Bangor City Hall shown in 2017. Credit: Ashley L. Conti / BDN

The Bangor City Council lowered the city’s property tax rate for the coming year on Monday night, but homeowners can still expect to see their property tax bills rise following a year of a soaring housing market and sluggish commercial sales.

Bangor’s mill rate will drop to $22.90 for every $1,000 in assessed property value from $23.20 under the $111 million budget councilors approved Monday. That budget will increase overall spending by nearly 4 percent over current levels.

The city will have $60.2 million in funding as a result of the budget while the Bangor School Department will have $50.7 million at its disposal in the fiscal year that begins Thursday. The municipal side of the budget grew by 6 percent, or $3.2 million, while the school department budget grew by 1.4 percent, or about $700,000.  

The new budget has little in the way of new initiatives. Many of the new costs are related to increases in salaries and benefits for city employees.

The drop in the city’s mill rate means that a family owning an average Bangor home worth about $175,000 would ostensibly see their tax burden drop from $4,060 to $4,007.50.

But residential property owners can actually expect to see their property taxes rise as they shoulder a greater share of the city’s tax burden because of rising property values.

Residential properties now account for 53 percent of the city’s aggregate property value, up from 51 percent last year, amid a soaring housing market that’s driven up home prices and slow commercial sales over the past year that have driven down the value of commercial properties.

The average home has risen by more than $12,000 in value, translating into an 8 percent, or $263, increase to the average Bangor property tax bill.

Councilor Jonathan Sprague said the 8 percent increase troubled him.

“We know that this will affect people on fixed income more than others,” Sprague said. “I’m troubled by that.”

A budget deal the Maine Legislature is expected to vote on Thursday would increase revenue sharing — a state program that distributes a portion of state sales and income taxes to towns and cities — and help lower that increase to about 6 percent, according to city officials.

The city also expects to receive up to $21 million in American Rescue Plan funding, though a detailed set of rules on how they can be used have not yet been released, City Manager Cathy Conlow has said. She noted the city could use the funds to offset revenue losses related to the Bangor International Airport, Community Connector and Cross Insurance Center in the years to come.

Retail, hospitality and gaming properties in the city have declined by $30 million in value in the past year, while residential properties saw a $70 million aggregate increase in their value, Bangor Assessor Phil Drew said earlier this month.

Councilor Sarah Nichols, who noted that her home had gone up in value by $50,000, said that nobody wants to increase a budget. But she said it was a necessary evil to fund the city’s numerous operations.

“If we were going to reduce our budget, it would all be in staff and programs,” Councilor Sarah Nichols said. “We need these services. This is what people are drawn to Bangor for.”