Why did my town cut my real estate taxes when we have budget shortfalls?

There's been quite a bit of hand wringing in my town about the state-mandated revaluation of all real estate performed last year. Our town has been dealing with budget shortfalls for a few years now, and many residents have expressed concern about how this town-wide tax reassessment will impact their property tax bills.

To make matters worse, the Board of Assessors has mismanaged this process by outsourcing the assessment function to an understaffed local company. This has caused a major delay in completing the revaluation, which has in turn delayed collection of tax revenue that our town desperately needs to run day to day operations.

I finally received my fiscal year 2007 tax bill this week (two months late), even though I came across a bumbling assessor wandering around my property in August 2006. While I was expecting a sizable increase in my property tax bill, I was shocked to see that it had actually decreased a little from what I paid last year! While I certainly don't have a problem paying less tax this year, I don't understand how that could be possible considering the budget shortfalls that our town is currently suffering through.

The stumbling point here is the way that the tax rate is calculated. Once the town determines the operating budget required for the coming year, a tax rate is chosen such that it will provide the required revenue to fund the budget. In my case, while the taxable valuation of my property increased by 13.5%, my actual property tax bill stayed relatively flat since the tax rate declined by about 14%.

I'm not sure how the town administrators figured that we would need less money in 2007, but it should certainly make for some interesting debate at the next town meeting.