FARMINGTON – Selectmen reduced the tax rate by $1.35 per $1,000 of valuation Tuesday when they set the rate at $14.48 for this year. Offsetting the rate reduction will be a hike in real estate values by 13 percent that most likely will result in a tax increase for many.

“People’s taxes were going to go up anyway because the budget increased,” town Assessor Mark Caldwell said Wednesday.

Caldwell said that the real estate market in the last few years has pushed values up so that the town’s level of assessment has dropped to 77 percent of fair market value. He added that state law mandates the revaluation in order to maintain the current level of exemptions.

The 13 percent increase would “allow the town to use 100 percent of exemptions such as the Homestead, veterans, and blind exemptions. By state law, I would have to use less then the full exemption if values are not brought up. My calculations show it would be appropriate to use 80 percent of the full exemption,” Caldwell stated in a memorandum to selectmen.

He also pointed out that residential growth has been offset by personal property valuations.

“The new taxable value changes from 2007 came mainly from residential growth,” Caldwell said.

The town’s taxable real estate value increased from $308.3 million in 2006 to $316.5 million compared to taxable personal property valuation that dropped from $28.1 million last year to $27.96 million this year.

“These changes coupled with the new exemptions and appropriations resulted in a net increase of 3.66 percent for this tax year,” Caldwell stated.

The town’s total appropriations for 2007 are $7.8 million, up from $7.49 million last year.

Appropriations include $407,452.50 for county tax, up from $383,020 last year; $4.16 million for municipal, up from $3.77 million; $3.25 million for school appropriations, down from $3.28 million last year.

After factoring in revenues, the net amount to be raised by property tax is $5.7 million compared to $5.4 million in 2006.

Under this tax rate a home valued at $113,000 this year would be taxed $1,448, factoring in the $13,000 Homestead Exemption. A home valued at $100,000 last year, and factoring in the $13,000 Homestead Exemption, was taxed at $1,377.21, according Caldwell’s data.

In other business, selectmen awarded the contract for the Church Street reconstruction project to T. Buck Inc. of Auburn for a bid of $109,389. The other bid received was from E.L. Vining & Son Inc. of Farmington for $111,978.75. Though the Vining bid fit into the selectmen’s specifications of a 5 percent preference to a local contractor, because it is a federal grant project, the project had to go to the low bidder, town secretary, Linda Grant said Wednesday.

[email protected]