Kathi Mahar, treasurer of the town of Mount Desert. Mahar recommended that surplus funds on hand be used to hold down a property tax increase in town. ISLANDER FILE PHOTO

Surplus shift eases tax hike

MOUNT DESERT — An additional $100,000 in unexpended funds will go into the town’s budget next year to help trim an increase in property taxes.

It will cut the projected higher tax rate by about five cents.

Surplus or “undesignated” funds in a municipal budget are the result of lower-than-expected costs or higher-than-expected revenues in previous years.

In each of the past few years, the town has used $300,000 in undesignated funds to boost the revenue side of the budget and help offset spending. The Board of Selectmen Monday night approved Treasurer Kathi Mahar’s recommendation to increase that to $400,000 for the next fiscal year.

She said in a memo to the selectmen that the “rule of thumb” for municipal budgeting is to keep an undesignated fund balance between 10 and 12 percent of the annual budget. This year for Mount Desert, that would be between $1.65 million and $1.98 million.

Mahar said the town’s current balance of surplus funds is about $2.08 million, or 12.6 percent of the budget and $96,148 more than the suggested rule-of-thumb maximum.

Given that, Mahar recommended “an additional $100,000 of surplus funds be appropriated from the undesignated fund balance to reduce the 2017-2018 tax commitment.”

Voters at the May 2 town meeting will be asked to approve a budget totaling just under $16.79 million – $9.24 million for municipal services, $6.69 million for education and $865,972 for Hancock County taxes.

All of that represents a 2.15 percent increase over the current year’s budget.

The tax rate for next year has not been determined because it is based on two factors, the budget as adopted at town meeting and the town’s total assessed property value. Assessor Kyle Avila has not yet completed this year’s assessment.

Based on the current valuation and the proposed budget for next year, the tax rate would increase by 18 cents to $7.45 per $1,000 of property value. The bill for a property valued at $250,000 would increase $45.

Without the $100,000 increase in the use of surplus funds, the tax rate would go up by about 23 cents.

But it is possible that the assessment Avila is completing this spring will find that new construction over the past year has boosted the town’s total valuation enough that there will be little or no increase in the tax rate.

Dick Broom

Dick Broom

Reporter at Mount Desert Islander
Dick Broom covers the towns of Mount Desert and Southwest Harbor, Mount Desert Island High School and the school system board and superintendent's office. He enjoys hiking with his golden retriever and finding new places for her to swim. [email protected]
Dick Broom

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