The Board of Aldermen are expected to adopt a tax rate tonight that would, on average, increase taxes by 3.57 percent citywide.

According to a preliminary report released by the assessor's office on the city's website, Newton will likely raise taxes to the full 2 1/2 levy limit in 2011 at tonight's classification hearing. This is the maximum allowed under Proposition 2 ½, a law that limits the amount a city can raise its tax levy.

At tonight's hearing, aldermen and assessors will determine how to apply that rate to changing property values in the town. Last year, the residential tax rate was $10.41 per thousand dollars of assessed property value, and the commercial tax rate was $19.93 per thousand dollars.

The board will likely adopt the maximum tax increase under Prop 2 ½, said Alderman Stephen Linsky, a member of the board's Finance Committee.

"The reality of the process is, nearly every community in Massachusetts, under Prop 2 ½, taxes up to the levy," he said. "Over the past couple of decades, because Newton has seen a rise in assessed value, the rate itself has been going down."

That trend has been changing in the last few years, Linsky said, so the tax rate may increase slightly to compensate for dropping property values. According to the assessor's report, single-family home property values dropped 1.33 percent in the last year, multi-family homes dropped 2.81 percent, condominiums dropped 0.9 percent and apartments dropped 1.78 percent.

Linsky said the aldermen may also change the rates slightly to alter the shift between residential and commercial tax rates. The aldermen always try to help keep the residential tax rate down, Linskly said, since residential property tax payers are the city's biggest revenue source. However, a harsh year for businesses will convince the board to alter the shift slightly in favor of commercial property.

Either way, Linsky said, the shift shouldn't be significant – no more than a few cents in either direction for the commercial and residential tax rates.

"Regardless of what sector you think needs the most assistance, the difference is very marginal," he said.

Alderman John Freedman, the finance committee's vice-chair, agreed that the board would adopt the maximum tax rate and a tax shift similar to last year's. He said that the classification hearing was just the beginning of a budget season that would feature hard decisions for the city.

"There are real challenges," he said. "We are either faced with enhancing revenues–and there's no easy way of doing that, that I can see–or cutting expenditures."

Freedman said that Mayor Setti Warren had done a good job of finding ways to cut costs in his budget, but that there would be "pressure for more." While he was hopeful that union negotiations could help bring down some city costs, he pointed to moves such as closing library branches, increased parking rates and student activity fees in the schools as hard decisions officials have had to make in recent years.

"We've made cuts in the past couple of years that have been very controversial, and that people have been unhappy with. I don't blame them," he said. "The (budget) gap will need to be closed by reducing our expenditures... Clearly, our Newton voters are not in the mood for an override."

Freedman was quick to point out that the city was still in much better shape than many municipalities, both across Massachusetts and elsewhere in the country.

"I don't want to paint a bleak picture–the city is wonderful," he said.

Want to know more about how the tax rate works in Newton? Check out our explanation.