EDDINGTON – The Board of Selectmen set the town’s property tax rate on Tuesday and heard that the process to re-evaluate the town will begin next month, Town Manager Russell Smith said Wednesday.

The tax rate for 2005-06 was set at $17.85 per $1,000 of property valuation, a decrease of 60 cents from this year’s rate.

Starting next month, assessors from Hamlin Associates Inc. of Parkman will begin the two-year process to align Eddington property values with current state market values, a process that was last conducted in 1979.

“They’ve done some adjustments along the way, but they’ve never had a true revaluation done,” Smith said. “We have properties valued at $50,000, and they’re selling at $150,000.”

Tax bills in August 2007 should reflect a significant increase in property values for most residents, he said. A drop in the mill rate should offset the increase in values, the town manager added.

“I expect it’s [property tax] going to drop down,” he said. “I’m not sure where it will go, but it could go down to $12.”

Residents approved spending $32,500 this year and next year to do a property revaluation at the annual town meeting in March.

The state Legislature requires that municipalities tax at a minimum of 70 percent of market value, David Ledew, acting director of the property tax division of the Maine Revenue Service, said Wednesday.

Most communities, especially larger ones, try to keep property values above the 90-percentile range, which ensures that taxes are fair and equitable for property and business owners, Ledew said.

“The state has us at 71 percent” of current property values, Smith said.

The low rating has had an effect on how the town is reimbursed by the state. For example, since Eddington is assessed at 71 percent, the town received only a corresponding percentage of their homestead reimbursement.

“We were penalized for the homestead exemption,” Smith said. “We were not reimbursed for the whole amount.

“The same thing is happening again this year,” he added.

Since the last evaluation, the town has implemented several property value increases, the last being in 1997 when property and land values were increased by 15 percent across the board.

During the meeting, eight Scott’s Point Road residents petitioned selectmen to make the last 460 feet of the dirt roadway into a town road. After being told of the expense and specific road condition requirements for a private dirt road to become a town-owned and maintained paved road, the group withdrew its request.