message that state revenue sharing to the city was $2.4 million in 2009-10, down from the previous year, when it received $2.9 million. This year, the city expects to get about $1 million. From 2011 to 2014, the city borrowed $12 million for various projects including a new police station, renovations to the library, opera house, Quarry Road Recreation Area, the airport, City Hall, work for roads and equipment and the property revaluation. Surplus was used to fill the gap, and now the city has to pay $1 million in annual fixed debt expenditures, according to Isgro.
The city is not to take all the blame, he said. The state changed the school funding formula as it relates to Title I funding and cut revenue sharing, and last year the Legislature increased the homestead exemption from $10,000 to $15,000.
“While legislators touted this form of property tax relief, the city lost $13 million in assessable value,” Isgro’s veto message says. “Cities and towns all over the state are now having to work this loss into the local mill rate.”
Amy Calder — 861-9247
Twitter: @AmyCalder17
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