EAST MILLINOCKET, Maine — Residents voted during the annual town meeting on Tuesday to pass a proposed $6.8 million town and school budget that would raise property taxes from $21.93 per $1,000 of property valuation to $27 mills.
Residents need to vote again during an election on Tuesday, June 10, to ratify the school budget, Superintendent Quenten Clark said.
Officials conceded the budgets are built on an assumption — that Great Northern Paper Co. LLC will pay its delinquent $657,900 property tax bill for the 2013-14 fiscal year and restart by the time the town sets its property tax rate in August or September.
Under the new mill rate, owners of $50,000 properties would face a tax increase of about $253.50 effective July 1, the start of the 2014-15 fiscal year. As part of the budget, town officials would transfer $700,000 from the approximately $2.1 million reserve account to cover the amount GNP owes, Selectman Cliff Linscott said.
The town’s fragile financial situation was discussed only briefly during the nearly 2½-hour meeting, when Linscott discussed the reserve account transfer. The $1.4 million reserve balance the town would be left with after the transfer is fairly healthy, he said.
“It looks to me that if we don’t get a big check from Cate Street — and I am not holding my breath — the town will be broke pretty soon,” resident Hollis Hafford said during the meeting.
A New Hampshire investor, Cate Street Capital LLC bought the East Millinocket and Millinocket mills for $1 in 2011. The Millinocket mill has been closed since 2008. The mill on Main Street stopped production in January and laid off 212 of its 256 workers on Feb. 6.
Cate Street leaders said at the time of the layoffs that they hoped to restart the mill in 16 weeks. That deadline lapsed in mid-May.
The $27 rate is based on the East Millinocket mill being valued at $30 million. If it remains closed, the town’s assessor has told town leaders that he would be forced to revalue the mill at $3 million. If that happens, the town would need a $37 mill rate to maintain the $6.8 million budget.
Town and school leaders have said their budgets have been cut significantly in response to the town’s financial woes. Town leaders laid off four town workers, including two police officers, in March in their $2.2 million budget in response to Great Northern Paper’s tax delinquency. That budget is about $33,000 higher than the budget that will lapse on June 30.
The school committee also has made deep cuts, proposing to eliminate two elementary school teachers and a half-time high school guidance counselor under its proposed $4.2 million school budget, but the impact of the school and municipal budget cuts is thwarted by state cuts to school aid and municipal revenue-sharing that more than offset them.
About 80 people attended the town meeting, which consisted of a series of line-item votes that residents approved, usually without much disagreement.
Dan Byron, chairman of the school board, endorsed the school budget at the beginning of the meeting, saying that school officials are expanding their college-level offerings in an effort to be of greater utility to students.
“We are all trying to minimize the taxation to you and looking at ways we can make money here at the school so we can reduce taxation,” Byron said.