The City of Pawnee, IN (not a real city) is planning to build a new hospital next year that has a property value of $100 million. The Pawnee government plans to keep the property tax rate the same every year and to provide the same government services as they did last year. That is, the total budgeted expenditures and income from other sources will remain unchanged. Note: This question does not require any numerical calculations.

1. Will the average amount of property taxes paid by property owners in Pawnee will increase, decrease, or stay the same.

2. Explain your reasoning by using the tax rate formula and your knowledge about property tax exemptions.