Madawaska paper mill seeks tax abatement that could mean millions less for town

Posted July 28, 2012, at 9:40 a.m.

MADAWASKA, Maine — While the municipal and school budgets hang in limbo, officials in Madawaska are operating on a month-to-month basis pending the resolution of a tax abatement request from the town’s largest employer.

Twin Rivers Paper Company — formerly Fraser Papers — had already received a $25 million abatement on the mill’s valuation for the previous tax year and is now looking for an additional valuation abatement of $130 million for the current year .

“Right now the valuation for the mill is at $170 million,” Don Chasse, chairman of the Madawaska Board of Selectmen, said. “Their original request was to put the valuation at $40 million, [and] that loss of $130 million in valuation in Madawaska would mean shut the doors, roll up the sidewalks and we are done here.”

Last year’s $25 million abatement for Twin Rivers translated into a tax revenue loss of just over $411,600 for the town, according to Christine Therrien, town manager.

“We have followed the abatement process guidelines and have submitted all of the requested information to the town’s independent appraiser,” Louise Merriman, communications manager with Twin Rivers, said through an email late Friday. “We are confident that this will result in a fair valuation that conforms with state law.”

Any further tax abatements, Therrien said, will come on top of the previous drop in revenue.

“We are working with them,” she said. “We are working with a third-party assessing agent [and] he’s reviewing [mill] documents.”

Chasse said he has no doubt that third-party review will show the town had overvalued the mill, but at this point no one is certain by how much.

“The selectmen did take some action last year by reducing the valuation by $25 million,” Chasse said. “There may be room for more.”

Further reductions, Therrien said, are going to be felt townwide.

“You never feel good about abating any money,” she said. “We are looking at making substantial cuts to our budget.”

Chasse agreed.

“This will definitely have a huge impact,” he said. “As we move forward, any cuts will have a definite impact on all departments and services.”

At the same time, Therrien and Chasse stressed the abatements must be given serious consideration due to the mill’s importance to the town’s overall economic well-being.

“Yes, there are cuts associated with whatever [abatement] is granted,” Therrien said. “But I would not feel good if the company closed that mill and 500 people lost their jobs.”

Because the loss from last year’s abatement was greater than 2 percent, Therrien said the town is eligible for some monetary relief from the state’s Sudden and Severe Impact Fund.

“We won’t get the entire amount we lost,” she said. “But we will get a percentage [and] I have to say the property tax division in Augusta has been great assisting us throughout this whole thing.”

In planning for further valuation abatements on the mill, Therrien said two municipal positions have been eliminated while others throughout the town are being looked at for streamlining.

“We are going to be sensible about this,” she said. “But at this point everything is on the table.”

The original abatement request for this fiscal year, Therrien said, represents a 33 percent reduction in property tax revenue for the town and would add an additional five or six mills to the current tax level if the town does not take action.

“We have to address this through cuts,” Therrien said. “We can’t put this on the back of the taxpayers.”

The uncertainty has put the town between a rock and a hard place, Chasse said.

“We do have a budget that we need to complete [because] right now we are operating without one,” he said. “For now we are operating month to month on the equivalent budget for that month one year ago.”

Once the abatement is resolved and a budget is ready, Chasse said, it will go to the voters during a special town meeting, hopefully by October.

Madawaska’s fiscal year ended June 30 and Therrien said it is next to impossible to formulate any budget until the town knows the exact amount of the abatement.

“We really need to know ahead of time how much money we are going to have to spend,” she said.

Officials with the Madawaska School Department declined to comment on the abatement issue.

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