Because of the downturn in the state’s economy, the mayor of Stratton thinks that uncollectible taxes are likely to increase from 5 percent of total tax bills to 10 percent in the coming fiscal year....

Because of the downturn in the state’s economy, the mayor of Stratton thinks that uncollectible taxes are likely to increase from 5 percent of total tax bills to 10 percent in the coming fiscal year. The total value of all the properties in the town of Stratton is $300 million and the approved budget is $3.5 million. Properties are assessed at their full value. A total of $5 million worth of properties is exempt from taxation. To minimize tax increases in the coming fiscal year, the mayor and town council have decided to take $500,000 out of the town’s rainy-day fund (a reserve used to meet short-term budget shortfalls) and apply that money toward the coming year’s budget. How much does the town have to charge per $1,000 of assessed valuation to raise the needed $3.5 million? Show your calculations. You may round your answer to the nearest penny. Be sure to check your answer by multiplying the amount you propose billing by the expected tax-collections rate to show that the amount you expect to collect is enough to meet Stratton’s fiscal needs.