By Eileen M. Adams,Staff Writer

DIXFIELD – Selectmen will hold a special meeting next week to discuss setting the tax rate, they agreed this week. They also voted to extend leases for SAD 21 and the U.S. Postal Service.

Town Manager John Madigan said the board will meet at 5 p.m. on Monday to review all figures related to the municipal budget, then possibly set the tax rate.

The budget approved by residents at the annual town meeting called for increasing the current tax rate of $26 per $1,000 valuation by $2. Another $1.75 increase might be necessary to offset the loss of state funding under the Homestead Exemption program, he said.

During past years, selectmen have called a special town meeting to gain approval to take funds from the town’s surplus in an effort to keep the tax rate down. That may happen again, Madigan said. The town currently has $734,000 in surplus. Each mill of property tax raises $77,000.

“We will look at the whole budget and we could cut some approved items,” Madigan said Tuesday afternoon.

He said his goal is to send out tax bills sometime in early September.

Also Monday, selectmen approved extending the lease for SAD 21’s use of half of the town garage for five years. The annual rate, effective July 1, 2005, will increase from $9,400 per year to $12,000, with a cost-of-living component built into the contract. Madigan said the higher rate is due to increased costs for heat, electricity and water, which are paid by the town.

The board also approved a five-year extension of the U.S. Postal Service lease with the town for the post office building on Main Street. The annual rent will increase from $13,500 annually to $14,500, beginning in January 2007. The Postal Service pays all utilities.

Also on Monday, the board voted to petition the Maine Department of Transportation to pay 50 percent of the cost of replacing the Thad White Bridge on Coburn Avenue. The towns of Dixfield and Mexico each own half of the bridge. Madigan said the cost of replacement is estimated at just over $200,000.