HOLDEN, Maine — Taxes are going up. Way up.

With both the town and school department getting less in state money, residents are being asked to pay more, Town Manager John Butts said Thursday, explaining why the tax rate increased by $1.38 for every $1,000 of property value.

Town councilors held a special meeting last week to discuss year-end finances and set the property tax rate, which increased from $12.32 to $13.70.

For the last couple of years, the town has been able to keep the tax rate low by using undesignated funds to offset increases, Butts said.

“The decision was made not to do that this year,” he said. “We need to build our reserves back up.”

The 2010 municipal budget is $2,121,686, which is nearly 7 percent less than in 2009, but both the SAD 63 budget and the Penobscot County assessment have increased, Butts said.

“Of the total taxes, 60.22 percent goes to the school, 7.78 percent goes to the county and 32 percent goes to the municipal budget,” he said.

The SAD 63 budget amount for the coming year is $2,275,777, which is about $101,550 more than last year; and the Penobscot County tax assessment increased to $293,867, which is about $6,000 more than in 2009.

Butts said Holden is like other communities in Maine that have seen decreases in state revenues and excise taxes. He added that the school department also saw large state funding cuts.

“Basically, the increase is due to state cuts to local funding,” he said.