FARMINGTON — Property owners can expect a higher tax rate than the one set last month by the Select Board after town staff members uncovered inaccuracies in data from the town’s appraisal firm.
The board has unanimously voted to reset the property tax rate, also called the mill rate, at $10.50 per $1,000 of assessed valuation based on recent revaluation figures. The new rate is less than half of last year’s rate, but more than the $9.81 rate that the board had hoped would help counter a spike in property valuations.
“Unfortunately, we’re going to have to reset the mill rate,” board Chair Matthew Smith said. “It’s not something we want to do. Some of the numbers we received weren’t right.”
The Select Board initially set the property tax rate Oct. 14, a little more than two weeks after KRT Appraisal completed the town’s first revaluation in more than 20 years.
The revaluation resulted in average home valuations nearly doubling, from $153,000 in 2024 to $300,000 this year.
In October, the Select Board set the tax rate at $9.81 per $1,000 of assessed valuation, a dramatic decrease from last year’s $21.45. At that point, it was estimated that tax bills could go out as early as the next week.
At the board meeting Nov. 4, Town Manager Erica LaCroix said two values the town had received from KRT were incorrect: The Business Equipment Tax Exemption amount was slightly understated, while the Homestead Exemption figure was roughly 10 times higher than it should have been.
The Homestead Exemption is a program that provides qualifying homeowners with a reduction of up to $25,000 in their home’s taxable value. The state reimburses municipalities for at least half of the revenue lost through the Homestead Exemption and several other property tax exemptions.
Due to incorrect figures, town officials mistakenly believed Farmington would generate $2.3 million more with the $9.81 rate than it actually would have. As a result, to fund the $12.5 million in town, school and county tax appropriations, Farmington must generate that shortfall locally.
LaCroix implemented a noncritical spending freeze across all town departments after learning of the error, a move expected to save between $250,000 and $300,000 before the end of the year. Farmington is also projected to gain from increases in non-tax revenue, though not nearly enough to offset the shortfall.
“This is definitely not the news we want to come to the public with,” LaCroix said.
She said that although she is not an assessor, she takes responsibility as head of the Town Office.
“We got bad numbers from KRT, but my job as your manager is to make sure that employees and contractors are delivering timely and accurate information, and just saying ‘I don’t know assessing’ isn’t good enough,” LaCroix said. “All I can commit to everyone is we’re going to take steps to ensure that this never happens again.”
Select Board members also accepted responsibility for the error, though some voiced frustration with KRT Appraisal, which they said started late, frequently rotated staff in Farmington and delayed delivery of the town’s first revaluation in more than two decades.
“(KRT) gave us numbers — they were supposed to be good,” board member Dennis O’Neil said. “And yeah, shame on us for believing them.”
LaCroix said via email Wednesday that the town would be discussing the errors with the firm.
“We will be holding separate meetings with KRT to discuss the errors and the impacts to the Town,” she wrote.
Select Board members reviewed three options to address the error. One option was to mail tax bills using the $9.81 rate approved Oct. 14. While this would avoid reprinting and allow more than half of the town’s taxpayers to see a decrease, it would deplete most of the town’s $3.2 million fund balance. That, in turn, could damage the town’s bond rating and lead to higher interest rates.
Additionally, tax bills would need to rise sharply next year, or the town would have to make deep cuts in services to close the gap. Taxpayers would see an increase at that point, even if the town, school and county budgets remained flat.
Select Board Vice Chair Richard Morton said using a property tax rate based on inaccurate information would be fiscally irresponsible and misleading, especially considering how severely taxpayers would be affected next year.
Another option was to preserve the town’s savings and cover the shortfall entirely through a higher tax rate. Although the proposed $11.70 rate would be lower than last year’s, it would fully fund the budget approved at the annual town meeting. However, due to increased property values, many taxpayers would still see significantly higher bills.
“I think it’s going to hurt too many people,” board member Scott Landry said of that option.
The board ultimately approved a middle-of-the-road option, setting the tax rate at $10.50 per $1,000 of assessed valuation. The motion included using $700,000 from the undesignated fund balance and liquidating a $600,000 investment account.
LaCroix told the board the actions would close the gap and leave the town with a $2.5 million fund balance. While the move will still hurt the town’s bond rating, the impact would be less severe than under the first option.
It also requires a special town meeting to authorize the board with additional emergency spending powers, allowing it to use such a large portion of the fund balance. If voters don’t provide the board with that approval, the tax rate would instead be set at $11.70, with a supplemental tax bill to make up the difference.
New tax bills are currently being printed and are expected to be placed in the mail Monday, LaCroix said via email. The new due date will be Dec. 22. Select Board members agreed that keeping the tax rate at less than $11 per $1,000 of assessed valuation was reasonable, given many taxpayers would still see a decrease.
Increasing the rate from the previously proposed $9.81 to $10.50 would also help soften the impact of future tax bills by increasing the rate more gradually.
At the $10.50 rate, a home valued at $300,000 would generate a tax bill of $3,150, before exemptions. That is still a decrease of $132, or about 4 percent, compared to the previous bill.
The Select Board discussed other consequences of the error, including how to manage future capital expenses, such as a ladder truck for Farmington Fire Rescue, and how it might affect the town’s plan to adopt a six-month transitional budget as part of shifting from a January-December fiscal year to a July-June cycle.
Board members noted that future budgets might need to be tighter than previously expected. “Things are not going to be business as usual, at least for a little while,” board member Randall Gauvin said.
One of the overarching lessons from the episode, LaCroix said, was the importance of not waiting more than 20 years between property revaluations. State law requires towns to conduct them every 10 years, though LaCroix noted enforcement has been minimal.
“This is a hard lesson for all of us,” Smith said.
The special town meeting has been scheduled for 7 p.m. on Thursday, Nov. 13, at the Municipal Building.
