When first presented with the options, Newcastle's board of selectmen could pick between a lower tax rate or saving more for a rainy day.

In the end, they went with both.

The board agreed to split the difference between $18 per $1,000 of assessed valuation and $18.10 per $1,000 and went with a rate of $18.05.

The move will create $27,000 in overlay, which has been used in past years to cover abatement costs and to add to the town's fund balance in order to build up a reserve.

Newcastle's reserves, which assessor's agent Jim Murphy said should be between $600,000 and $800,000 or enough to run the town for six weeks, were almost completely depleted several years ago when the town's calendar changed. Newcastle had previously operated with a budget cycle that mirrored a normal calendar; several years ago the town switched to a fiscal year calendar, which runs from July 1 to July 30 of the following year.

That meant that when Newcastle made the switch, the town was operating for 18 months on a 12-month budget, Selectman Ben Frey said. While the town didn't have to acquire a loan or tax anticipation note (TAN) to cover the cost, most of the burden was placed on the town's reserve funds.

The past several years have been dedicated to a higher overlay to allowed the town to build up that reserve, Frey said. Newcastle has more than $170,000 saved currently.

Murphy said the tax rate is set by the state, which determines how high or low the rate can be. The highest the rate could have been was $18.80, which would have led to a large overlay, but would have required taxpayers to pay more in property taxes.

The lowest the town could have gone was $18, Murphy said, but it would have added only $14,000 in overlay. The rate was $17.40 last year, which created an overlay of $55,000.

“Last year we had 14 total abatements,” Frey said. “(Overlay) is one of the few ways to raise or increase the fund balance — the town really doesn't have too many ways to raise (the reserve).”

Murphy said things could be on the upswing for Newcastle potentially. He said the newly-constructed Central Maine Power hardware in Newcastle could add to the valuation, and an up-tick coming in the future from Lincoln Academy's new buildings could add to the tax base.

“The number of new house permits is down, but we could still see a bit of a bounce (in the future),” he said.

Newcastle's budget increased in 2015-16 from increases in the county tax and school budgets. Newcastle voters approved a $1.56 million municipal budget during the June town meeting, along with a $372,000 county tax and $3,089,000 school budget.

Finance committee member Eva Frey said the fund balance can be rebuilt over time and that there was no rush to refill the emergency coffers.

“It's like the old saying 'Slow and steady wins the race’,” she said. “I think ($18.05) is a good balance between what we ought to do, and what we can do.”