LINCOLN, Maine — The town’s property tax rate has been lowered for the third straight year as officials brace for possible layoffs at bankrupt Lincoln Paper and Tissue, LLC, they said Tuesday.
Town officials set a new mill rate last week of $22.20 per $1,000 in property valuation. That’s 20 cents lower than the $22.40 rate of the 2014-15 fiscal year, which ended June 30, and 76 cents lower than the previous year’s $22.96 tax rate, Tax Assessor Ruth Birtz said.
The mill rate would have remained at $22.40 but the Town Council opted to transfer $150,000 from the town’s $2.52 million unassigned fund balance, Treasurer Melissa Quintela said.
Councilors wanted to make things easier for taxpayers — particularly mill workers and suppliers — while not threatening the town’s financial position, which they think is strong, council Chairman Steve Clay said.
“As far as the mill goes, we will just have to see what happens,” Clay said Tuesday. “The impact of the tax cut spans more than just the people who are laid off. It’s trucking companies, people who cut wood. There’s a massive trickle-down effect when a mill closes.”
The council vote occurred earlier this month, shortly after Lincoln Paper, the town’s second-largest taxpayer, filed for Chapter 11 bankruptcy protection on Sept. 28. The company’s 179 workers will remain employed at least until the mill’s bankruptcy auction on Nov. 10 thanks to a $2.3 million extension of LPT’s credit line.
Lincoln Paper filed bankruptcy-court documents on Oct. 21 stating that the privately held business’ gross revenue in 2014 dropped to $70 million from $145.3 million the previous year. Company officials blamed the losses on a boiler explosion the previous year that left the mill unable to produce its own wood pulp and ended its paper production.
Town officials are bullish about the town’s prospects should the company fold, but they still hope for a buyer who will keep operations going at the mill.
The mill is the town’s third-largest employer and second-largest taxpayer, according to town records. It pays about $570,000 in property taxes annually, enough to account for 7 percent of the town’s tax base, town officials have said.
The town’s top taxpayer, Evergreen Wind Power, pays $1.3 million in taxes. Emera Maine, the town’s third-highest taxpayer, pays $153,155. Wal-Mart pays $72,136 and Gardner Land Co. pays $60,952 annually, officials have said. RSU 67, the public school system serving Chester, Lincoln and Mattawamkeag, employs 310 people at its three schools and central office in Lincoln. Penobscot Valley Hospital employs 223 workers.
At $22.20, owners of $100,000 properties pay $2,220 in property taxes annually. Despite the tax reduction, the town’s unassigned fund balance remains a very healthy 28.68 percent of the town government’s annual operating cost, officials said. The town’s independent auditor recommends, and town policy mandates, that the balance be between 20 and 25 percent, Birtz said.
Like a rainy day fund, the balance is a crucial part of the town’s ability to maintain services when sudden economic losses occur, or to reinvest in itself, without changing the town’s property tax rate or eliminating services.
Birtz called the tax cut “a good statement to people.”
“It is saying, ‘We are listening. We understand, and we are doing our best,’” Birtz said. “The council really is conscious that a lot of people might be out of work soon.”