PRESQUE ISLE – The 2007 mill rate is down by five-tenths of a percent after City Council approval earlier this month, but some tax bills still will show a slight increase.

City Manager Tom Stevens said Monday that while this year’s mill rate is 26.15 – last year’s was 26.20 – a change in assessed property values will mean an overall increase for some taxpayers.

Stevens explained that the city’s assessed value usually is set at 100 percent, but that officials knew that number would be lower this year based on the difference between homes’ sale prices compared to how they were valued.

The city’s 2007 assessed value on property was certified at 89 percent. That change affects people who are eligible for certain exemptions, such as the homestead exemption, which is available to Maine residents who own homes.

The homestead exemption allows eligible people to exclude $13,000 of their home’s value before paying taxes. But with the assessed value at 89 percent, the exemption decreases to $11,570, and that means homeowners have to pay taxes on the $1,430 difference.

Here’s how it would work with a home valued at $100,000: Based on the 26.15 mill rate, a homeowner would pay $2,615. The year before, he would have paid $2,620, so his bill initially would be down by $5.

But if the homeowner were eligible for the homestead exemption, the $1,430 difference would be taxable, in this case $37. That would increase his tax bill, which had been down by $5, back up by $32. That would bring the total tax bill for a $100,000 home – one that received a homestead exemption – to $2,647.

Business property owners will not be affected by the change because they are not eligible for the homestead exemption.

Stevens said city officials are working to bring the assessed value back up to 100 percent by next year. The city recently hired a new assistant assessor to help complete the work. The city manager pointed out that the issue is not as simple as raising all properties by a certain percentage.

“We don’t want to overassess,” Stevens said. “We’re trying to make the assessing fair, so if a home is really worth $100,000, we should have it assessed at something close to that.”

Stevens said that despite slightly higher tax bills for some, the good news about this year’s mill rate is that the city was able to hold steady, though officials had to use more surplus money – from $525,000 in 2006 to $600,000 this year – to keep the mill rate down.

This year’s figures also showed a 3 percent or $11 million increase in property valuation. The city’s total valuation for 2007 is $413 million.

“Our financial position as a city continues to be strong and solid,” Stevens said. “And the future looks quite promising, financially.”

The Presque Isle City Council unanimously approved the 2007 mill rate on July 9. Tax bills are expected to go out this week.