Budget, Valuation and Mill Rate Projections for FY2002-03
I have attempted to forecast what our total assessed valuation will be for the coming year, as well as any foreseeable changes in revenue or expenditures. We won't know what the budget will be for expenditures until at least the end of April. But already we know what our County taxes are, how much we may lose in state subsidy to the schools, and what certain expenditures will be (such as debt service and reserve accounts). Add to this my early projections for the expenditure side of the budget, and we should have the start of a mill rate projection. I wish to underscore the obvious: these numbers are early estimates and are subject to change, good or bad. I have attempted to error on the side of the worse case scenario in each projection: I hope to be pleasantly surprised.

Valuation

The Board of Assessor's has decided to hire Bob Duplissea to conduct a town-wide sales analysis of real estate transactions over the past three years, and also to revisit the decision to keep a 10% depreciation factor for all stick-built residences. Considering that this is not dissimilar to what Bob did in 1990 as a "revaluation", it is clear that we should expect an increase in total value as a result. In particular, base land values will be adjusted, some up and some down, likely yielding a net increase. Eliminating the 10% factor on all stick-built residential structures will also have a net increase in value. To what magnitude these increases will be in the end is hard to predict, but I have attempted to do so here. In the chart below, I have listed the Town's values for land, buildings, and personal property in each of the past five years, beginning with the current year. Note that in years 1999-2000 and 1997-1998, I estimated what the figures would be: for those years I could only find a sum for the figures in each of the two categories.

Tax Year	Land Value	Building Value	Personal Property
2001-2002	54,630,900	59,050,600	5,182,000
2000-2001	54,666,800	58,131,000	9,373,800
1999-2000	54,538,500	56,386,100	9,707,000
1998-1999	54,410,200	59,909,600	9,933,300
1997-1998	54,290,000	57,308,800	10,429,800

From these numbers, I have further extrapolated the changes in value over time. Note that the value for personal property has been in steady decline, which is reflective of the loss of manufacturing in our community. The percentage listed after each value is the percentage of increase or decrease from the previous year.

Tax Year	Land Change	Building Change	Personal Property
97-98 to 98-99	120,200 (+.2214%)	2,600,800 (+4.54%)	(496,500) (-4.76%)
98-99 to 99-00	128,300 (+.2358%)	(3,523,500) (-5.88%)	(226,300) (-2.28%)
99-00 to 00-01	128,300 (+.2352%)	1,744,900 (+3.09%)	(333,200) (-3.43%)
00-01 to 01-02	(35,900) (-.0657%)	919,600 (+1.58%)	(4,191,800) (-4.47%)

Using these percentages, and through out the lowest statistical value for each category, I arrive at the following average percentages of change for the past five years in the three categories of value:

Land	Buildings	Personal Property
+.2308%	+3.07%	–3.39%

Utilizing these averages, I derive the following chart showing my projection for this year's valuation.

FY01-02	Value	%age Change	FY02-03 Value
Land	54,630,900	+.2308%	54,756,988
Buildings	59,050,600	+3.07%	60,863,453
Personal Property	5,182,000	-3,39%	5,006,330
Total	$118,863,500	+1,763,271	$120,626,771

In addition to these statistical projections, I have factored in the projected value changes for land based on the expected results of the sales analysis, and also changes for building values, based on removing the 10% factor for depreciation on stick-built residential structures.

Starting with the building values, I have found that last year's total building value was $59,050,600. Unable to determine exactly how much of this value is only stick-built residential structures (which experience the 10% depreciation), I have used 7% as a factor. 7% should make up the difference for the amount of value which is trailers or commercial property, and therefore not subjected to the 10% depreciation. Also taking into consideration the avaerage statistical increase of 3.07% for building value, mostly from new construction, I think 7% is a conservative estimate of the amount of additional value removing the 10% factor will yield.

FY01-02 Building Value	+7%	FY02-03 Building Value
59,050,600	4,133,542	63,184,142

In regard to land value, the last time this was done was 1990. The result – which has been termed a revaluation – was a doubling of the total value in Town. The expectation from the limited sales analysis here is for some base values to go up, some to go down, some to remain constant. I predict, based on what I have seen of current sales and also the impact of the 1990-1991 study, that we will see a significant net increase in land value. I may be wrong. To give a conservative estimate, I predict an overall 5% increase in land values, yielding the following total land value.

FY01-02 Land Value	+5%	FY02-03 Land Value
54,630,900	2,731,545	$57,362,445

The following are my estimates for total valuation for FY02-03.

FY01-02	%age Change	FY02-03
Land	54,630,900	5% = 2,731,545	57,362,445
Buildings	59,050,600	7% = 4,133,542	63,184,142
Personal Property	5,182,000	(3.39% = 175,670)	5,006,330
TOTAL	$118,863,500	$6,689,417	$125,552,917

These are my estimates in value. They will change, but they certainly will not be this high if the sales analysis is not implemented, as well as a full roll-back of the 10% depreciation on stick-built residential structures.

Budget

I have used similar methods to devise the percentage increases last year in both municipal and school expenditures. The attached mill rate calculation shows what the above-derived total value will likely yield if expenditures go up as listed, and revenues do not increase at all.

Projected Mill Rate

Based on these projections, I predict a mill-rate around $21.66 per $1,000 valuation. I believe this is a worse-case scenario, and will hopefully not be any higher than this. The municipal budget figures are from my draft budget figures, which will be reduced, I believe, by a combination of myself and the Board and the budget committee. The school budget figures are simply estimates based on how much of an increase we experienced last year: Dick Gould, our school board chairman, says he intends to not increase the budget beyond last year's figure. If he can keep it to no more of an increase than was experienced last year, this projection will be accurate. Further, I have left "other revenue" flat-funded. We will have increases in this line as the share to be paid by Beaver Cove, Piscataquis County, and Shirley go up for such items as Fire Protection and Solid Waste. And if the state can find some more money for the schools than what is currently projected ($42,000 to $56,000 less than last year), that will favorably impact us as well.

Recommendation
Begin to review the budget I will present to you by the end of the month (preferably by March 20), and see what we can do. I will monitor state funding and also seek Bob Duplissea's comments and keep you posted. If we discover we do not have to have such a large overlay, we could save .37 mill.