BAILEYILLE, Maine — Projected rate hikes of more than 84 percent had water users thunderstruck this week as they tried to figure out how they would pay their bills now that the town’s biggest employer has shut its doors.

On May 5, Domtar Industries shut down its pulp mill indefinitely tossing more than 300 people out of work. The mill used to be the Baileyville Utility District’s largest water user. Now area residents, businesses and the town will have to make up the lost revenue.

The BUD held a hearing at Woodland Elementary School on Tuesday night. About 100 ratepayers attended. The BUD is a quasi-municipal entity run by a board of directors. The BUD is in the process of applying to the Public Utilities Commission for a rate hike.

“I’ve got no good news,” said Steven Levy, executive director of the Maine Rural Water Association. Levy served as moderator of the meeting.

Levy said that in 2001, Domtar paid the BUD more than $139,000 in annual water rate revenues. This year with the shutdown, the company has paid only about $34,000 and it is anticipated that future revenues will be around $10,000, BUD officials said.

It has been a tough year for Baileyville residents.

In an effort to cut costs, the once free ambulance service is now a pay-as-you-go entity. The one-time 24-7 police coverage has been cut and property taxes are expected to go up.

On top of all of that bad news a letter to ratepayers sent out before the meeting by the BUD said that effective July 1, the residential water rate was expected to increase 84.31 percent while commercial rates would go up 84.28 percent. Government water rates would increase 84.25 percent.

For those who use minimum amounts of water, their quarterly water bill will increase from $55 to $101, interim Town Manager Dottie Johnson said Thursday.

“The increase is necessary to meet operating, debt service and depreciation costs, in view of a substantial loss of revenue from the closing of Domtar Industries,” the BUD said in its legal notice of the meeting.

But the BUD hopes to spread the rate hike out by spreading the payment over 12 months.

“We are working with the PUC to allow a monthly payment plan,” the directors said in their letter to ratepayers. “With a monthly plan the cost would be approximately $34 a month for a minimum bill. We will discontinue the late charge if we get enough participation in the monthly plan.”

In addition, the board also has taken steps to cut costs including eliminating a 20-hour position, refinancing two loans to reduce interest and payments, and changing the employee health insurance plan.

All of the cuts are expected to lead to savings of about $50,000 a year.

But those changes did not satisfy some of the ratepayers.

“This town is flat on its back,” resident Gary Kneeland said. “You cannot sit there and expect the town, the ratepayers to pick up this loss.” He said more people are going to end up leaving town.

One woman asked whether property owners could put in their own well.

“There is nothing to prohibit a ratepayer from drilling a well,” Levy said. “That being said, there would be one less ratepayer coming in.”

Poring over the BUD’s expense accounts, residents wanted to know why a 2 percent raise was given to the BUD’s two employees this year; why the employees did not have to pay their own personal water bills; and why the employees did not contribute to their health care plans.

Ratepayers also recommended that any rate increase be phased in over time.

After more than an hour of listening to ratepayers’ concerns, the board said it would review the issues raised by water users.

The proposed rate hike isn’t a done deal. In the legal notice presented by the BUD, residents were told they could appeal the rate hike to the PUC.