A reevaluation (or property revaluation) is the process by which a town or municipality reassesses the value of all properties within its jurisdiction. The impact of a reevaluation on the town's mill rate is closely tied to changes in property values, and here's how it works:

1. What is a Mill Rate?

The mill rate (or millage rate) is the amount of property tax paid per $1,000 of assessed property value. For example, if the mill rate is 25 mills, then a property valued at $100,000 would pay $2,500 in taxes ($100,000 ÷ 1,000 × 25 mills).

2. What is a Property Reevaluation?

A reevaluation is the process where a town or city re-assesses the values of all taxable properties within its boundaries, usually due to changes in the local real estate market. Property values may go up, down, or remain stable based on the market, property improvements, or other factors.

3. How Does a Reevaluation Affect the Mill Rate?

• If Property Values Increase:
  When the assessed values of properties increase, the total taxable value of all properties in the town increases. However, to avoid a windfall gain (where the town collects more tax revenue due to higher property values without needing to raise the mill rate), the town's Board of Finance or Select Board will likely adjust the mill rate downward. This helps keep the total tax revenue roughly the same as before the revaluation, even though property values have gone up.

  Example:
  Before reevaluation, the town’s total taxable property value might be $500 million, and with a mill rate of 30, the town collects $15 million in taxes. After reevaluation, the town’s total taxable value might increase to $600 million, but to keep tax revenue at $15 million, the mill rate would need to decrease to 25.

• If Property Values Decrease:
  If the reevaluation shows that property values have declined, the total taxable value of all properties in the town would decrease. To maintain the same level of tax revenue, the town may raise the mill rate. However, the increase in the mill rate would still be subject to oversight to ensure the town isn't over-collecting taxes.

  Example:
  If the town's total taxable value drops from $500 million to $400 million, and the town still needs $15 million in revenue, the mill rate might increase from 30 to 37.5.

4. How Does This Impact Property Owners?

• For Individual Property Owners:
  Depending on how their property value changes in comparison to the average townwide change, property owners may see a higher or lower tax bill despite the change in the mill rate. If their property value increases more than the average townwide increase, they might pay higher taxes, even with a lower mill rate. Conversely, if their property value increases less than the average, they might see a reduction in their taxes.

• For the Town:
  The goal of a reevaluation is to ensure that the tax burden is distributed fairly based on current property values, so that no one property owner is unfairly over- or under-taxed. It also allows the town to continue funding its budget without experiencing large fluctuations in tax revenue.

Summary

In short, a reevaluation impacts the mill rate by adjusting it to reflect the changes in total property values. If property values increase, the mill rate generally goes down to keep revenue steady. If property values decrease, the mill rate might go up to compensate. The reevaluation itself doesn’t automatically increase or decrease total tax revenue; it’s the mill rate adjustment that determines the overall tax burden.