MILLINOCKET, Maine — Town and school leaders hope that a meeting between their attorneys will determine whether the school department or town government will get a second $158,000 hardship allocation from the state and thereby possibly keep school officials from suing the town.
That was the agreement made by both sides after a Millinocket School Committee meeting at Stearns High School on Tuesday. No meeting date between the lawyers has been set.
The Town Council and committee met at committee Chairman Kevin Gregory’s request to clear the air between the governing bodies, but Millinocket Town Council Chairman John Davis said he was still unsure whether school leaders would refrain from filing a lawsuit.
The lawsuit threat “does not appear to be [on the table], but they were a little unclear,” Davis said after the meeting. “I don’t know.”
Gregory and school Superintendent Kenneth Smith said early in the meeting that school officials never threatened to sue the town for the money, to which they believe the schools are entitled under state law, but Gregory and committee member Michael Jewers appeared to contradict those statements later.
“If it comes to a point,” Jewers said at the meeting, “where neither lawyer can agree [who should get the money], then we have to go higher. This has to be settled.”
And when asked after the meeting whether there was any chance the school committee would sue the town government, Gregory said: “I don’t know. It depends on the lawyers.”
Davis said he heard the same basic message from Gregory when he discussed the matter with him on Wednesday. “It really comes down to what the lawyers say,” Davis said.
The state last year approved a $158,000 Sudden and Severe Impact payment to the schools when the Millinocket mill was devalued under the ownership of Brookfield Asset Management of Toronto.
Town Manager Eugene Conlogue said Wednesday that the school department seeks to receive an additional $158,000 in Sudden and Severe Impact funds that were approved by the state because of a second drop in valuation at the mill.
Sudden and Severe Impact funds become available when a community suffers a significant loss in taxable value. Over the past year, the town has lost more than $96 million in taxable value from its paper mill, Conlogue said.
The last $20 million drop in taxable value occurred as the result of negotiations on the sale of the mill to Cate Street Capital in August. This additional value loss created the additional $158,000 in Sudden and Severe Impact funds because property taxes originally expected as part of the school budget were reduced again, Conlogue explained.
School officials believe they are entitled to both $158,000 payments, but town leaders say that the second $158,000 in Sudden and Severe Impact funds simply replaces the lost property taxes and, therefore, no additional funds are due to the school.
“S&SI funds are replacement monies, not new monies. The only change is a dollar-for-dollar change between two revenue lines,” Conlogue said. “What people need to know is that there is no net change in school revenues and absolutely no change in planned expenditures.”
During Tuesday night’s meeting, councilors and committee members made clear that both sides face deep financial stresses. Town government and the school system both endure declining state and federal aid, populations and enrollments; the need to raise taxes or cut services; and continually rising costs.
Councilors and committee members have been cutting or maintaining zero-growth budgets annually for at least the last six years and said they loathe the idea of increasing the burden on taxpayers. Both sides agreed they want the best school system possible.
“This town is in dire straits right now,” Councilor John Raymond said at the meeting. “We came very close to bankruptcy and if it wasn’t for the sale of the mill, we probably would be in bankruptcy.”
The school committee cut more than $1 million from its $7.5 million budget over the last few years, Gregory responded, asking, “Do you know how hard that was to do?”
Smith said the school department does not face a $150,000 shortfall originally estimated by former School Committee Chairman Arnold Hopkins before he abruptly resigned his position last month.
“Right now we do not have a shortfall. We are doing everything we can to avert a shortfall. Right now we are not planning on a shortfall,” Smith said.
“We are trying very hard to keep people employed and not do something irrational,” he added.
Davis said he wondered why school leaders would want the $158,000 if they weren’t anticipating a shortfall.
“If there isn’t a shortfall there, then I am a little surprised that they would want to carry that over as a surplus instead of the town applying it to the mill rate now,” Davis said. “But we had a good meeting. I came out of there feeling pretty good that we had our issues addressed.”