534 Pequawket Trail, West Baldwin, Maine 04091
(207) 625-3581 & (207) 625-9107
Fax: (207) 625-7780
A Report from the Board of Selectmen on Property Taxes 14 Jan 2018
This is the third installment in a series of reports that discuss property taxes. You don’t need to read the previous two to understand this one but you are encouraged to anyway. This one is about current year property taxes and how they fit into the overall town budget, and how you can measure it from year to year.
There is a block on your annual Real Property Tax Bill titled “Current Billing Distribution.” This area is required by state statute and is supposed to list the percentage and amount of your taxes being spent on County Taxes, the Town Budget, and the Schools. This year the percentages on you tax bills was 5%, 25%, and 70% respectively. The dollar amounts listed after the percentages will depend on your individual tax bill(s).
The Town of Baldwin collects property taxes so that it can pay for the goods and services that the townspeople vote for at Town Meeting. The major goods and services are schooling, fire protection, emergency medical treatment and transport, snow plowing of municipal roads, road maintenance and repair, building inspections and other code enforcement, animal control, maintenance, repair and support costs for the town buildings. And it must also pay county taxes.
The Town voted to raise approximately $1,277,089.00 last year for specific line items in the town warrant. In addition it needed about $104,000.00 for county taxes and $1,538,096.00 for our share of MSAD 55’s budget. At tax commitment time the Board of Selectmen also added $11,184.00 of overlay for a total funding requirement of $2,930,639.00
Basic math says that
The municipal budget takes up $1,277,089.00/$2,930,639.00 = 43.58% of our spending
Our share of MSAD 55 takes up $1,538,096.00/$2,930,639.00 = 52.48% of our spending
County taxes takes up $104,000.00/$2,930,639.00 = 3.55 % of our spending.
Overlay makes up the rest.
Where did the money come from to pay these bills?
Group 1: From the State of Maine: About $148,239.00 broken out roughly as follows
$40,000.00 in state revenue sharing
$53,303.00 in homestead reimbursements
$11,936.00 in BETE reimbursements (Business Equipment Tax Exemption)
$43,000.00 from local road assistance (LRAP)
Group 2: From the Town of Baldwin: $769,992.00 broken out roughly as follows
$287,449.00 from excise taxes (estimated) (a tax on property from the current year)
$25,543.00 from building permits, clerk fees, etc. (estimated)
$250,000.00 from the undesignated fund balance (taxes collected previously)
$50,000.00 from the tax stabilization reserve account (taxes collected previously)
$157,000.00 from the road maintenance reserve account (taxes collected previously)
Group 3: From the Town of Baldwin: $2,055,409.00 from property taxes committed to be collected this year.
If you were to say that we only pay our MSAD 55 bill from property taxes collected this year, you could say that support of MSAD 55 cost the Town of Baldwin about 75% of those newly collected taxes. A number somewhat close to that is what you will see in the “Current Distribution” section of your annual property tax bill. However, that number can be misleading and could shift dramatically, with no change in the overall budget. How? With the exception of the clerk fees and building permits, the income sources in 2 above are also property taxes, some collected this year, and some in previous years ($457,000.00 from fund balance and reserve accounts). If you think about what happens when/if the reserve accounts stabilize and are no longer a source for funding current operations, and the budget is more closely managed so that use of the undesignated fund balance is reduced, you will see that a large chunk of the funding from group 2 will need to be replaced by funding from group 3 above, i.e.: property taxes from the current year. If the overall budget remained the same but $400,000.00 was shifted from group 2 to group 3 sources, the “Current Distribution” section of your tax bill would show about 62% for schools instead of 75%, with no actual change in spending by the schools or the town!
That’s a lot of information to digest but the bottom line is that the more the Town gets away from dipping into reserve accounts and the undesignated fund balance to fund current year requirements, the lower the school funding percentage on your property tax bill will be.
In addition, the Board of Selectmen is proposing for this coming budget year, that the town establish long term capital expenditure plans. The plan in its current form reflects a substantial long-term investment, primarily for Fire Department and Town Roads vehicles, which will need to be raised from property taxes. This will further lower the school funding percentage number on your property tax bill.
Baldwin Board of Selectmen
Town of Baldwin, Maine
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