MILLINOCKET, Maine — Property tax bills will be mailed months early to avoid a $3 million to $4.5 million anticipated cash-flow shortage caused partly by the delinquency of the town’s top taxpayer, officials said Monday.

The Town Council met in executive session for about 1½ hours with the School Committee, which oversees the town’s most costly department, to discuss cutting costs. Town Manager Peggy Daigle said she told both boards that the town’s reserve account was down to $800,000 — not enough to run town government and schools for a typical month, which costs about $1.3 million.

“Our cash flow and fund balance are weak to the point where financial institutions don’t find us very attractive to lend money to,” Daigle said Monday. “We can limp by for a while if we are selective about what [bills] we pay. It is sad that things have gotten to this point, but we will work as hard as we can to correct the situation.”

Officials are taking remedial steps, including mailing property tax bills on July 8 that are due in mid-August instead of waiting until Oct. 15 to do the mailings. The town will pursue 11 of 38 properties whose delinquent owners have been foreclosed upon.

“We are giving them one more shot at paying what they owe us,” Daigle said. “Then we will just proceed with the sale of their property.”

Daigle said she knows of only two of the 38 properties being occupied. Thirty properties are also in foreclosure for failing to make sewer payments, she said. Some of those properties are also on the foreclosed property tax list.

The cash-flow problem, Daigle said, has many sources, including Cate Street Capital LLC subsidiary Great Northern Paper Co. LLC owing the town about $450,000 in tax payments for the second half of the current fiscal year. Unless the town receives school subsidy and revenue sharing funds from state government or tax payments from a large number of delinquents, government and schools might run out of cash before Aug. 1, she said.

Town Council Chairman John Davis declined to comment after the meeting, saying he might have a statement Tuesday.

Cate Street or its subsidiary own the mill site on Katahdin Avenue, which includes the No. 11 paper machine. GNP also owns the paper mill in East Millinocket. A more complete property listing was not immediately available.

The company is also late on its $350,000 second-half payment to East Millinocket, said Clint Linscott, chairman of the East Millinocket Board of Selectmen. Linscott declined further comment.

Cate Street spokesman Scott Tranchemontagne said company officials met with Daigle last week to discuss a tax payment plan.

“We thought the meeting was productive,” Tranchemontagne said. “We remain committed to the payment-plan concept and I hope that we can work that through with the town.”

Millinocket’s school board is due to complete its budget for the 2013-14 fiscal year, which begins July 1, when it meets at Stearns High School at 3 p.m. Tuesday. Budget figures weren’t immediately available Monday, but Daigle said the board’s budget was preliminarily set to increase next year by about $70,000 over this year’s.

Under the roughed-out budget Daigle compiled, the town’s mill rate would rise to $27.24 for every $1,000 of taxed property, up from $26.40 this year. However, according to her review of town records, the town’s property tax rate has been artificially deflated by payments from the town’s cash reserve for years.

Town government, Daigle said, should have about $4.55 million in cash, enough to pay its way until taxes typically come due in November. The town’s cash reserves dropped from about $2.7 million about three years ago to $800,000. It peaked in 2003 and about $3.3 million, according to Daigle. The 2012 reserve was $1.3 million.

Several overages ate into the reserve since July 1, 2012. Town leaders pulled $660,000 from the reserve to offset a potential mill rate increase. Another $305,000 went to the School Department in 2011 to cover an overspent budget. Town officials budgeted $720,000 in revenues expected from state government to offset a loss in valuation of the paper mill, but received only $504,000 of that payment, Daigle said.

Raising taxes enough to generate $4.55 million in reserves would raise the mill rate to about $38.16 mills. That would raise the taxes paid on a $50,000 home in Millinocket from $1,320 at $26.40 mills to $1,908, Daigle said.

Her talk of the ideal cash reserve might be more theoretical than real but for her meetings last week with GNP leaders and at KeyBank, which town government uses. KeyBank officials said that the tax delinquency in Millinocket creates among them concerns about the town’s ability to pay back any tax anticipation note, or TAN. Daigle was considering seeking a TAN of $3 million, about double the TAN the town got in mid-September 2012 and paid off last month, Daigle said.

“Hopefully we wouldn’t have to draw down the entire note,” she said.

GNP offered no date of payment “in the near future that would help alleviate” the town’s problems, Daigle said.

Cate Street applied last week to the Finance Authority of Maine for a $30 million bond to build New England’s first torrefied wood machine at the Katahdin Avenue paper mill site.

Cate Street, a New Hampshire investment company, established Thermogen Industries LLC subsidiary to manufacture torrefied wood, a type of wood pellet, in Millinocket and Eastport for sale to British and European coal-fired electrical plants.

Tranchemontagne has said the first torrefied wood machine is one of five slated for Millinocket. Two or three more will be built in Eastport over the next several years, with the first Eastport machine coming online sometime in 2015. The first machine in Millinocket will directly employ 30 to 35 workers and create or sustain 80 to 100 jobs indirectly, he said.

Each machine after will employ 20 to 25 directly with 80 to 100 jobs indirectly benefiting.