MECHANIC FALLS – Higher tax bills for some homeowners in the next two years are inevitable.

Recent sales of houses here have been higher than the assessed values of most and that has got to change, says the town manager.

Each year Maine Revenue Services conducts a sales analysis for every town. A representative from the state agency looks at 10 to 12 recent real-estate sales, the assessed values of the properties and the actual sale prices.

Ideally, towns should maintain a sales ratio of 100 percent. That is the difference between the assessed value and actual sales price. The average in Mechanic Falls dropped for the third consecutive year to its current level of 95 percent.

“The problem comes when the 100 percent sales ratio begins to drop,” said Town Manager Dana Lee.

Under Maine’s Homestead Exemption Act, the first $7,000 of the value of a taxpayer’s principal residence is exempted as long as the town’s sales ratio is at 100 percent. The state pays the exempted portion of the taxes to the town.

When the ratio is lower, the property owners pay taxes on a larger percentage of the assessed value. Mechanic Falls taxpayers currently receive a credit of $6,650, which is $350 below the maximum allowed by the state.

“We’re rapidly moving toward a need to do a revaluation,” Lee said. He asked the Town Council a year ago to begin putting aside funds. The council put aside $10,000 last year and likely will do the same this year. The cost of the revaluation is estimated to be in excess of $50,000. It would likely be done during the 2004-05 fiscal year.

There are two sides to the issue, with winners and losers, Lee said.

“Everybody’s valuation on property is generally more accurate after a reval and the mill rate tends to go down because you’re spreading the taxes over greater wealth,” he said.

“But you’ll have houses that we may have valued at $49,000 and after a reval it’s $85,000 and their taxes will shoot up.”