Mill ownership pays East Millinocket $2.17M tax bill

Posted April 22, 2011, at 6:01 p.m.

EAST MILLINOCKET, Maine — The town’s largest single taxpayer paid almost all of its 2010 taxes on Friday in one whopping $2,172,781.16 payment, guaranteeing that the town won’t have to lay off workers or cut programs to pay its bills, officials said.

Katahdin Services Co. LLC., apparently a subsidiary of Katahdin Paper Co. LLC., hand-delivered the check on Thursday, Tax Collector Angela Cote said. It was the largest single payment she has ever received, she said.

The Main Street mill’s payment will cover town bills at least until the end of the 2010-11 fiscal year on June 30, said Mark Scally, chairman of the town’s Board of Selectmen.

“I am glad they paid. I think it’s only fair,” Scally said Friday. “Let’s go forward from here.”

With town reserve accounts running low and absent the payment, which represents tax bills for both halves of the 2010 fiscal (and calendar) year, town officials might have had to lay off workers, including teachers, thereby threatening the graduation of Schenck High School seniors this year, Scally said.

“It was a desperate situation there,” Scally said. “We were trying to negotiate with them different scenarios, and finally, out of the blue, they just called and said they were going to pay the whole thing. We said, ‘OK, if you insist.’”

Katahdin Paper Co. LLC is a subsidiary of Brookfield Asset Management of Toronto, which owns the paper mill on Main Street that was until recently the town’s largest single employer, with about 450 workers, and another mill in Millinocket, which employed about 150 workers and has been closed since September 2008.

Brookfield still owes about $18,778, plus some slight and accumulating interest, Cote said. Company officials have promised to pay the remainder next week. They already paid $100,000 owed for 2010.

The resolution of the 2010 tax dispute is a sliver of sunshine in what for town officials remains a gloomy sky.

The East Millinocket mill shut down on April 1 and remains closed as town and state officials scramble to find a buyer willing to restart it and its sister mill in Millinocket. Several potential investors have toured the mills, and Millinocket officials have met to discuss at least one buyer’s interest, since a mill deal fell apart on April 8.

Brookfield has given Katahdin region officials until April 29 to find a buyer or their workers might start dismantling both mills, thereby ending about a century of papermaking in the Katahdin region. Some residents believe that a permanent mill shutdown would lead to an exodus and great poverty in a region already struggling with a higher-than-average unemployment rate and several previous reductions in paper mill employment.

The dispute over Brookfield’s 2009 taxes is ongoing, with town officials claiming that Brookfield owes about the same amount of money and with Brookfield pressing to lower the mill’s valuation from $117 million to $5 million.

Selectmen met with Administrative Assistant Shirley Tapley, the town’s assessor and its attorney, in an executive session on Tuesday to discuss the dispute. Scally reported no significant progress.

Even if a mill buyer is found, town officials say it is unlikely that they will get anything like the tax payments once received from Brookfield. That makes at least some significant budget cuts, if not government layoffs, a likelihood by the summer, although state government programs will provide something of a cushion for the massive drop in tax revenues.

School officials already have voted to close one school, and school and town officials continue to compile budget proposals for next year.

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