LINCOLN, Maine — Town leaders can apply for a $500,000 loan to cover the late mailing of property tax bills caused by the discovery of about $1.2 million in budget errors, officials said Wednesday.
The Town Council voted 6-0 on Nov. 5 to give Treasurer Gilberte Mayo the authority to seek a tax anticipation note from Machias Savings Bank for as much as $500,000 within 60 days of that date. The loan would carry a 0.99 percent interest rate. Councilor David Whalen was absent.
The loan might not be needed or sought, Mayo said.
“We are not running a deficit but it is very tight as far as cash flow goes,” Mayo said Wednesday, “and because the council meets only once a month, I wanted to have the ability to borrow in case I needed it.”
As of Wednesday, the town had about $278,000 in cash, which is usually enough to pay four weeks of expenses. Town workers mailed 3,600 property tax bills on Friday, about two months late, with Dec. 17 the date at which taxpayers start paying late-payment interest, Mayo said.
Councilors had no problem authorizing the possible expenditure, Chairman Steve Clay said.
“It is a matter of cash flow more than anything else,” Clay said Wednesday. “I don’t think it is damaging. I think it will just be a matter of possible need.”
The Oct. 2 discovery of errors in the 2011-12 budget totaling what interim Town Manager William Lawrence said was $1.2 million forced town officials to redo the budget for the 2012-13 fiscal year, which ends June 30, 2013.
On Nov. 5, councilors passed with a series of votes a new $4.2 million municipal budget for 2012-13. The next day, Assessor Ruth Birtz committed the town to pay $7.6 million in property taxes to the county and state at 19.86 mills, the mill rate in the original 2012-13 budget, Mayo said.
Tax anticipation notes are tools often used by municipalities to cover short-time lags between tax billings and payments. Millinocket officials use them almost annually. Lincoln hasn’t sought one in about 25 years, said Mayo, who has worked for the town for 27 years.
The notes were necessary then, usually in late fall, because the town ran its budget on a calendar, not fiscal, year and sometimes encountered shortfalls in November, Mayo said.