After months of uncertainty and fear that Edgecomb’s property taxes would spike for the second consecutive year, selectmen established the town’s tax commitment for 2015-2016 at their Monday, July 6 meeting.
Edgecomb’s new mil rate of 15.2, or $1,520 for every $100,000 of property value, is an approximate 2 percent increase from the previous year’s mil rate of 14.9.
Edgecomb’s mil rate has been in a state of flux for the past three years due to a tax commitment error that left the town with approximately $400,000 less than what it needed to raise for the 2012-2013 and 2013-2014 fiscal years. The error was made when responsibility for the tax commitment was outsourced to John E. O’Donnell & Associates.
The tax commitment is once again the responsibility of the board of selectmen. Selectmen, Treasurer and Town Clerk Claudia Coffin, and auditor Fred Brewer joined together to check and recheck their figures before establishing the 15.2 mil rate on July 6.
The mil rate is now stable and accounts for all of the town’s expenses, selectmen said, ending the unpredictable variations in the mil rate over the past few years.
“This [the 15.2 mil rate] was a pleasant surprise,” Chair Jack Sarmanian said. “I expected it to be much higher.”
Preliminary results of the 2013-2014 audit, announced in April, showed the surplus account in the negative, initiating discussion on the select board of raising the maximum amount possible in overlay, an addition to the tax commitment decided by selectmen, to rebuild the surplus account.
Tax commitments are largely determined by the municipal budget, the education budget, and the county tax. With the exception of the county tax, the majority of expenditures are approved by voters at town meeting.
In addition to voter-approved expenditures, selectmen are allowed by law to raise up to 5 percent of the town’s valuation in overlay, an account established to cover tax abatements. The amount in overlay not used for tax abatements is transferred to the general fund or surplus account at the end of the fiscal year, according to Maine law.
According to Coffin, however, overlay should not be used as a vehicle to rebuild the surplus account.
The amount raised in overlay has varied drastically in Edgecomb over the last seven years; from a low of $7,000 for the 2010-2011 fiscal year to a high of $129,290 for the 2012-2013 fiscal year.
The 2012-2013 and 2013-2014 fiscal years were the two highest years for the amount raised in overlay in Edgecomb. The funds were used to offset the approximate $400,000 shortfall caused by the tax commitment error, according to The Lincoln County News archives.
Selectmen had the ability to raise up to $160,783 in overlay for 2015-2016 and establish a maximum mil rate of 15.8. Selectmen, however, decided to raise $30,687.55 in overlay. According to selectmen, they do not intend to use overlay to supplement the surplus account.
According to the final results of the 2013-2014 audit, the town had a positive surplus balance of $43,959 as of June 30, 2014. According to Coffin, Edgecomb currently has $500,000 in its coffers.
Selectmen and Coffin debated the best time to take out a tax anticipation note to help with cash flow when hefty bills such as the county tax bill, the road construction loan payment, and the school bill come due in the fall.
Edgecomb residents voted at their May annual town meeting to move up the due date of taxes to Oct. 31. According to Brewer, the new due date for taxes will help with the town’s cash flow and may eliminate the need for a tax anticipation note.
Selectmen decided to table the discussion for the next selectmen’s meeting July 20. The finalized copy of the audit will be available at the town office shortly, Coffin said.
Selectmen are considering retaining Brewer, of the PFBF accounting firm, to conduct the audit for the recently ended 2014-2015 fiscal year. Selectmen said they hope to have the 2014-2015 audit completed by December, so it will be available to the budget committee at the start of the next budget season.
According to selectmen, the tax bill with a 15.2 mil rate is what taxpayers should expect to see in the future. “This is the tax bill with everything sorted out,” Selectman Mike Smith said. “People should be relieved things are stable for something that’s been unstable for awhile.”
“The board is committed to maintaining the quality of life in town for the citizens,” Sarmanian said. According to Sarmanian, there was a lot of feedback for the board when the tax commitment error was made.
However, with greater involvement from the community, there is a decreased likelihood of past mistakes reoccurring, Sarmanian said. “Be a part of the process,” Sarmanian said.