The town of Bow’s fiscal year 2007 tax rate has been set and due to the floods in May, the town was unable to apply as much money from surplus as it had originally hoped.

The new tax rate is $27.99 per $1,000 assessed property value, or $8,397 on a $300,000 home, a $1.62 raise over last year’s rate of $26.37, or a 6.1 percent increase.

“Had we had the usual amount of surplus to apply toward the tax rate, the increase in the municipal portion of the tax rate would have been less,” Town Manager Jim Pitts said.

“Because the law and DRA (state Department of Revenue Administration) allow surplus to be used for catastrophic events, the surplus was significantly less.”

Still, Pitts said the $1.62 increase in taxes is still less than the $1.82 increase of last year. Pitts said due primarily to emergency relief and repair costs stemming from flood damage, the DRA gave Bow permission to use surplus funds to assist with the state of emergency in town.

Once the president of the United States declared Merrimack County a federal disaster area, FEMA became obligated to pay 75 percent of repair costs, but the remaining 25 percent had to be deducted from town surplus, at least initially.

The state of New Hampshire, according to Pitts, has historically paid an eighth of the total cost, which would leave Bow with the remaining 12.5 percent Although the state has yet to approve such a move, Pitts said he expects historical precedent to be followed.

This year, the town applied roughly $600,000 against the tax rate, about half as much as last year.

“Normally, we take the surplus that’s left over from the recently closed budget and that goes into the town’s general fund balance,” said Pitts.

“We normally take anything we have over the maximum general fund balance required by the DRA and apply that toward next year’s taxes to give that back to the taxpayer in that form.”

While the town had an increase of 77 cents, going from $4.57 to $5.34, the largest percentage of the tax jump can be attributed to an 89 cent increase in the local education tax rate, which is up from $15.90 last year to $16.79 this year.

Superintendent of Schools Kathleen Holt, however, said the increase can be deceptive because of insurance and fuel costs and the jump could have been worse had the district not returned $978,796 from last year’s budget.

“One of the major portions of that would have been salary savings from staff that we either did not replace for a period of time or when we did, we hired at a lower rate,” said Holt.

“Health insurance came in 3.7 less than we expected, about $300,000 less, and we saved another $375,000 in salaries. Plus, we had additional unanticipated revenue.”

Holt said unlike the town, the school district cannot carry funds over from one year to the next, and was forced to give money back to apply against the tax rate, rather than using it for the current fiscal year.

This year, however, is a little different from last.

“What we budgeted is exactly what we are paying, which unfortunately was a high increase in salaries with the new teachers’ contract and the second year of support staff contract,” said Holt.

There was also a substantial increase in health insurance costs, a minor increase in dental, and a sizable increase in diesel fuel cost, electricity, natural gas and heating oil, said Holt, who noted that with the recent decrease in gas prices, any unused money will again be returned to the taxpayer.

Additional funds were used for special education, a significant change in the mathematics curriculum and a new assessment testing program.

Outside of the town and school district realm, another 10 cents was added to the rate from the Merrimack County tax, which rose from $2.47 to $2.57. There was, however, a slight reduction of 14 cents from the statewide education property tax, which dropped from $3.43 last year to $3.29 in 2007.