| Peter Bragdon, Select Board Chair |
Here in New Gloucester, it is what we call “budget season.” It’s a time of numerous meetings with terms being used like mil rate, overlay, Undesignated Fund, abatement, TIF and CIP, to list a few. At the end of a few months, the dust settles and taxes are calculated. Do you ever wonder how this process works or what all these terms mean? Over the next few weeks, I will be sharing articles about the budget process and taxes. Please note this information is provided by me and not representative of the Select Board.
All you need to know about taxes…
Every fiscal year (July 1-June 30) you owe taxes on the real estate property you own. The taxes are based on the value of the home/property and what the tax rate is for New Gloucester. The tax rate is referred to as “the mil rate,” which we will discuss more later. Taxes are due in October and April. If you do not pay your taxes, the town reserves the right to foreclose on the property whether or not you have a mortgage.
Some towns have an Assessor who is an employee of the town. In New Gloucester we contract with John E. O’Donnell & Associates to serve as our assessors’ agent. Their role is to determine property values and work with the tax assessments. The Select Board also serve as the Board of Assessors, which is the next level above John E. O’Donnell Associates.
There are two types of property taxes that are assessed directly by the town, the first being real property taxes that I mentioned already and the next being personal property taxes. Despite the name, personal property taxes are paid by businesses each year. Businesses are taxed on the equipment they own and use to run their business. For example, a welding shop may pay taxes on the value of computers, welding machines, special cutters, and other items they use daily for their operation.
Another term used often is abatement. If you feel you have been overtaxed, you can ask for an abatement. You are asking the town to eliminate the taxes that were over-assessed, that don’t belong to you because the property was sold or because you are being taxed on property that is not yours. This process starts with John E. O’Donnell Associates. In most cases everything is solved at that level. If not, it can then go to the Board of Assessors. If not resolved at the town level, it can move to the County of Cumberland, and then lastly it potentially could go to court. The last two steps are rare; most often abatements are handled at the town level. It should be noted there is also a hardship abatement. If a property owner meets certain low income and asset levels and cannot pay their taxes, the town can then abate the taxes owed. This process is done in executive session.
The current tax rate or mil rate for the town is $13.80. The term “mil rate” means that for every $1000 of value in your house, you pay $13.80. If your property is valued at $100,000, your taxes would be $1380.00. If the mil rate goes up, it means you pay more taxes; if the mil rate goes down, then you pay less taxes. Generally, the mil rate goes up when the town spends more money than in the prior year.
It is important to note, taxes that are paid for your property or business get divided into three places. About 71% of your taxes are sent to the School District, and about 4% are sent to Cumberland County. The remaining approximately 25% of your taxes stay in New Gloucester. Of every $13.80, you pay only approximately $3.45 directed to the Town of New Gloucester. To calculate further, for a home valued at $250,000 with the current mil rate of $13.80, taxes would be $3450 for one year. Approximately $860 of the $3450 goes to the town, $2450 to the schools and $140 to the county. The Select Board has no direct control over the portions of the mil rate for the schools and county. The School Board and County Commissioners develop their respective budgets.
There are two programs most used that are available to help with tax bills. A Homestead Exemption can be applied for after living in your residence for over 1 year and meeting other easy stipulations. It shelters $25,000 of the value of your home. That means if your home is worth $200,000, you would only have to pay taxes on $175,000, saving you $345 in taxes under our current mil rate. There is also a Veterans Exemption for some veterans. If you apply and meet the standards set forth, $6000 in value is exempt, for a savings of $83 in taxes
The last topic on taxes is the term “revaluation.” This is the process (about every ten years) where the town has all property values re-evaluated. Many properties rise in value, some stay the same and some go down. There are several factors that are looked at while re-evaluating a property. When the process is completed, it often means the mil rate will go down. In New Gloucester’s recent situation, the mil rate did drop but the value of the town went up. When the value of the town goes up, it means a larger tax base, so the mil rate does not need to be as high to cover the budget. At the end of the day, the same number of properties in town are funding the budget amount even though the mil rate is lower. For example, your property could have been valued at $200,000 before the revaluation. After the process, the mil rate is lower but the same house might now be valued at $250,000, so the lower tax rate doesn’t always mean you are paying less in taxes.
In closing, I recommend you go online to the John E. O’Donnell website: www.jeodonnell.com. Locate the tab for the town of New Gloucester. You can then search for your property and see the information on it. Please note that taxes are public record. With that said, you can ask to have some of your information blocked online, but it would still be available if someone inquired personally about it.
I hope this helps shed some light on a not-so-fun topic. Stayed tuned as my next topic will talk about budget terminology.
Please reach out anytime with questions: pbragdon@newgloucester.com or 740-7528.
