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 affect occurs when the values increase then tax rate will decrease.

Example: Affect of valuation change on tax rate
 
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 $20.00.
 
Valuation decreases and budget stays the same then 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 $25.00.
 
Valuation increases and budget stays the same then 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.