Legislative committee rejects East Millinocket bailout bill

Mark Scally
Mark Scally
Posted May 25, 2011, at 7:38 p.m.
Last modified May 25, 2011, at 8:24 p.m.

AUGUSTA, Maine — A committee of state legislators on Wednesday rejected state Rep. Herbert Clark’s attempt at a state law that would help cushion East Millinocket against the economic shock of losing 450 jobs and about $810,000 in municipal tax revenue in the fiscal year beginning July 1.

Members of the Legislature’s Committee on Taxation expressed sympathy for the town’s government and the laid-off workers, and didn’t rule out state government helping the town another way, but voted 8-4 to drop the bill after more than an hour’s hearing on Wednesday.

Clark’s bill, LD 1578, asked the state tax assessor to reduce the state valuation of the town for the years 2010 and 2011 by $66,000,000, the amount of valuation that town officials lost due to the closure of the Katahdin Paper Co. LLC paper mill on Main Street in East Millinocket on April 1.

Committee members said they rejected the idea for several reasons. Members said they disliked causing the Penobscot County government to have to refigure its tax commitments to its municipalities and state government.

They also questioned whether it would be fair to other municipalities and taxpayers to give East Millinocket such a break and they queried town officials on their assumed $30 million property tax assessment of the closed mill and whether that assumption would survive a legal challenge.

Clark, D-East Millinocket, said not supporting his bill would have a dire impact on East Millinocket and Millinocket, which lost 150 jobs when its Katahdin Paper Co. LLC mill closed in September 2008.

“You leave a heck of a dilemma on those towns,” Clark said during the hearing.

He and Mark Scally, chairman of the East Millinocket Board of Selectmen, did not immediately return telephone messages left after the hearing. Several East Millinocket leaders attended the hearing.

East Millinocket, Scally said during a town budget meeting on Tuesday, will eventually get an increase in state aid under state laws written to cushion municipalities against sudden and severe losses in valuation, but under those laws, the help will not come for another year.

“If that happens, then we will have to find a way to hang on,” Scally said Tuesday.

Without immediate aid from the state, East Millinocket could face layoffs of three full-time workers and five part-timers when the new fiscal year begins July 1, town leaders told residents on Tuesday. Town residents will meet June 14 to vote on a new town budget.

School officials who are still assembling their budget have already decided to close Opal P. Myrick School and have begun issuing layoff warning slips to school workers in response to the expected 2011-12 revenue shortfall.

It was unclear Wednesday whether Clark could or would seek to bypass the Taxation Committee’s recommendation and get it through the Legislature and signed into law another way.

Efforts to find a new owner and restart the paper mills are ongoing. State legislators are also considering buying a former paper mill landfill in the Dolby section of East Millinocket, which would help make the two Katahdin region paper mills easier to sell.

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