Town grows, but taxes can’t be set any lower

The town of Berlin’s property tax rate might stay the same as last year, at 80 cents per $100 of assessed value, and if it does, the tax bills received by some property owners will be slightly more than they would be under the constant yield rate of 77.9 cents.

As proposed by Mayor Zack Tyndall, leaving the 80-cent levy in place is not the wrong thing to do, when the reality is the town could use a little more than that.

The town’s constant yield rate reflects growth of the tax base of about $12.7 million — from $463.8 million to $465.5 million — since the last round of assessments and adjustments to incorporate new properties and improvements.

What keeping the 80-cent rate means is that the tax bill will remain the same for properties whose assessments have not changed since last year, rather than dropping slightly. The owner of a property assessed at $400,000, as an example, would pay $85 less than last year were the constant yield rate to be imposed.

That, however, is not a life-or-death amount of money, and arguing over it would be a matter of principle rather than finances. Meanwhile, Berlin’s problem is that even though staying the course on the tax rate will bring in roughly $101,000 in new revenue, it’s still $130,000 short of what the town needs to cover the budget as proposed.

Berlin’s thin financial situation, which is gradually being rectified by the mayor and council, stems from betting that potential growth would make up for years of low water and sewer rates. That, as everyone knows, didn’t happen.

Now, not only does the town need to regain its financial footing, but it must also, like any ordinary household, build up its cash reserves to protect itself and taxpayers from unexpected demands on its treasury. Think of the reserve fund as financial shock absorbers that keep the ride smooth when the road is unexpectedly bumpy.

Realistically, the town needs a two-cent increase on its tax rate to do everything it needs to do. Tyndall says that’s not going to happen, which makes the 80-cent rate the best deal taxpayers can expect … if the council finds a way to do it.