NORTH SMITHFIELD — Tax bills will be going out this week, carrying an 8.9-percent tax increase due to the first full payments on the $30 million the town borrowed to build the new middle school, Town Administrator Robert B. Lowe said.

The increase is more than the 5-percent cap on property taxation enacted by the legislature because bond payments are exempt under the law that set up the taxation limits, Lowe and Finance Director Jill Gemma said.

For residential taxpayers, the new tax rate is $13.24 per $1,000 of assessed value, $1.08 per $1,000 more than last year’s $12.16 rate. For commercial taxpayers, the rate is $16.72 per $1,000 of assessed value, a $1.35 jump over last year.

The median value of a house in North Smithfield is about $300,000, Lowe said. For the owner of that house, the taxes would go from $3,648 to $3,972 this year, an increase of $324. Lowe said initial estimates were that the first $1.8 million payments on bonds would add about $358 to the tax bill on that $300,000 house. The increase was kept below that by budget-cutting by both the town and School Department, he said.

“I’m not happy by any means that we’re raising taxes,” Lowe said. “But when we started, it was well over $100 more than that.”

The rate was set after the Town Council and School Committee met to thrash out an agreement on how to find about $474,000 the School Committee said it needed — at a bare minimum — in its $20.6 million budget to adequately staff and supply the new middle school, which will welcome its first classes of students in September.

The School Committee agreed to commit its $224,000 surplus from last year as well as a $147,000 payment the district was getting from the Northern Rhode Island Collaborative. The Town Council agreed to take $122,000 from the town surplus to fill the gap. That wound up about $20,000 more than the School Committee’s minimum.

School Committee Chairman Robert Lafleur said the agreement meant the School Committee could dodge large-scale reductions in several popular programs.

“This avoids all of those first-tier cuts: sports, all-day kindergarten, music, a third-grade teacher,” Lafleur said.

He said the committee would still have to look at some lesser cuts, but would not be making any final decisions until next month, when it will know how many teachers are retiring this summer.

Gemma said her concern was that the town got through this year’s budget with several one-time-only revenue sources. There is no guarantee there will be a school or town budget surplus to draw on next year, she said, nor a payment from the collaborative. Unless that money can be replaced, next year’s budget process will start about $400,000 in the red, she said.

Lafleur and Lowe each praised the work of their respective department heads and the employees of their organizations for coming up with tight budgets in a difficult year. Both also said that while this year’s talks were sometimes contentious, both sides agreed that they would be working more closely together sooner in the process in the coming year.

jhill@projo.com