RIVER VALLEY — Tax rates for Rumford and Mexico are going up by 1.75 and 2 mils, respectively.

Town Manager Carlo Puiia said Rumford’s 2012-13 tax rate has increased from 22.5 to 24.25. It had been 22.5 mils for the past two years.

“So we had held the line. Unfortunately, fuel costs, insurance costs, material costs, things that drive everybody’s expenses up, affects the towns as well as your own home,” he said.

The average homeowner will see an increase of $93.59, from last year’s average of $1,377.95 to $1,471.59. On average, municipal services rose $33.56, education’s cost up $46.42, county tax up $3.57 and initiated articles up $10.04 higher.

Municipal services account for 50.29 percent of the budget. “That is all that we can control from this table here or the Finance Committee, or what the citizens ultimately voted in,” said Puiia.

Education accounts for 44.59 percent, so that is the responsibility of the school board to maintain. The county tax accounts for 3.08 percent and initiated articles account for 2.04 percent.

The average home in Rumford (including land) is valued at $60,682, which is down from last year at $61,242.

In Mexico, selectmen approved Town Manager John Madigan’s recommendation to have the tax rate increase from $23 to $25 per $1,000 valuation. The increase is the result of higher school taxes of about $127,000, and increased municipal expenses.

The new tax rate will allow an overlay of $16,738, which can be used for any valuation disputes.

In a related matter, voters at the special town meeting Thursday approved allocating $100,000 (just under one mil) from the undesignated fund balance (surplus) to reduce the property tax. Madigan said the town carries the state recommended amount of surplus, which is 10 to 15 percent of the total town budget of $3.1 million.

They also approved allocating $140,000 from surplus to make this year’s payment on the $2.9 million road construction bond. A similar amount was used last year.

In a third article, voters approved taking $50,000 from surplus to make short term repairs to 1,850 feet of the Poplar Hill Road. A week earlier, residents of Poplar Hill and nearly Riley Road turned in a petition signed by 34 residents there to the Board of Selectmen requesting asking for repairs of the road because of its poor condition.

Madigan said that after the roads that the town has targeted for work, Poplar Hill is the next worst. Madigan said he has authorized engineers to survey that road, but the necessary reconstruction on the one-mile stretch would cost about $800,000, so it would be some time before the town could do this.

Regarding the $50,000 from surplus, he noted that is possible because, thanks to the past mild winter, the highway department turned backed $72,000 into surplus.

The town manager said he has asked the highway crew to repair the end of the Riley Road, which is especially bad.

Anson contractor Bruce Manzer Paving is expected to begin work on the $49,420 project in a week or two, and complete it by mid-November. To save additional costs, the town’s public works crew will do all the ditching.

Madigan said work will likely provide at least 10 years additional life to that section of the road. The remaining section of the mile-long road requires a complete rebuild. That work can’t be done until the town can accumulate sufficient funds.

Despite all these funds from suplus, he said the town still carries the state recommended amount of surplus, which is 10 to 15 percent of the total town budget of $3.1 million.

Following the special town meeting, the board also approved a five-year lease/purchase agreement with the Gorham Leasing Group for the purchase of a new Case backhoe for $78,700. That includes the trade-in of the old John Deere backhoe.

No penalty will be assessed if the town is able to pay in full before the end of the purchase period, said Madigan.

Selectmen were going to pay the full price for the backhoe up front. However, at the last meeting, Selectman George Byam presented a case for a replacement stainless steel side dump body for the town’s sander at a cost of $29,798. However, Board Chairman Richie Philbrick was very concerned about depleting the $103,000 in the equipment reserve fund so early in the budget year.

Negotiating the lease/purchase agreement for the backhoe will allow purchase of the side dump body from H.P. Fairfield of Skowhegan and still leave funds in the equipment reserve fund.