EAST MILLINOCKET, Maine — The town’s assessor has warned officials that using $700,000 from the municipal reserve account to cover an anticipated loss of tax revenue from Great Northern Paper Co. could imperil the town’s financial health.
In a memo from administrative assistant Shirley Tapley to the Board of Selectmen dated May 28, she relates a conversation with William Van Tuinen in which he advises filing a tax lien against Great Northern Paper Co. for $657,900 in property taxes owed for the 2013-14 fiscal year.
Van Tuinen also questioned the wisdom of using $700,000, as part of the total $6.8 million town and school budget for the 2014-15 fiscal year, to cover the delinquent taxes. Voters approved the budget during an annual town meeting Tuesday.
Van Tuinen recommended lowering the mill valuation next month from $30 million to $3 million, which would leave the town needing as much as $700,000 in tax revenue in 2014-15.
Tapley wrote that Van Tuinen questioned, “Why would you want to add another potential unpaid tax bill adding another $700,000 to the mix, which would then be a loss of anticipated revenue of $1.4 million?”
Van Tuinen noted GNP officials have, since 2011, stripped much of the equipment from the Main Street mill — as they have with their Millinocket mill site — from which East Millinocket draws its $30 million personal property tax assessment. Cate Street Capital bought the Millinocket and East Millinocket mill sites for $1 in 2011 and created Great Northern Paper Co. LLC to operate both sites.
“[Van Tuinen] said [that] since 2011, most of the value is gone. Recycle plant, wood yard crane and of the two paper machines one may be used for parts for the one that was running,” the memo states. “[Van Tuinen] said looking at the income approach there is zero value [associated with the mill]. There is no demand for the paper it produces, so why would it start up?”
The impact of the stripping of equipment from the East Millinocket site will eventually resemble the loss of $2.3 million in tax revenue Millinocket expects in the 2015-16 fiscal year, given GNP’s plans to auction its Millinocket paper machinery later this month.
“They still have equipment but not what they had three years ago when the mill value decreased to $30 million from $96 million,” the memo added.
East Millinocket officials plan to commit taxes and set a mill rate in August or September this year. Van Tuinen did not return a message left at his office in Madison Thursday.
GNP stopped producing newsprint when it shut down the mill in late January, laying off 212 of its 256 workers Feb. 6. GNP leaders announced then they hoped to restart production in 16 weeks — a deadline that lapsed last month.
Gov. Paul LePage’s economic advisers met with Millinocket officials at his office Wednesday. LePage spokeswoman Adrienne Bennett corrected an earlier statement she made when she said LePage attended a portion of the meeting.
East Millinocket officials were not invited to the meeting. Meeting participants declined to comment on the subject of the meeting, except to describe it as an economic development matter. LePage said during a campaign stop in Gray Tuesday he hoped to make progress this week on getting the East Millinocket paper mill restarted.
Selectman Clint Linscott discussed the $700,000 transfer during the annual town meeting Tuesday, when residents voted to approve the 2014-15 budget that would include a mill rate increase. He said town leaders planned to get a tax anticipation note, which banks or other creditors typically issue to municipalities to cover gaps in revenue collection, but he didn’t expect to need to use it because the town’s $1.4 million reserve account was “healthy.”
Millinocket town officials used TANs for several years to cover financing gaps, but that practice failed in 2013 when GNP — that town’s largest taxpayer — took several months to pay an overdue property tax bill of $2.3 million. The lapse, in combination with a bank’s refusal to issue Millinocket a TAN, precipitated a cash-flow shortage in Millinocket that lasted several months.
According to the memo, Van Tuinen said East Millinocket’s tax collector “has no choice” but to file a lien against GNP for its unpaid taxes ,“just as [it would with] all the other unpaid taxes of properties in town. [Van Tuinen] said that exceptions can be made, but his thought is that they should be made to the senior citizen that can’t pay due to health issues, not to a mill.”
Tapley said selectmen will consider filing a lien. No meeting date has been set.