RUMFORD — Trying to find a balance between a minimal tax rate hike and establishing a rainy day fund, the Board of Selectmen voted 3-2 Monday night to raise the property tax rate 50 cents.

The new rate will be $27.45, with a fund balance of 15.70 percent, or $1.25 million. Last year’s rate was $6.95, with a fund balance of 15.10 percent.

A home with an assessed value of $100,000 would be taxed an extra $50.

Before the vote, Town Manager John Madigan said, “Even though the budget was the same, we need to raise the tax rate just to break even because we lost about $11 million in value between the (Catalyst paper) mill and Brookfield (Power hydroelectric plant).”

On April 6, town auditor Ronald H.R. Smith, managing partner of RHS Smith & Co. of Buxton, told selectmen now is the time to begin establishing a rainy day fund in case the mill closes. He said Bucksport established a rainy day fund before their mill closed.

Verso Paper Corp. shuttered the mill in December 2014, laying off 500 workers.

“I think your decision should be, not so much on what the mil rate is, but an effort to build up the fund balance for a rainy day fund,” Madigan said.

The fund balance policy of the town is to maintain a minimum balance of two months, or 16.66 percent of operating costs. The targeted balance is three months, or 25 percent. Maximum balance is not to exceed 25 percent of the operating expenditures so long as cash flow needs are met and lowest-point cash flow is not less than one payroll and one warrant combined.

Selectmen Mark Belanger and Frank DiConzo supported the largest increase of 75 cents per $1,000 dollars of assessed value, citing the recommendation by the town auditor.

Selectman Peter Chase agreed but said he didn’t want to do it “in a rush.” He opted for the 50-cent increase.

Selectman Jeff Sterling said keeping the tax rate the same as last year would please taxpayers, but it would also drop the fund balance. He said he would choose the 25-cent tax rate increase but would be open to a 50-cent hike.

“We’re never going to achieve the 16.66 percent if we keep going backward,” he noted.

“My gut is that people I represent don’t want to pay a lot more taxes in the first year,” Board of Selectmen Chairman Brad Adley said. “I think we need to do it in increments.” He said he would support the 50-cent increase.

Sterling made the motion for the 50-cent increase, which was seconded and passed, 3-2. Sterling, Chase and Adley voted for it; DiConzo and Belanger against.

The board also discussed a townwide property revaluation. The town is presently assessing property at 84 percent of market value.

If it were 100 percent, the tax rate would about $22 per thousand dollars of valuation instead of $27, Madigan said.

“But the taxes would be the same?” Belanger asked.

The answer was yes.

Madigan said the town has $130,000 set aside for a revaluation. The total cost could be $400,000, he said.

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