How are tax rates set?

The Town determines the amount of revenue (R) to be raised. The Town then totals all the assessments (A). The Town divides the revenue (R) by the Assessments (A) to get the actual tax rate: Tax Rate = R/A.

If the value of property decreases then the rate must increase to meet the budget. The opposite effect occurs when the values increase then the tax rate will decrease.

Example:

• The affect of valuation change on the tax rate

The town valuation is \$5,000,000 and the town budget was \$1,000,000. The tax rate is calculated by dividing the amount to be raised \$1,000,000 by the Valuation divided by 1000 (\$1,000,000 / (5000000/1000) equals a tax rate of \$20.

If the valuation decreases and the budget stays the same then the rate increases.

If the Town valuation decreases to \$4,000,000 and the town budget remains flat at \$1,000,000. The tax rate is calculated by dividing the amount to be raised \$1,000,000 by the Valuation divided by 1000 (\$1,000,000 / (4000000/1000) equals a tax rate of \$25.

If the valuation increases and the budget stays the same then the rate decreases.

If the Town valuation increases to \$6,000,000 and the town budget remains flat at \$1,000,000. The tax rate is calculated by dividing the amount to be raised \$1,000,000 by the Valuation divided by 1000 (\$1,000,000 / (6000000/1000) equals a tax rate of \$16.66.