EAST MILLINOCKET, Maine ? State officials have assured town leaders that East Millinocket schools will receive about $500,000 during the 2011-12 fiscal year to cover the sudden and severe loss of tax revenue caused by the closing of the Main Street paper mill, officials said Thursday.
The $500,000, coupled with deep cuts school officials have made to their proposed 2011-2012 school budget, should be enough to stave off much of the impact of the mill’s devaluation upon town schools. The loss in tax revenue is expected to result in a $1.2 million cut in school funding for the 2011-2012 fiscal year, officials said.
“Everything is a little unclear,” Superintendent of Schools Quenten Clark said Thursday, “and this won’t make up for everything, but it will allow us to survive this year without more layoffs.”
The School Department’s budget, which the school board finished earlier this week, calls for five full-time teaching positions to be cut, plus several part-time ed tech positions, Clark said. The budget will be reviewed at a town meeting next month.
The Katahdin Paper Co. LLC mill closed on April 1, idling about 450 workers, after a California-based buyer walked away from a tentative agreement late last month to buy the mill and its Millinocket counterpart if certain conditions were met. State officials are scrambling to find another buyer.
As part of the unfolding town budget situation, the Board of Selectmen is planning to follow the town assessor’s recommendation of setting a new paper mill valuation of $30 million. State education officials promise members of the Legislature’s Committee on Taxation that the $500,000 in funding would come through when that happens, said State Rep. Seth Barry, one of the committee’s leaders. The new valuation is expected in mid-July, Barry said.
A bill submitted to the committee by Katahdin region state Rep. Herbert Clark, 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, which is the amount of valuation that town officials estimate they will lose because of the closure of the Katahdin Paper Co. LLC paper mill on Main Street in East Millinocket on April 1.
Committee members 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 town officials on their assumed $30 million property tax assessment of the closed mill and whether that assumption would survive a legal challenge.
Also, the Department of Education’s commitment to provide the $500,000 under an earlier state law made Clark’s bill unnecessary, said Barry and Clark, who is not related to the superintendent.
“It takes care of about 99 percent of what they needed from the bill I had,” Rep. Clark said Thursday.
State officials believe the revaluation would occur by mid-July, Barry said.
“This doesn’t solve the entire problem for East Millinocket,” Barry said. “It solves the big problem, which is state general purpose aid to East Millinocket schools.”
It should, Superintendent Clark said, also open the door to more state revenue sharing with the town.
School officials won’t know until June 14 whether a lot of assumptions they made in formulating their budget, such as the absence of penalties for failure to meet the state’s school consolidation law, would prove true, Superintendent Clark said.
“If none of this money comes through, there will have to be a tax increase, but we have pretty good assurance that they will come through,” Superintendent Clark said. “We have had to take a bit on faith, but I think we have it covered now.”