East Millinocket opts to continue mill tax break talks

Eric Zelz | BDN
Posted March 07, 2011, at 11:37 p.m.
About 400 East Millinocket residents told the Board of Selectmen to continue with negotiations with Meriturn Partners on tax breaks the San Francisco investor seeks to buy the paper mill on Main Street. The green cards indicate yes votes. The public hearing occurred at Schenck High School on Monday, March 7, 2011.
About 400 East Millinocket residents told the Board of Selectmen to continue with negotiations with Meriturn Partners on tax breaks the San Francisco investor seeks to buy the paper mill on Main Street. The green cards indicate yes votes. The public hearing occurred at Schenck High School on Monday, March 7, 2011.
About 400 East Millinocket residents told the Board of Selectmen to continue with negotiations with Meriturn Partners on tax breaks the San Francisco investor seeks to buy the paper mill on Main Street.
About 400 East Millinocket residents told the Board of Selectmen to continue with negotiations with Meriturn Partners on tax breaks the San Francisco investor seeks to buy the paper mill on Main Street.

EAST MILLINOCKET, Maine — Get a better deal.

That was the message about 350 residents gave the Board of Selectmen through a straw poll during the board’s first public hearing at Schenck High School on Monday on Meriturn Partners’ offer to buy the Main Street paper mill for $1 in exchange for an almost $2 million tax break.

“They didn’t say to accept the deal,” board Chairman Mark Scally said Monday. “They said to go back and hammer out a better deal, but don’t cut off negotiations. Keep at it. Keep plugging.”

A heavy show of green cards provided by the board, signifying a yes vote, dwarfed the red card vote, but nobody was enthusiastic. Residents and town leaders alike peered into a haze of unknowns and unpalatable possibilities in pondering whether to continue the Meriturn talks.

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 been losing money for years — for $1.

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

A positive result of the deal, town leaders said, would be the continuation of 450 full-time paper mill jobs and the creation of about 200 more at the paper mill in Millinocket, which closed in 2008. It would be the continuation of an economic way of life that began more than 100 years ago built around the paper industry.

But it would come with a heavy price.

The proposed tax cut, which would drop the mill’s annual local tax bill from $2.1 million to $46,800 effective July 1, likely would force the closure of Opal Myrick School, with Myrick grade-schoolers moving to Schenck. Schenck would need to be remodeled to handle the change and the consolidation probably would not prevent more cuts in educational services as the proposed tax cut entails a $1 million cut in town education aid, Union 113 Superintendent Quentin Clark said.

“There is no way you can take a million out of these schools and meet your obligation. It just can’t be done,” Clark said, “but there are things we can do that can save money.”

The town’s loss of valuation would spur an increase in state education subsidies, but the increase would not completely offset the loss in revenue.

“Everything is going to have to be cut. Are we going to have to cut out the basketball team? I doubt it,” Clark said, “but what about the assistant baseball coach? Could we get by with only one baseball coach?

“We don’t want to take it out on kids. You only get to be in the third grade once,” Clark said.

Totally eliminating town schools and sending the children to another town, such as Millinocket or Sherman, would net only a $75,000 savings, as other towns charge tuition that the town would have to pay. School officials could make the same cut to the education budget and keep students in town, Clark said.

Municipal services also would be slashed, Scally said. Town emergency services would remain intact — the ambulance service actually earns revenue — but every other town department would face consolidation, with workers not laid off taking on new responsibilities.

“We will lose services, we will lose departments,” Scally said. “The rub here, folks, is the offer of more jobs and that’s where the tough decision comes in. We will face a loss in value either way with this. Do we do this with 450 people unemployed or with 200 more people being employed?”

Again, town officials will get some state aid in cushioning the shock of the drop in valuation, but that won’t offset the need for cuts. A local property tax increase of 3 mills would help significantly to keep town services going, Scally said, but a homeowner paying $3,000 in property taxes this year would pay double in 2011-2012.

Residents listened quietly and asked a lot of questions but did not have much to say.

“It’s the first meeting,” resident Bob Lakeman said. “There’s a lot more information we need to get before we can really decide. We are kind of hanging out in limbo right now. I don’t like the situation we’re facing right now, not for the town and schools’ sake but when we come back again we can get more information.”

Katahdin region leaders will meet with Gov. Paul LePage on Tuesday and will hold a regional economic development board meeting on Wednesday.

Town officials will meet with their attorney and assessor on Thursday followed by another session with Meriturn officials. The board will meet during a regular session on March 14.

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