Katahdin region leaders to press LePage to help mills deal

Posted March 04, 2011, at 5:21 p.m.
Last modified March 04, 2011, at 5:38 p.m.

Gov. Paul LePage and leaders from East Millinocket and Millinocket will meet Tuesday in Augusta to see whether the state can help the towns grant a potential buyer of two Katahdin region paper mills $48 million in local property tax breaks over 10 years, officials said Friday.

LePage spokesman Dan Demerrit said Wednesday that state government will contribute, among other things, at least $10 million to the deal in helping Meriturn Partners clean up an East Millinocket dump site used by the mills but wouldn’t directly intercede in the local tax matter.

However, state Rep. Herbert E. Clark, D-Millinocket, released e-mails Friday showing that state House Democratic legislative aide Amy Watson Saxton on Tuesday requested a meeting with LePage and that Micki Mullen, an assistant to the governor, approved the request Thursday.

Millinocket Superintendent of Schools Kenneth Smith said school officials will attend the meeting to show LePage how much school systems already hurt by state aid and budget cuts would be further weakened by granting such a massive tax break to Meriturn.

“It really has more to do with the impact, the fact that we have already made huge reductions in the school budget and the fact that we will be receiving a lot less state subsidy this year,” Smith said Friday. “We will have a few things to talk about.”

Millinocket school leaders expect a subsidy reduction of $455,000 during the 2011-12 school year and are applying for a waiver to a $114,000 penalty they could be levied for failing to comply with the state’s school administration consolidation law. If that request is granted, Smith said, the schools will suffer a $341,000 net loss.

Smith’s proposed 2011-12 school budget will carry a half-million-dollar cut, in compliance with a school board request, he said.

Meriturn signed a letter of intent Feb. 11 to purchase the mills from Brookfield Asset Management of Toronto by April 29 if several conditions are met. East Millinocket and Millinocket town leaders disclosed Tuesday that Meriturn seeks the $48 million break over 10 years from both towns and would buy the mills — which Meriturn partner Lee C. Hansen said have lost money for years — for $1.

If the deal falls apart, Brookfield said it would shut down the East Millinocket plant April 22.

Mark Scally, chairman of East Millinocket’s Board of Selectmen, called the initial Meriturn offer “a joke,” but he and Millinocket Town Manager Eugene Conlogue said their towns’ leaders are considering it. Negotiations will continue next week.

In Meriturn’s proposal, the East Millinocket mill’s tax bill would decline from $2.1 million to about $46,800 starting in the 2011-12 fiscal year, which begins July 1, Scally has said. Millinocket would see a decline from $2.6 million to about $50,000, Conlogue has said.

Both tax deals would continue for 10 years. Through their lifetime, Conlogue figured, the tax breaks would amount to about $26 million from Millinocket and $22 million from East Millinocket.

“Essentially, Meriturn is asking the towns to finance a major portion of this business buying the mills,” Conlogue has said.

Meriturn has not disclosed how much it plans to invest in the mills or how the state or federal governments could help make the deal workable for the mill towns. If approved, Meriturn’s request would likely force town government layoffs and service reductions, Scally and Conlogue said.

Both mills represent as many as 650 full-time jobs for the region. As part of its tentative agreement with Brookfield, Meriturn has pledged to restart the Millinocket mill, which would restore about 200 jobs to the area lost when the mill shut down in 2008, due to its need for oil to make steam as part of the papermaking process.

East Millinocket officials invited to attend Tuesday’s meeting include Scally, town Administrative Assistant Shirley Tapley, and Union 113 Superintendent Quenten Clark. Millinocket officials invited include Conlogue, Town Council Chairman John Davis, Smith and school committee Chairman Arnold Hopkins, Clark’s e-mail states.

Herbert Clark, Conlogue and Scally did not immediately return telephone messages seeking comment Friday.

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